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Why Your Health Insurer Can Send A Big Check Soon

Consumers can expect about $ 1 billion in health insurance repayments this fall, according to a newly released data analysis by the Kaiser Family Fou

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Consumers can expect about $ 1 billion in health insurance repayments this fall, according to a newly released data analysis by the Kaiser Family Foundation.

Such rebate payments are the result of a provision in the Affordable Care Act of 2010 that requires private insurance companies to spend a large percentage of premium money on patient care.

Policyholders who are eligible for discounts can expect a payment of approximately:

  • $ 141 if they bought an ACA plan on the individual market
  • $ 155 if their coverage is through the small group market
  • $ 78 if their coverage is by the large group market

Although $ 1 billion sounds like a lot, it is sharply lower than the $ 2 billion that health insurers had to pay out in 2021. The rebate totals are calculated using three previous years of insurer activity.

According to KFF:

“This year’s total is about half of last year’s $ 2 billion, partly because 2021 was a less profitable year and because the 3-year window no longer includes 2018, when individual market insurers overpriced their ACA market plans due to uncertainty caused by the recall and replacement debate and other ACA policies. ”

Health insurance companies have to pay rebates if they do not comply with the medical loss ratio established under the ACA. This ratio requires insurers to spend at least 80% – or 85% for large group plans – of health insurance premiums on health care claims or efforts to improve quality.

KFF expects the $ 1 billion in rebates to be split roughly as follows:

  • $ 603 million to 4.3 million people, of whom a large percentage bought coverage through ACA marketplaces
  • $ 275 million to 1.8 million people from small group insurers
  • $ 168 million to 2.2 million people from large group of insurers

KFF notes that this year’s discount numbers are projections. They are based on preliminary data reported by insurers to the National Association of Insurance Commissioners and compiled by Mark Farrah Associates. Final numbers will arrive in the fall.

In a press release, Drew Altman, KFF president and CEO, says:

“The ACA has never done much to reduce the rate of increase in national health spending, but it has done much to make health care more affordable for consumers, from subsidizing cover, to protecting people with pre-existing conditions, to the requirement of these rebates from insurers. ”

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