Yesterday, 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. Nebraskans are expected to receive $4.8 million in rebates. More than 46,000 people will get a rebate, with an average of $215 per family.
These rebates come from a provision in the Affordable Care Act. This rule, also known as the “Medical Loss Ratio,” requires that insurance companies spend 80% of consumers’ premium dollars on medical claims. Until the ACA was passed, there was no requirement that insurance companies spend premiums on medical claims, nor were they required to disclose how much money they spent on administrative costs or advertising.
But under the new law, insurance companies are required to rebate consumers by August 1 if they don’t spend 80% of premium dollars on medical claims. Consumers will receive a letter from their insurance companies, informing them of the law, and will get notified every time their insurance company misses the mark. Companies can pay out the rebates by sending a check, crediting consumers’ accounts if the premium was paid by credit or debit card, reducing future premiums, or having the employer use one of the above methods, or applying the rebate in a manner that benefits employees.
And that’s good news for consumers.