Get free help preparing your taxes from AARP Foundation Tax-Aide. Find a location


AARP Staying Sharp: Keep Your Brain Healthy
Celebrate Black Life, History, and Culture!
Bob Dylan Talks!


Military and Veterans Discount


Rewards for Good Sweepstakes


Introducing RealPad by AARP


AARP Auto Buying Program


Piggy bank on the road - AARP Driver Safety

Take the new AARP Smart Driver Course!

Download the ipad App



AARP Games - Play Now!

LEARNING centers

Get smart strategies for managing health conditions.


Heart Disease


Most Popular


share your Thoughts

What does the health care law mean to you? Your story is important. We read and learn from every story and it helps us in our educational efforts. We may even use your comments (with permission) to brief legislators, inspire readers and more. Please share your story with us. Do

Health Insurance Rebates Average $151

Firms with high administrative costs are sending money back to policyholders

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.

Health Law Answers - Get your customized report about how the law works for you and your family.

Health Insurance Rebate Check - Close-up of man's hand removing letters from letter box

Will you be receiving a check in the mail from your health insurer? — Photo by Tetra images/Getty Images

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.

Topic Alerts

You can get weekly email alerts on the topics below. Just click “Follow.”

Manage Alerts


Please wait...

progress bar, please wait

Tell Us WhatYou Think

Please leave your comment below.

Discounts & Benefits

From companies that meet the high standards of service and quality set by AARP.

Walgreens 1 discount membership aarp

Members get exclusive points offers from Walgreens, Duane Reade and

Grandson (8-9) whispering to grandfather, close-up

Members can save 20% on hearing aids with the AARP® Hearing Care Program provided by HearUSA.

AARP membership discount Man trying on eyeglasses at optometrists smiling

Members save up to 60% on eye exams and 30% on glasses at LensCrafters.

Member Benefits

Join or renew today! AARP members receive exclusive member benefits & affect social change.

Rewards for Good

Your Points Balance:

Learn More

Earn points for completing free online activities designed to enrich your life.

Find more ways to earn points

Redeem your points to save on merchandise, travel, and more.

Find more ways to redeem points