Part of the Affordable Care Act includes something called the medical loss ratio. Health insurance companies who fail to meet the requirements of the ratio have to issue rebates to their customers. Those rebates are supposed to go out in August of this year. Here are things you should know about the health insurance rebates.
The medical loss ratio is a portion of the Affordable Care Act that went into affect in 2011. It was created to prevent health insurance companies from spending the majority of the money that their customers paid in premiums on things like employee salaries, advertisement, and other administrative costs.
The medical loss ratio requires health insurance companies to spend at least 80% of the money that they get from premiums on things that will improve the health of their customers. This would include things like medical bills that health care providers send to the insurance company, coverage of smoking cessation programs, and other things that a person could reasonably assume would result in the improvement of a person’s health.
The remaining 20% is what insurers can use for profit and to cover administrative costs. Insurers who fail to meet the 80% requirement have to give their customers a rebate. The rebate could be in the form of a check. It can be in the form of a reduction in a person’s health insurance premium. It could be in the form of a lump-sum payment to the credit card that a person was using to pay his or her premiums. Rebates given to employer-sponsored plans will go to the employer, (who may or may not opt to pass them on to the workers).
Consumers and businesses will receive around $1.3 billion in rebates this August. Keep in mind, though, that the Supreme Court is expected to make its decisions about the Affordable Care Act in late June. There is potential that the Court’s decisions could result in making these rebates, and any potential future rebates, disappear.
The amount of the rebate that a person, or business, will receive varies by state. It also will vary based upon the type of plan, and the company the plan came from. The amount of your rebate could be anywhere between less than $1 to over $500.
If your health insurance is coming from your employer, and your employer is “self-insured”, then you will not be getting a rebate. The medical loss ratio rule does not apply to “self-insured” plans.
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