More People May Like Obamacare After They Get Their Rebate Check
Posted by Phil Ferguson on August 1st, 2012 – 1 Comment – Posted in Uncategorized$1 Billion in cash now on its way to the American public.
American health insurance companies are about to shower over $1 billion in rebates on policyholders — refunding premiums paid in 2011 that fail to meet the so-called 80/20 rule imposed by the health care reform law.
How cool is that?
Under that 80/20 rule, health insurers are required to use no more than 20% of premiums for overhead and profit, with at least 80% going to cover the cost of health care and quality improvements. For large group plans — those covering more than 50 employees — a more stringent standard applies. They must spend at least 85% of premiums on health care and improvements. To the extent a company misses the mark, it must rebate sufficient premiums to bring it into line.
This prevents super large insurance companies from collecting money and NOT using it on insurance.
Based on data for 2011, the federal government says insurers will rebate about $1.1 billion to 12.8 million Americans. The average rebate for households that get one will be about $151. The rebates are to be made by August 1.
$151 is not huge but if your budget it tight it is a nice little surprise and another reason for many to like The Patient Protection and Affordable Care Act (PPACA).
The GOP is put in the position of claiming that the big companies should be allowed to keep that extra 1.1 Billion. What do you think? Did you get a rebate check?
Some people, maybe a number of people, may not be getting checks.
Actually things are somewhat more complicated than what the news reports make it seem. First there are two spending levels, the 80/20 mentioned and an 85/15 level.
http://www.healthcare.gov/law/features/costs/value-for-premium/index.html
If your medical insurance is through your employer and you paid a partial premium, it is your employer who will receive the rebate. Under the Affordable Care Act, the employer has two options. An employer may issue a rebate to the employee based on the part of the premium the employee paid, or the employer may take the rebate and apply it to reduce next year’s premiums or if they use an ERISA (Employee Retirement Income Security Act) apply it benefits enhancements.
The calculation for the 85/15 or 80/20 rule is done on a state by state basis. I have already received letters from my former employer (retired) and its insurance carrier. The insurance carrier determined it paid 83.2% in my state. My former employer that since the rebate per employee will likely be quite small they will…apply this more flexible approach Medical Loss Ratio rebate we receive and offset 100% preventive care coverage and “Your Health First” disease management in 2013.
I.E. I won’t be getting a check, which for my case I estimated it would be a little over $10.
George