Consumers and businesses will receive an estimated $1.3 billion later this year in rebates from health insurance companies, according to an analysis by the Kaiser Family Foundation.
The rebates are from insurers that spent more on administrative expenses and profits in 2011 than allowed under the Patient Protection and Affordable Care Act. The federal health care reform law requires large group health insurance plans to spend at least 85 percent of premium dollars on patient care and quality improvement. Small group and individual health plans must spend at least 80 percent in those areas. The spending requirement, known as the medical loss ratio, went into effect last year. Health insurers that don't meet the spending requirements must issue rebates to those who purchased coverage.
According to Kaiser's analysis, those who will receive rebates include:
- 19 percent of large employers, totaling $541 million.
- 28 percent of small employers, totaling $377 million.
- 31 percent of consumers who purchased individual policies, totaling $426 million.
The average rebate for individual consumers will vary from nothing in a few states to a few hundred dollars in others, Kaiser said. The foundation projected the nationwide average rebate for individuals will be $127.
Health insurance companies will issue the rebates by August of this year.
Kaiser based its analysis on filings by insurance companies to the National Association of Insurance Commissioners in the 2011 Supplemental Health Care Exhibit. Actual rebates will be based on reports insurers submit to the federal government later this year.