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					                Are You Getting A Health Insurance Rebate?

Health Insurance Rebates

Many health insurance policy holders may be surprised to hear that on August 1, 2012, they may be
getting a check. For the first time ever, health insurance companies will be issuing rebate checks to policy
holders because a provision in the new health care law known as the Patient Protection and Affordable
Care Act or PPACA. This has not been widely publicized because, until the Supreme Court Decision last
month, it was not clear whether companies would need to follow through or not.

The rebate is tied to an insurance concept called the Medical Loss Ratio or MLR. The MLR is the
percentage of premiums paid to directly cover medical expenses of the insured. Historically, these ratios
for health insurance range from 60% to 110%. The PPACA contains a provision requiring insurance
companies to have a medical loss ratio of at least 80% for individual and small group health plans and at
least 85% for large group health plans. This means that insurance companies cannot incur more than 15%
to 20% in general administrative expenses plus profit. Any amount over these limits must be rebated to

According to an April report by the Kaiser Family Foundation, there will be an estimated $1.3 billion in
premiums paid back to policyholders. Of these numbers, $426 million will be paid to individual
policyholders, $377 million will be paid to small businesses and $541 million will be paid to large
businesses. The largest health premium rebates will go to policyholders in Texas, of $186 million, and
Florida, with $149 million. Some of the highest rebates to individual consumers will be up to $305 in
Alaska, followed by the states of Maryland, Pennsylvania, Idaho, and Mississippi. For a complete report
by state, download a complete report from the Kaiser Family Foundation.

For company plans, these rebates will be sent to the employer for processing. Depending on the plan
contract, these rebates may be handled with a refund check or credited towards future premium payments.
Since employers share the cost of group insurance plans, only part of the rebate will go to the employee,
based on the percentage that employer pays of the total plan cost. For individual plans, the rebate will be
issued to the policyholder. In some cases, these rebates may be treated as taxable income for the
policyholder. If the rebate amount is less than $5, the insurance does not have to issue a check.

Trust PeopleSurance™ to keep you up to date with your health care reform questions and news. If you are
in the market for a quality health insurance plan, try our no-obligation, Term life insurance quote today
to see how much you could be saving on health insurance. Look for more news and updates on the
PPACA as new provisions go into effect because, at PeopleSurance™, our goal is to make Insurance

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