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Health insurance rights & protections

Rate Review & the 80/20 Rule

The health care law provides 2 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 explain any rate increase of 15% or more before raising your premium. This does not apply to grandfathered plans.

80/20 Rule

The 80/20 Rule generally requires insurance companies to spend at least 80% of the money they take in from premiums on health care costs and quality improvement activities. The other 20% can go to 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 doesnโ€™t meet these requirements, youโ€™ll get a rebate on part of the premium that you paid.

Will I get a rebate check from my insurance company?

If your insurance company doesnโ€™t meet its 80/20 targets for the year, youโ€™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, youโ€™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.
FYI: The 80/20 rebate rules donโ€™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 donโ€™t apply to grandfathered plans. Check your planโ€™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.