Affordable Care Act
Chances are, if you’re like most people, you didn’t know you could be getting a rebate on your health insurance premiums this year.
When we surveyed our customers last year, only about one-in-ten people (11%) actually knew these rebates even existed.
One major, yet little known, requirement of the Affordable Care Act (health care reform) was that a major medical health insurance plan be required to spend at least 80-85% of collected premium dollars on member medical care, beginning in 2011. This is the law’s so-called “medical loss ratio” rule.
Now, every year, insurers who don’t meet this medical loss ratio (MLR) requirement have to refund the difference to policyholders. Rebates are due no later than August 1.
No official data has been published yet, but in 2012 the amount of the rebate issued to policyholders varied substantially by health insurance plan, by state, and several other factors.
The average rebate was a little over $80 dollars, with some people receiving much larger rebates, and others see very small rebates or none at all. Overall, the Kaiser Family Foundation found that in 2011, nearly 16 million consumers were covered by major medical health insurance plans that generated approximately $1.3 billion in rebates for policyholders in 2012.
If you still have questions about these rebates, take a look at our list of frequently asked questions:
A: The law requires both employer-sponsored, major medical health insurance plans and individually-purchased major medical plans to adhere to the MLR rules.
Privately-purchased individual or family plans, any rebate due will go to the primary member on the policy. For employer-based group health insurance plans, the rebate will be made to the employer.
A: Health care reform (Obamacare) required health insurers to limit what they spend from the monthly premiums they collect from policyholders on overhead.
The law requires 80-85 cents of every dollar an insurer brings in through member premiums, be paid to cover medical expenses for the plan’s members.
The difference between the insurer payments for medical expenses and the total incoming premiums are known as the insurance company’s “medical loss ratio.” And, the insurers that spend less than 80-85% of premiums on medical care have to pay customers back in the form of a refund.
A: 2012 refunds should, according to the letter of the law, be paid by August 2013, if not sooner.If you’re due a refund for premiums you paid in 2013, you’ll get those in 2014.
A: No.Rebates are not guaranteed.
Rebates will vary from plan to plan, not insurer to insurer. So, if the insurance plan you bought didn’t meet the 80-85% medical loss ratio requirement, you, and everyone else who bought the same plan, is likely to get a refund.
By law, your insurer has to make you and other policyholders aware of how your plan performed under the new rule, and whether or not you’re going to get a rebate in 2013.
If you don’t get a notification from your insurer, good or bad, by the end of June, contact your insurance company.
A: Again, the answer is maybe.
Health care reform required the refunds to be issued to the policyholder. For employer-based health insurance plans, the employer is the policyholder.
But, if you contributed money toward your monthly health insurance premiums in 2012, you may be entitled to a portion of that refund. The law provides a little flexibility in terms of how an employer can manage the rebates they receive.
In most instances, the employer can pass the refund on to employees or use the portion of the refund due to employees to improve your health insurance benefits in some way.
A: We haven’t seen estimates for 2013.But, in 2012, the Kaiser Family Foundation, estimated that 15.6 million people who purchased individually and employer-sponsored health insurance plans could expect rebates for 2011 premiums.
A: In 2012, the government estimated that rebates could average as much as $164 for people who bought their own health insurance (coverage not obtained through an employer).
The actual amount of the refunds varied substantially from state to state by state, insurance company to insurance company, and plan to plan. And, other factors could impact rebates as well.
A: There is no right or easy answer to this question.
What we know for a fact is that plans that issue rebates spent less than they expected to spend on health care in 2012, which is why they’re issuing refunds.
You could look at that as poor management, but you could just as easily view it as good luck, or better than expected health outcomes. The reality is that so many factors go into the pricing of health insurance plans and the payment for health care services, that it’s very difficult to place a ton of weight on the value of a rebate as it relates to the value of your insurance plan.
What we would encourage you to do, whether you receive a rebate or not, is consider whether or not your health insurance plan still meets your needs and budget. If the answer is no, shop around.