12.8 Million Americans To Get Health Insurance Rebates

Good news for 12.8 million Americans — insurers will start doling out $1.1 billion in rebates to reimburse consumers for spending too much of premiums on overhead, instead of mostly on medical care.

Today the Department of Health and Human Services announced the final refund amounts that health insurers will have to hand over, with the average family receiving $151 back as a result of the Affordable Care Act.

The act requires health insurers to spend on average at least 80% of premiums on actual medical care, instead of overhead and profits. Rebates will vary in size and depend on how you get your coverage: whether you buy it on your own or for your family, get it through a small business (50 or fewer employees), or through a large employer with more than 50 employees.

Final numbers are still pending release later this summer but refunds are due by Aug. 1.

“This is exciting news for families struggling with rising health insurance costs” said DeAnn Friedholm, Director of health reform at Consumers Union, the policy and advocacy division of Consumer Reports. “Because of the health reform law, consumers now are actually getting money back from insurance companies who spent too much money on overhead.”

Check out a map produced by Consumers Union listing companies that anticipate owing rebates based on earlier estimates reported by insurers.

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  1. Loias supports harsher punishments against corporations says:

    Hey Nigerian Prince, let us know how much you got back. I’m curious!

    • MattO says:

      $25. company greater than 30k employees…I would guestimate the average monthly premium for employees portion is around $150 or so.

    • Nigerian prince looking for business partner says:

      Unfortunately, it doesn’t look like I’ll be getting anything — My insurer (Highmark) isn’t listed.

      Though, my previous insurer is, so hopefully we’ll be getting a check. We paid them over $12,000 in premiums last year.

      • CTrees says:

        Ditto – insurer not listed. However, I’ve only been paying anything for medical insurance starting after I got married (my employer covers 100% of premiums for single employees), so I couldn’t really complain anyway.

      • One-Eyed Jack says:

        Boo, we have Highmark, too. But does that mean they’re managing my (the company’s) money better than the other guys?

  2. pms says:

    Bet this will be considered taxable income.

    • RvLeshrac says:

      Refunds and rebates from private companies are usually not considered taxable.

      • frank64 says:

        Except if the premium was bought tax free at work, or otherwise deducted, then technically it would be taxable.

        • Nigerian prince looking for business partner says:

          That is a good point. If it was pre-tax when originally paid, it seems like a rebate would make it taxable.

          I’ve run into similar issues with my HSA. When my wife was pregnant, we put down a $5,000 deposit to cover pre-natal care and delivery. Because of how things came together, the actual cost was around $4,000 and we wound up with a $1,000 refund.

          We couldn’t figure out any way of declaring this income and kept our mouths shut.

          The same thing happens with providers who are insistent that HDHP customers pre-pay for services and then refund the difference between billed rates and contract rates.

    • JJFIII says:

      It was already taxed. You are taxed on the the value of your paycheck. There is no tax free on the benefits. In fact, if you have benefits for a domestic partner, those are actually taxed as well.

      • frank64 says:

        Did you read what I posted two spaces down about an hour before you posted? Most ways people pay for insurance are not taxed on that money. The tax was on their income is figured AFTER they pay for the insurance. Most did not pay tax on the money when they earned it. When a rich person does it, it is a loophole, when we do it is for the public good. (;

  3. eirrom says:

    I blame Obama for this.

    • HomerSimpson says:

      Everybody needs to call the Supreme Court ASAP and put a stop to this injustice!

      • Sudonum says:

        Don’t worry, the ruling will come Monday and if they wipe out the whole law there will be no checks issued.

    • frank64 says:

      My premium was about $6,000 for the up $800 from the previous year and I had $30 co-pays, a $15 increase. The $150 is negligible. Also added taxes for tanning, and last I knew medical equipment manufacturers.

      This rebate really means nothing one way or the other in how health care reform is going.

    • pythonspam says:

      I also blame Obama for making gas prices decline towards $3 per gallon. If it is his fault for it costing so much, it must be his fault for making it cost less, too.

  4. Blueskylaw says:

    I’m assuming this is only for people who were actually able to afford insurance last year. But don’t worry, insurance companies will raise rates due to “governmental actions” to bring the threshhold of profits up to a more proper level.

    • MattO says:

      The idea of the refunds, under the new Affordable Care Act, is actually limiting the insurance companie’s profits. Everyone is so quick to blame the insurance company, and I agree they are not blameless, but it isnt “all going to line their coffers”.

