Families stand to benefit from health insurer rebates this summer

Within the next 40 days, families will get some much needed financial relief from their health insurers and experience yet another tangible result of the Affordable Care Act. By August 1st, insurance companies will provide a rebate to policyholders which averages $151 for each family covered by a policy. According to the U.S. Department of Health and Human Services, the states with average rebates above $500 per family are: Vermont ($807), Oregon ($777) and Indiana ($503) in the large group market; Georgia ($811), Ohio ($783), New York ($632), Alaska ($622), and Illinois ($551) in the small group market; and Mississippi ($651) and Alabama ($582) in the individual market.

HHS claims that 12.8 million Americans will benefit from $1.1 billion in rebates, because of the Affordable Care Act’s “80/20 rule.” Under the health reform law, insurance companies are required to spend at least 80 percent of consumers’ premium dollars on medical care and quality of service. Insurers can spend the remaining 20 percent on administrative costs, such as salaries, sales, and advertising.

Beginning this year, insurers must notify customers how much of their premiums have been actually spent on medical care and quality improvement, and if the insurer does not meet the 80/20 rule, it must provide policyholders with a rebate for the difference by August 1, 2012. HHS provided a detailed breakdown of these rebates by State and by market.

According to HHS, consumers owed a rebate will see their value reflected in one of the following ways:

• a rebate check in the mail;
• a lump-sum reimbursement to the same account that they used to pay the premium if by credit card or debit card;
• a reduction in their future premiums; or
• their employer providing one of the above, or applying the rebate in a manner that benefits its employees.

Voices applauds these and other health reforms benefitting children and their families, providing them with more affordable health coverage and making access to quality care more easily achieved. We believe it is imperative for both state and federal officials to continue moving forward with full implementation of the health reform law.