Healthcare Law Provides Rebates, Saves Consumers Over $1 Billion
Earlier 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, also known as the Medical Loss Ratio (MLR) standard. These rebates will be an average of $151 for each family covered by a policy.
The healthcare 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 Aug. 1, 2012.
"The 80/20 rule helps ensure consumers get fair value for their health care dollar," Secretary Sebelius said in a HHS release.
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.
According to HHS, 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.