      The new MBR (medical benefit ratio) requirement is 80% i believe – that was an item up for contention, so it may have been lowered…cant remember…but what that means is, literally 80 cents on each dollar that comes in goes right back out to medical claims. This gives the insurance companies 20 cents on the dollar to handle all processing of the claims, and all administrative expenses. You have to think about it from the perspective of other companies – insurance companies make someting like 5% profit margin. Microsoft is at 12%, apple is in the 20’s…

      I know this is going to fall on deaf ears – and I am not trying to completely stand up for the insurance companies, because again, they have a lot of issues, but it is foolish to think they keep raising rates just to make more money – that is part of it, but the majority of it, is that an MRI that was $500 last year, is now $600…they need to raise your rate to cover that stuff.

      • Blueskylaw says:

        I would rather make 5% on 100 billion dollars in sales than 20% on ten billion dollars in sales.

        • Bsamm09 says:

          Really? I would rather invest/run/work for a company that only takes $5 to make $1 than $20 to make $1. Granted net income doesn’t tell nearly the whole story about a company, but from the limited info, one company is way more efficient and could deal with input increases better than the other. 5% is a slim margin.

          • Blueskylaw says:

            Corn that you buy from the grocery store is typically priced at a 100% profit. Does that mean you want to go into the corn selling business just because of high profit margins?

      • Nigerian prince looking for business partner says:

        The biggest issue I’ve read about with MLR requirements is that overhead doesn’t always scale proportionately between plans with varying deductibles. Essentially, a plan with a very high deductible is more likely to fail the requirement because there’s a certain baseline, minimum overhead for all policies sold.

        My current policy costs about $400/month. By law, that means Highmark can charge $80 for overhead and $320 towards paying out claims each month.

        My previous policy cost about $1,000/month. By law, that means $200 for overhead and $800 towards paying claims.

        In practice, the cost of administering each plan is relatively flat between policies, which can turn into a huge disincentive for offering plans with low premiums and high deductibles. That, coupled with new comprehensive requirements for 2014 will be pushing people into significantly more expensive PPOs.

        • MattO says:

          it isnt exactly like you are saying though – it sets a LIMIT. It says “no MORE than 20% you get to keep”.

          Furthermore, if they DO take more, they ahve to reimburse you – which costs more overhead.

          The sad part of this, is I believe the act only refers to fully insured employers, not self insured – most large companies are self insured – they choose everything, and the insurance company takes their cut of everything for administering the plan – the the employer is insuring themselves….I dont believe they have to follow this rule – they just keep that extra money in the bucket, just in case the following year is worse than expected.

          • Nigerian prince looking for business partner says:

            My point is that there is a minimum amount that it costs insurers to maintain a policy, whether someone has a Cadillac PPO or a bare-bones HDHP.

            Essentially, if this flat amount is at least $80/month that essentially means an insurer can never charge less than $400/month for a policy, whether the deductible was $10,000 or $20,000 because it wouldn’t meet the MLR requirement. It turns into a disincentive against HDHPs.

            I’m trying to dig up an article from KFF that explains it better than I am.

      • frank64 says:

        Doesn’t this give the insurance companies an incentive to pay more for services, if that allows them to bill more?

        They could make more money by NOT negotiating lower hospital rates, agreeing to more billable tests and in general not holding back bills? I do know that insurance companies in the past have fought hospitals hard on billing, there have been some battles akin to the cable and network fights with insurance companies threatening to dump hospitals.

        Hopefully that has been dealt with, or I am wrong. Anyone know?

        • Nigerian prince looking for business partner says:

          That is definitely a concern but I imagine it would come down to how much competition your state has.

    • Bsamm09 says:

      You got it. It’s all in their 10-K reports. From United Health Group -

      “The annual insurance industry assessment ($8 billion levied on the insurance industry in 2014 with increasing annual amounts thereafter), which is not deductible for income tax purposes, will increase our operating costs. Premium increases will be necessary to offset the impact these and other provisions will have on our medical and operating costs.”

      http://www.unitedhealthgroup.com/invest/2011/UNH-2011-10-K.pdf

  5. jaydub says:

    Every loves free money.

    It’s interesting that the Gov’t says that 20% profits/overhead are good, but 21% isn’t.

    When will they decide that the amount *you* make is too much?

    Not (really) a conspiratorialist, but you can see the slippery-slope issue.

    When you get your “rebate” check, consider the cost, and what cashing it means….

    • Blueskylaw says:

      If they have to come up with a number then 20% seems reasonable. If they didn’t specify a number then 90% of premiums would be spent on salary and executive bonuses with only 10% going to actual medical care.

