What are "premium adjustments" in health insurance?

Premium adjustments in health insurance refer to changes made to the policy premium based on claims history or changes in risk. Insurers evaluate the claims experience of a policyholder and the overall risk profile, determining whether the premium needs to be adjusted accordingly. If a policyholder has had a high number of claims, it may signal a greater risk to the insurer, prompting an increase in the premium to reflect this higher anticipated cost.

Additionally, if an individual’s risk decreases—due to improved health, for example—the insurer might also consider lowering the premium as part of these adjustments. This practice allows insurance companies to manage their risk exposure and maintain financial stability while providing coverage tailored to the policyholder's circumstances.

The other options involve alterations or factors that do not exclusively reflect the direct relationship between past claims or individual risk changes and premium costs. These could include regulatory factors or benefit changes, which might influence premiums but do not specifically align with the concept of premium adjustments based on claims history or risk changes.