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).
Published June 21, 2012
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.
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 $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.
The refunds are to be mailed by Aug. 1, officials said.
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.
“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.
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.
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 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.”