Consumers to Receive $1.1 Billion of Premium Rebates from Health Insurers under Affordable Care Act, HHS Announces

Consumers to Receive $1.1 Billion of Insurance Premium Rebates from Insurers under Affordable Care ActThe U.S. Department of Health & Human Services (HHS) announced yesterday that due to the Affordable Care Act (which some call “Obamacare”), 12.8 million Americans will receive rebates from insurance companies this Summer, totaling $1.1 Billion.

The insurance companies must pay the premium rebates to consumers because the insurers have violated the Affordable Care Act’s “80/20 Rule” (officially called the Medical Loss Ratio (MLR) standard). Under this standard of the Affordable Care Act, insurance companies for the first time are required actually to spend at least 80 percent of consumers’ premium dollars on medical care and quality improvement, rather than on administrative costs, salaries, advertising, or profits for the insurance companies.

Insurance companies that do not meet the 80/20 standard must pay their policyholders a rebate for the difference no later than August 1, 2012.

Beginning this year, the Affordable Care Act requires insurers to notify customers how much of their premiums have been actually spent on medical care and quality improvement.

“For the first time, all of this information will be publicly posted on HealthCare.gov this summer, allowing consumers to learn what value they are getting for their premium dollars in their health plan,” HHS said in a news release it issued yesterday.

“The 80/20 rule helps ensure consumers get fair value for their health care dollar,” Secretary of Health & Human Services Kathleen Sebelius said in the HHS news release.

The $1.1 Billion of rebates owed by the insurance companies to consumers on August 1, 2012 will average about $151 for each family covered by a policy.

The rebates will be paid to consumers in one of the following ways:

  • a rebate check in the mail;
  • a lump-sum reimbursement to the same account that they used to pay the premium if by credit card or debit card;
  • a reduction in their future premiums; or
  • their employer providing one of the above, or applying the rebate in a manner that benefits its employees.

In addition to the rebates, “For many consumers, the 80/20 rule motivated their plans to lower prices or improve their coverage to meet the standard. This is one of the ways the 80/20 rule is bringing value to consumers for their health care dollars,” HHS said in its news release.

Following is the news release issued by HHS on June 21, 2012, in its entirety:

Department of Health & Human Services
Centers for Medicare & Medicaid Services
Room 352-G
200 Independence Avenue, SW
Washington, DC  20201

FOR IMMEDIATE RELEASE                                     Contact: CMS Media Relations

June 21, 2012                                                                     (202) 690-6145

Health care law saves consumers over $1 billion

Health care law provides rebates to 12.8 million consumers

Today, Health and Human Services (HHS) Secretary Kathleen Sebelius announced that 12.8 million Americans will benefit from $1.1 billion in rebates from insurance companies this summer, because of the Affordable Care Act’s 80/20 rule.  These rebates will be an average of $151 for each family covered by a policy.

The health care law generally requires insurance companies to spend at least 80 percent of consumers’ premium dollars on medical care and quality improvement. Insurers can spend the remaining 20 percent on administrative costs, such as salaries, sales, and advertising. Beginning this year, insurers must notify customers how much of their premiums have been actually spent on medical care and quality improvement.

Insurance companies that do not meet the 80/20 standard must provide their policyholders a rebate for the difference no later than August 1, 2012.  The 80/20 rule is also known as the Medical Loss Ratio (MLR) standard.

“The 80/20 rule helps ensure consumers get fair value for their health care dollar,” Secretary Sebelius said.

Consumers owed a rebate will see their value reflected in one of the following ways:

  • a rebate check in the mail;
  • a lump-sum reimbursement to the same account that they used to pay the premium if by credit card or debit card;
  • a reduction in their future premiums; or
  • their employer providing one of the above, or applying the rebate in a manner that benefits its employees.

Insurance companies that do not meet the 80/20 standard will send their policyholders a rebate for the difference no later than August 1, 2012. Consumers in every State will also receive a notice from their insurance company informing them of the 80/20 rule, whether their company met the standard, and, if not, how much of difference between what the insurer did or did not spend  on medical care and quality improvement will be returned to them.

For the first time, all of this information will be publicly posted on HealthCare.gov this summer, allowing consumers to learn what value they are getting for their premium dollars in their health plan.

For many consumers, the 80/20 rule motivated their plans to lower prices or improve their coverage to meet the standard.  This is one of the ways the 80/20 rule is bringing value to consumers for their health care dollars.

For a detailed breakdown of these rebates by State and by market, please visit:

http://www.healthcare.gov/law/resources/reports/mlr-rebates06212012a.html

For the text of these proposed notifications, please visit: http://cciio.cms.gov/resources/other/index.html#mlr

For more information on the MLR provision in the Affordable Care Act: http://www.healthcare.gov/news/factsheets/2010/11/medical-loss-ratio.html

For more information on how the Affordable Care Act is creating a transparent market for health insurance, visit:

http://www.healthcare.gov/news/factsheets/2010/12/increasing-transparency.html

If you have questions about Medicare activities, please visit Medicare.gov or http://www.cms.gov/, or visit our Frequently Asked Questions or you may also Search the Medicare.gov Site. These features are designed to assist you in obtaining the information you are seeking.

More Information

See related HelpingYouCare™ reports on:

15.8 Million Americans to Receive $1.3 Billion in Rebates from Insurers Due to Affordable Care Act, HHS Announces

White House Issues New Report on Benefits of Affordable Care Act & Debunks Myths About It

More States to Implement Health Care Law, HHS Announces

HHS Announces $728 Million of Funding for Community Health Centers Under Obama’s Health Care Law

HHS Announces 3 New Home & Community-Based Care Options under Affordable Care Act

HHS Announces New Administration on Community Living to Help Seniors & Disabled Live At Home

New Reports Highlight Harm to Women if Supreme Court Strikes Down Health Care Law

HHS Notes Successes of Affordable Care Act (Obamacare) on its 2-Year Anniversary

For more news and information on the Affordable Care Act and health care reform, see the HelpingYouCare™ resource pages on VoicesForCare™, including:

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