    • Applekid ┬──┬ ノ( ã‚œ-゜ノ) says:

      The problem with arguing based on “slippery slope” is that no one is talking about that end of the slope. We’re talking about health care. What people need to, well, not die. Or at least not die in cases when proper medical care can save them.

      I’m pretty sure no one is ever going to argue the guy who owns the plastic novelty poop factory can’t make more than 20% profit.

  6. HogwartsProfessor says:

    Hmm, UnitedHealthcare is in my state, but I wasn’t on it that long before I was laid off. Maybe I’ll get a couple of bucks back. Anything would be helpful considering my savings are getting smaller by the second.

  7. crispyduck13 says:

    Damn, I get nothing.

  8. yellowdog says:

    Well, a refund’s a refund. A drop in the bucket beats no drop at all, barely. I’ll take whatever they send me and set it aside for the next time I need to cough up hundreds on co-pays and deductibles.

  9. Rick Sphinx says:

    Yea, that equals a $1 refund for me, do I have to claim that on my taxes!

  10. jrwn says:

    Exciting news? It’s only $181. Are we going to get the car dealships advertising how they will double this, just like they do for taxes?

    Couldn’t they just force insurance companies to do away with something like co-pays instead. That would make me excited.

    • Nigerian prince looking for business partner says:

      I don’t think you’d want to pay the premiums on a policy with no co-pays or deductibles.

    • frank64 says:

      Co-pays are a way to retrain over use of healthcare, also they are most certainly average out to more. Besides many companies did are not having to pay out.

  11. Misha says:

    Dang it. Anthem is on the list in Indiana, which is yay, but only for the Small Employer Market, not for Large Employer or Individual Market, which is not as yay.

  12. sir_eccles says:

    Going by past experience of rebates it looks like I’m going to have to cut off one ear and mail it in with the original receipt before the deadline of Tuesday a week ago.

  13. frank64 says:

    Doesn’t this kind of prove that the insurance companies were scapegoats? Most here have agreed that 20% seems fair, and many insurance companies aren’t needing to pay. Those that are paying are paying a relatively insignificant amount. This means that all the neg talk of insurance companies was misguided.

    I am not actually saying they are blameless. I think the whole insurance/employer/federal system has hid us from price increases, allowing the whole medical industry to raise rates with impunity. When we as the consumers don’t aren’t motivated to ask how much a test is, or how much a doctor really charges, there is no incentive to keep prices down. As far as insurance companies go, up until recently they could just accept the increases and pass them on to our employer.

  14. dwtomek says:

    $143? All problems with the health system are now fixed. I mean, cutting $143 off of my annual bill of $13,860 has made it so affordable! I’m gunna be rolling in cash now.

  15. consumerd says:

    none of mine were listed… Blue Cross Blue Shield, IL.

  16. iblamehistory says:

    I wonder what this means for those of us who were forced to buy plans through, say, United, while enrolled in grad school. Answer: probably nothing.

    Granted, we could have bought from anywhere, we just had to either buy their insurance or show proof of other insurance. Which I never understood. If I get sick and miss a ton of school, it affects the school none, as they already have my tuition money.

  17. AllanG54 says:

    I got mine few months back. MONTHLY premium was $1028 last year (now $1212). I got back a whopping $56.

  18. drtrmiller says:

    I’m a healthy 20-something, and my individual premium for my BCBS policy increased over 28% year over year. I was told it was an “across-the-board” increase.

    Lies.

    There’s no way that people are using 28% more health insurance or costs have gone up that much in just one year.

    It’s a welcome respite knowing that the government cares enough to legislate that companies spend a certain percentage of their premiums on care and not overhead and profits, but shouldn’t that number be more like 90% as opposed to 80%?

  19. CarlS says:

    It’s so frustrating to read this crap and think “insurance prices would not have been so high in the first place if the government had not gotten involved.” Bureacratic bungling and greedy grasping by congress and the executive branch, along with criminal mangling of law by the courts is what caused the problem in the first place. Yet now we’re supposed to accept the fixes they provide? Where in the hell did the governm,ent get any truly lawful authority to interfere with private business and consumers in the first place? It for sure is not in the Constitution. Those laws passed by Congress? The Constitution cannot be changed by Congress passing “laws”. The only valid way to make changes is via Amendment. Which menas that all the “legal lawyering” by government is criminal.

  20. MarineCorps says:

    I only got $4.82 from havard pilgrim :(