Obamacare delivers for South Carolina citizens and businesses once again

One important part of Obamacare passed in 2010 was a thing called the medical loss ratio.  Essentially it says that if at least 80% of the health insurance premiums collected by an insurance company do not go to paying for medical services then the policyholder is due a refund. 

As the story below indicates, South Carolinians can expect $19.6 million in premium refunds from their health inurance company.  Thanks to SCBIZNews.com for reporting this story. It appears that no one else did (except for me on my radio show yesterday).

But don’t be looking for your refund on overpayments of premiums if the National Federation of Independent Business succeeds in having the Supreme Court declare all of the healthcare reform bill unconstitutional.  If that happens next week, the insurance companies will just keep your money.

$19.6M in health insurance refunds due to S.C. consumers

The bulk of the refunds, about $15.3 million, will be going to 105,043 individual policyholders for an average of $227, the federal Department of Health and Human Services said. Another $4.3 million will go to small businesses that have group health plans.

By Chuck Crumbo
Published June 21, 2012

About $19.6 million worth of refunds on health insurance premiums will be paid to S.C. individual policyholders and companies that provide the benefit, the federal Department of Health and Human Servicesannounced today.

The refunds are being issued to meet the spending threshold established by the health care law, the agency said. Called the medical loss ratio, the threshold requires health insurers to spend at least 80% of premium dollars collected from individual policyholders and small businesses of two to 50 employees on health care, rather than business expenses. Carriers who write policies for large employers — those with 51 or more workers — must spend 85% of premiums on health care. In all cases, the insurance companies will be required to refund consumers.

In South Carolina, refunds will total $19,630,152 and will benefit 251,632 consumers, according to the agency. The average refund will be $131.

The bulk of the refunds, about $15.3 million, will be going to 105,043 individual policyholders for an average of $227, the agency said.

Another $4.3 million will be refunded to small businesses that have group health plans. The average refund for the group, which totals 145,401 employees, is $53.

Another $54,594 will go to large employers, the agency said. The group has 1,188 enrollees and the average refund will be $85, the agency said.

Fewer companies are in the large group market because most large employers are self-insured.

The refunds are to be mailed by Aug. 1, officials said.

An executive of BlueCross BlueShield of South Carolina, which has about 45% of the state’s share of health policies — individual and group — did not offer an overall total of refunds for consumers, but said refunds would average about $200.

Actual refund amounts will depend on terms of the plans and the length of time someone has been enrolled in the plan, said Jim Deyling, president of BlueCross BlueShield of South Carolina.

Humana, which is ranked among the state’s top five health insurance carriers, did not have a dollar amount on its rebates.

“I can tell you the company is preparing to issue rebates to policyholders (generally employer groups or members enrolled in individual Humana medical plans), where appropriate, by the Aug. 1 deadline,” said spokeswoman Nancy Hanewinckel.

For those enrolled in group plans, the refunds will be sent to the employer, Deyling said. It will be up to the employer to decide what to do with the money.

BlueCross BlueShield of S.C. serves about 10,000 firms in the small group market that will be eligible for the refund. None of the company’s large group clients will receive a refund because their medical costs exceeded 80% of premiums collected.

BlueCross BlueShield of S.C. has about 60,000 individual policyholders, he added.

According to the federal agency, the employer can:

  • Send a check for the full amount to the employee.
  • Provide a lump-sum reimbursement to the same account that was used to pay the premium if it was paid by credit or debit card.
  • Offer a direct reduction in future premiums.

Before people run out and spend their rebates, Deyling said the issue could be moot if the U.S. Supreme Court throws out the health care law.

“If the federal law is struck down in total it’s as if the law didn’t exist,” Deyling said, noting that the court is expected to rule soon on the law. BlueCross BlueShield of S.C. then would have to decide what to do with the refund money.

“If they strike down the law then the rebates are null and void,” Deyling said. “What we are planning on doing is to take hard look at what we would do with regards to rebate. We could take the rebates and decide to reinvest them. Eventually, what’s going to drive our thinking on what action we can take is what’s in the best interest of all of our customers.”

For now, the company is “operating under the assumption that the law stays in place,” Deyling said.

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