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Health Insurers to Pay $1 Billion in Rebates This Year: Report

·1 min read
iStockphoto

Private health insurance companies expect to pay $1 billion in rebates to consumers this fall, according to a preliminary estimate by the Kaiser Family Foundation. The rebates are required under a provision of the Affordable Care Act, which mandated that insurers spend at least 80% of premium payments (85% for large group plans) on medical claims or quality improvement rather than having more money go toward administrative costs or profits. Insurers that fail to meet the threshold must provide rebates to their enrollees. The rebates are calculated based on a three-year average.

This year’s rebate total will be larger than in most prior years, the report says, but will be well shy of the record $2.5 billion issued in 2020, when the Covid-19 pandemic curtailed usual spending on elective and routine care, and the $2 billion issued in 2021. This year’s smaller rebate total comes “in part because 2021 was a less profitable year and because the 3-year window no longer includes 2018, when individual market insurers overpriced their ACA marketplace plans due to uncertainty caused by the repeal-and-replace debate and other ACA policies,” KFF said in a news release.

The new analysis estimates that 8.2 million people are owed a rebate, including 4.3 million people who bought plans on the individual market, which includes the ACA marketplaces. The average rebate per person is projected to be $128. Rebates or rebate notices are due to be sent out by the end of September.

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