Almost nine out of ten health insurance policyholders had no idea they might get a rebate on their health insurance premiums this year. That’s what we found when we surveyed eHealthInsurance customers this past May.
The Affordable Care Act (“ACA,” the health reform law) requires major medical health insurance plans to spend at least 80-85% of collected premium dollars on member medical care, beginning in 2011. Insurers who did not meet that requirement in 2011 are required to return the difference to policyholders no later than August 1, 2012.
Approximately 15.8 million consumers in 2011 were covered under plans for which an estimated $1.3 billion in rebates will be issued this summer, according to the Kaiser Family Foundation. The amount of the rebate issued to policyholders may vary substantially by health insurance plan, by state, as well as by other factors.
In order to help you better understand how these so-called “medical loss ratio” rebates work and what they mean for you, we’ve compiled a list of “Dos and Don’ts:”
Dos:
- Do understand rebate basics. The 2010 health care reform law requires that for every dollar a health insurance plan brings in through member premiums, 80-85 cents must be paid out again toward member medical expenses. If your health insurance plan in 2011 didn’t meet that goal, you may be due a rebate no later than August 2012. Not everyone is getting a refund, however, and how much you personally spent (or didn’t spend) on medical care has little to do with whether you receive a rebate. To learn more about rebate basics, read our answers to frequently asked questions.
- Do expect a letter. If you were covered under a health insurance policy you purchased for yourself in 2011, you should receive a letter or notice from the insurer informing you how well your health plan performed according to the health reform law’s new requirements, and whether or not you’re due a rebate. If you were covered under an employer-sponsored health insurance plan, the letter may go to your employer instead.
- Do find out if you’re due a rebate. If you don’t receive a notice from your health insurance company by the end of June, contact them. Once they confirm the name of your plan and whether your coverage was in effect for 2011, they should be able to tell you if a refund is due and when it will be paid or credited to you.
- Do ask your employer if they got a rebate. Any rebates due for an employer-sponsored health insurance plan will be paid to the employer directly, rather than to employees. However, if employees contributed toward their coverage in 2011, they should still benefit from the rebate. Most employers are required to either pass on the refund to employees in a proportional manner or else use the employee portion of the refund to provide enhanced benefits under the plan.
- Do review the value of your health insurance plan. If you get a rebate for 2011 health insurance premiums paid under an individually-purchased plan, this may suggest that your insurance company paid fewer claims than it anticipated or that you were simply paying too much for your coverage. Whether or not you get a rebate, shop around for coverage at least once a year to make sure you’re paying a fair price and getting the coverage best suited to your needs. Get personalized quotes for brand-name plans in your area at eHealthInsurance.com.
Don’ts:
- Don’t feel disappointed if you don’t get a rebate. If you don’t get a rebate on your 2011 health insurance premiums, this means that your health insurance plan met the medical loss ratio goals set by the health reform law. It doesn’t necessarily mean that your health plan is the best option for your needs and budget, but it does mean that your insurer achieved a reasonable balance between incoming premiums and expenses paid for member medical care.
- Don’t automatically cancel your existing plan if you do get a rebate. It’s always a good idea to look into your other health insurance options. However, if your plan meets your needs and budget, it may still be right for you. Additionally, if you get a rebate on your 2011 premiums, you may be somewhat less likely to face a large rate increase in 2012.
- Don’t assume that your rebate will come as a check. The health care reform law allows insurance companies to provide rebates in several forms. You may get your rebate as a check in the mail or, if you’re still covered under the plan, as a reduction in your future monthly premiums.
- Don’t assume you’re not due a rebate if you didn’t get a letter. Policyholders are supposed to receive notices from their health insurance companies whether or not they are due a rebate. It’s possible your notice got lost in the mail. If you haven’t heard anything from your health insurance company by the end of June, call and ask.
- Don’t cut back on your medical care in hope of a rebate next year. The amount of money you spend on your personal medical care in 2012 has little to no effect on whether you’ll get a rebate in 2013. Rebates are calculated based on the monthly premiums and medical expenses for all the people who purchased the same plan from the same insurance company.
Image by Flickr user stevendepolo
