En español | The $1.1 billion in rebates that private health insurers are giving some 12.8 million Americans this summer may be a sweet, unexpected gift, but don't plunk money down on that shiny red Ferrari just yet.
The amount policyholders are likely to receive under provisions of the Affordable Care Act will average $151 — about one in six policyholders will get the rebate.
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First, here's why you may be getting the few extra dollars: The health care law generally requires insurance companies to spend at least 80 percent of premiums on actual medical care and no more than 20 percent on administrative costs. Companies that don't meet this 80/20 standard must give the difference back to their policyholders as a rebate.
So how do you know if you're due one? Insurers are required to send notices to all their policyholders, telling them whether they're owed anything. You can also go online to this government website to see whether your insurer met the standard and, if not, how much of a rebate it's paying out on average.
For example, Florida residents insured as part of a small group by Blue Cross and Blue Shield of Florida will receive, on average, a refund of $209, because the company's medical spending figure for that category was 77.3 percent. Illinois residents with large group coverage from Humana Health Plan will get no rebate, because that company had a figure of 87.2 percent for large group coverage.
If you're due money, there are three ways you could receive it:
- as a rebate check in the mail.
- as a lump-sum reimbursement to the credit card or debit card you used to pay your premiums.
- as a reduction in your future premiums.
In some cases, it will be employers who collect the rebate. They will be expected to pass on money to employees based on how much they contributed to premiums.
The rebate applies only to people who have commercial health insurance, which excludes people who are on Medicare or Medicaid. People whose employers pay their entire health insurance premiums are also not eligible.
All told, of about 80 million commercial policyholders, there will be no rebates for 67.1 million, government officials said.
The 80/20 rule (known formally as the medical loss ratio) was included in the 2010 health care law to keep premiums down for everyone and curb profiteering. "The 80/20 rule helps ensure consumers get fair value for their health care dollar," Health and Human Services Secretary Kathleen Sebelius said in a statement in June.
Industry groups have spoken out against the spending cap, saying the factors it considers have little to do with why medical costs take a bigger bite every year out of consumers' pocketbooks.
"The data are very clear that soaring medical costs — not health plans' administrative costs — are driving health care cost growth," says Robert Zirkelbach, a spokesman for the trade group America's Health Insurance Plans.
The nonprofit group Consumer Watchdog employs 14 people and pays 100 percent of their health care premiums. CEO Jamie Court says the group recently got a rebate of $4,000, a welcome gesture, though he says it pays nearly $250,000 a year in premiums.
"It's great to tell health insurance companies that they can only take 20 percent for profits and administrative expenses," he says. "But it's not going to do much because the premiums go up, so the 100 percent continues to grow and the 20 percent is meaningless.
"Without capping premiums or without the ability to say no to excessive premium rate hike proposals — and many states don't have that power — it's not good enough," Court says.
Carole Fleck is a senior editor at AARP Media.
Also of interest: Organize your important health information.
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