Rate Filing Justification Part II Memorandum
Effective January 1, 2026
Scope and range of rate increase
Wellmark Health Plan of Iowa, Inc. (Wellmark) has requested an average rate increase of 13.6% for ACA-compliant policies effective January 1, 2026. Rate increases vary by plan, ranging from 8.0% to 17.5%, and do not include rate changes due to age of the members on the policy. As of March 31st, 2025, there are approximately 83,000 individual members in the pool. Most of the members in the pool are eligible for a premium subsidy and may not experience a post-subsidy rate change within the range above.
Financial experience of the product
Wellmark anticipates 2025 experience will be worse than the target loss ratio. Applying the requested rate increases, Wellmark projects a loss ratio of 89% for this block of business in 2026. It should be noted that the projected Medical Loss Ratio (MLR) meets the minimum requirement of 80% defined in the ACA.
Changes in benefits
Plan design changes were made to Wellmarkâs 2026 product offerings. These changes drive rates down for 2026. Rate changes provided above incorporate the impact of plan design changes.
Changes in medical service costs
Annual trend of 5.9% was used to project claims from the experience period into the rating period and drives rates up for 2026. This trend assumption includes changes in service costs and utilization.
Administrative costs and anticipated profits
The main drivers of administrative expenses are employee salaries and benefits, broker and agent commissions, and various governmental taxes and fees. Wellmark strives to maintain a low administrative expense as a percent of premium, as well as the underlying cost of care, in order to provide the best value to our customers. With an increase to the Exchange User Fee, larger government fees in 2026 are driving rates up.
American Rescue Plan Enhanced Subsidy Expiration
The enhanced subsidies afforded in the American Rescue Plan are set to expire in 2026. Wellmark anticipates this change will result in worse market risk, driving rates up.