If you sponsor a health plan, and you’re not self-insured, you could be getting a nice fat check from your insurance carrier this August.
Beginning in the 2011 calendar year, the healthcare reform law has required insurers spend at least 80 cents of each premium dollar they take in over the course of a year — 85 cents for plans in the large group market — on medical care and healthcare quality improvement.
If they spent less than that, they have to pay the amount back to policy holders — either by issuing them checks or by reducing future insurance premiums.
As a result, insurers are expected to refund between $1.2 billion and $1.3 billion dollars in profits this August, according to two research groups.
This is the first time insurers have to issue rebates due to the healthcare reform law rule, most commonly referred to as the medical loss ratio requirement.
The rule does not apply to employers with self-funded plans, even if they use stop-loss coverage. Mini-med plans were also excluded, at least until 2014.
The Kaiser Family Foundation estimates individuals and plan sponsors will receive $1.3 billion in refunds.
Goldman Sachs analyst Matthew Borsch estimated the total rebates will be around $1.2 billion.
Both analyses were based on estimates that insurers filed with state regulators.
Who gets what?
According to Kaiser, around $426 million will go to people who bought their own health plans, $541 million will go to large employers and $377 million to small businesses.
About 31% individual policy holders are expected to get rebates — with the average being $127.
In the small group market, about 28% of plan participants will get a rebate — with the average being $76.
In the large group market, approximately 19% of participants can expect a refund of around $72 on average.
Consumers and businesses in Texas and Florida will see the largest rebates, with $186 million and $149 million expected to be dished out to the states respectively.
Hawaii is the only state not expected to receive any rebates.
According to Borsch’s analysis, the companies expected to refund the most money include:
- UnitedHealth Group — $307 million
- Blue Cross Blue Shield — $250
- Aetna — $177 million
- WellPoint $94 million
- Coventry Health Care — $50 million