The health care law provides 2 new ways to hold insurance companies accountable and help keep your costs down: Rate Review and the 80/20 rule.

Rate Review

Rate Review helps protect you from unreasonable rate increases. Insurance companies must now publicly justify any rate increase of 10% or more before raising your premium. This does not apply to grandfathered plans.

Look up your insurance plan to see its proposed 2015 rate increase and its final increase after the review.

80/20 Rule

The 80/20 Rule generally requires insurance companies to spend at least 80% of the money they take in on premiums on your health care and quality improvement activities instead of administrative, overhead, and marketing costs.

The 80/20 rule is sometimes known as Medical Loss Ratio, or MLR. If an insurance company uses 80 cents out of every premium dollar to pay for your medical claims and activities that improve the quality of care, the company has a Medical Loss Ratio of 80%.

Insurance companies selling to large groups (usually more than 50 employees) must spend at least 85% of premiums on care and quality improvement.

If your insurance company doesn’t meet these requirements, you’ll get a rebate from your premiums.

Will I get a rebate check from my insurance company?

If your insurance company doesn’t meet its 80/20 targets for the year, you’ll get back some of the premium that you paid. You may see the rebate in a number of ways:

  • A rebate check in the mail
  • A lump-sum deposit into the same account that was used to pay the premium, if you paid by credit card or debit card
  • A direct reduction in your future premium
  • Your employer may also use one of the above rebate methods, or apply the rebate in a way that benefits employees

If you or your employer will get a rebate, your insurance company must notify you by August 1.

If you have an individual insurance policy, you’ll get the rebate directly from your insurance company.

For small group and large group plans, the rebate is usually paid to the employer. It may use one of the above rebate methods, or apply the rebate in a way that benefits employees.

Note: The 80/20 rebate rules don’t apply when an insurance company has fewer than 1000 enrollees in a particular state or market.

Does this apply to my plan?

It depends.

For Rate Review: These requirements don’t apply to grandfathered individual and small group health plans. Check your plan’s materials or ask your employer or your benefits administrator to find out if your health plan is grandfathered.

For the 80/20 Rule: These rights apply to all individual, small group, and large group health plans, whether your plan is grandfathered or not.