Health Insurance Navigator

By Lisa Zamosky

As part of the Affordable Care Act, insurance companies are required to spend at least 80 cents of every dollar they collect in premiums on medical expenses and quality improvement, as opposed to marketing costs or executive salaries. Companies that fail to do so must refund the difference to policyholders.

Health and Human Services announced late last month that 12.8 million Americans are scheduled to receive a total of $1.1 billion in rebates from insurers this summer.

Here are 6 things you should know about the Affordable Care Act’s “80/20 rule” and the impact it could have on your wallet.

1) Size matters: Insurers working with large employer plans are required to spend 85% of all premiums they collect, and at least 80% for individual and small employer health plans.

2) August deadline: Any insurance company that failed to meet the standard is required to send the difference to policyholders by no later than August 1^st.

3) Advance notice: You should have received a letter from your insurer by the end of June letting you know whether or not you can expect a refund. The letter should clearly outline how much your insurer spent on medical care and how much money will be returned to you. Call your insurance company to inquire about rebates and whether you can expect one this summer if you haven’t yet received notice.

4) Show me the money: Although the amount of the refunds varies greatly by insurer and state, the national average amount being returned is $151 per family.

5) All insurance types qualify: Whether you buy health insurance on your own or get it at work, money will be refunded if your insurer didn’t meet the health law’s spending requirements. This doesn’t apply to people on Medicare, however.

6) You may not get the check: Insurers can refund the difference between what they collected and failed to pay in medical expenses in a number of ways:

• A rebate check that comes to you in the mail
• Reimbursement to the account (credit or debit card, for example) with which you pay your premiums
• By reducing future premiums
• Through your employer (assuming you get health insurance at work), which may then in turn pass the refund on to employees or use the funds to offer enhanced benefits under your existing plan. You would need to ask your employer directly about its plans.

Your turn: Have you received notice from your insurer that you’ll be getting a refund or telling you that one isn’t coming? Please share your experience in the comments section below.