Finding Out If Your Health Insurer Is Providing Value for Your Premiums
By Michael Hash, Interim Director, CCIIO
When hardworking Americans pay for health insurance for their families and themselves, most of what they are paying for should be medical care, not CEO bonuses, slick advertising or administrative costs. That is why one of the pillars of the Affordable Care Act is to help consumers get good value for their health insurance premium dollars.
The health care reform law holds health insurance companies accountable to consumers and ensures that consumers are reimbursed when insurers don’t meet a fair standard of spending premium dollars on care. Because of the new “80/20 rule” in the Affordable Care Act, insurance companies generally must spend at least 80 cents of every dollar you pay in premiums on your health care or activities that improve health care quality. If the insurer fails to meet this standard – the “medical loss ratio” – in any given year, it must pay its policyholders the difference. This could mean a rebate check or a reduction in future premiums for you and your family.
Under the health care law, nearly 13 million Americans are expected to benefit from $1.1 billion in rebates from insurance companies due by Aug. 1, 2012, because of the 80/20 rule. All insurance companies for the first time will send their policyholders a letter informing them of the rule and whether the insurer met the standard. Those that do not meet the 80/20 rule standard will inform consumers that they will receive a rebate.
Want to know whether your health insurance company is required to provide a rebate? Today, on HealthCare.gov, we’re launching a new tool that will allow you to enter your state and health insurance company information and see the average rebate your insurer is required to pay. See the sample screenshots below:
But remember, that’s just an average, and you may see the “rebate” in a number of ways. These include:
- A lump-sum reimbursement to the same account that was used to pay your premium if it was paid by credit card or debit card;
- A rebate check to you in the mail;
- A direct reduction in your future premiums; or
- Your employer using one of the above rebate methods, or applying the rebate in a manner that benefits employees.
Many Americans are working hard to provide for their families and they do not deserve to have their health insurance premium dollars wasted on excessive administrative costs and profits. The 80/20 rule is one of the many ways that the Affordable Care Act is making sure that millions of Americans get value for their premium dollars.
For a detailed breakdown of these rebates by state and by market, please visit
To learn more about the 80/20 rule provision in the Affordable Care Act, please see http://www.healthcare.gov/law/features/costs/value-for-premium/index.html