This past month, you may have received an unexpected check
in the mail. This check – a rebate
from your health insurance company – is a direct result of the health reform
law, the Affordable Care Act.
Before health reform, over 20% of consumers who purchased
coverage in the individual market were in plans that spent more than 30 cents
of every premium dollar on administrative costs. Health insurers could spend as much money of your premium as they wanted on
what they wanted. Now they must be accountable.
Depending on the size of the insurance plan, insurers must
spend at least eighty or eighty-five percent of your premium on health care and
activities that improve your health, not on administrative expenses or profits.
This is known as the medical loss ratio rule (MLR) rule. If your insurer doesn’t
meet those standards, it must send you--or your employer if you have
employer-based insurance--a rebate check.
Even if the check goes to the employer, it will ultimately
benefit you, for example through a lump-sum reimbursement or reduction in
future premiums. It can be complicated,
but the good thing is most of the money you pay for health insurance will be
used for health care or improving the quality of health care, rather than
administrative costs and profits.
Between January 1 and August 1, nearly 12.8 million
Americans were provided with more than $1.1 billion in rebates this year due to
this MLR rule. The largest rebates
have been given to consumers in Texas ($167 million) and Florida ($124
million). The average rebate per family in the U.S. is $151. The average rebate per family in Illinois is about $380. Nearly 230,000 Illinoisans will receive
$62 million in rebates; about $380 per family.
