Health insurer rebates to top $1 billion

From Benefitspro.com.  For the full article click here.

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April 26, 2012 •

Experts are gathering more evidence that health insurer rebates this year will top $1 billion. Consumers and businesses can expect to receive notices of their rebates by August.

Rebates are required by new rules governing the medical loss ratio (MLR) for health insurers. Under this health reform policy, health insurers offering coverage to individuals and small businesses must spend at least 80 percent of their premium income on claims and quality improvement activities, and 20 percent or less must be reserved for administrative expenses. The MLR threshold is higher for large group plans, which have to spend at least 85 percent of premium income on claims and quality improvement.

Insurers that don’t meet these standards are required to issue rebates to their customers.

According to a new report from The Kaiser Family Foundation, preliminary estimates project that insurers will have to return $1.3 billion to customers this year, including $426 million in the individual market, $377 million in the small group market, and $541 million in the large group market.