US Health Insurers to Pay $1.1 Billion In Rebates – HHS
Excerpt from Reuters article by David Morgan before Supreme Court upheld 2010 Patient Protection and Affordable Care Act, June 28, 2012
U.S. health insurance companies are due to pay out $1.1 billion in rebates to employers and individuals this summer, under a new industry regulation imposed by President Barack Obama’s health care law.
Rebates are due by August 1 and would be paid out by health insurance plans that cover 12.8 million beneficiaries in the individual and group markets.
HHS office could not fully estimate how many of those beneficiaries would receive an actual check from their insurers and they could not identify specific insurers that would be required to provide rebates.
Just over $700 million in rebates, or nearly two-thirds of the $1.1 billion total, will be paid by insurance plans in the group markets for small and large employers. The remaining one-third comes from insurers in the individual market.
The rebates stem from a provision of the healthcare law that requires insurers to spend at least 80% of premiums on medical care or quality improvements, rather than advertising and administrative costs, salaries or bonuses. Insurers that devote less to actual heathcare services must pay customers the difference.
About 4.1 million people who are covered by individual insurance plans would receive a direct rebate, which HHS said would average $152 per family.
But the remaining 8.7 million beneficiaries are covered through the small and large employer markets and would receive only a portion of the rebate value depending on their share of premium costs. Officials said employers may choose to pass along the value of the rebate due their employees in forms other than cash, such as lower premiums or added benefits.
Insurance plans covering 67 million beneficiaries met the standard this year, HHS said.