Policy, Payers

Insurers paid out $2B in rebates for last year’s claims

Insurers that didn’t meet medical loss ratio requirements have paid out a total of $2 billion in rebates to nearly 10 million people, split between people who received their insurance through individual market plans and group plans. 

Insurers have paid out roughly $2 billion in rebates to 9.8 million people, as the amount of premium dollars spent on care dipped below thresholds outlined in the Affordable Care Act. 

Per the ACA’s medical loss ratio provision, health insurers must spend at least 80% of premium dollars on medical claims for individual or small group plans, or at least 85% for large group plans. Any amount below that threshold must be sent back in the form of rebates.

Rebate amounts were particularly high as many people postponed care last year, while hospitals cancelled surgical procedures to preserve masks and equipment. For example, UnitedHealth Group reported a medical care ratio of 82.3% for the first three months of 2021. By comparison, that number was just 77.7% in the first three months of 2020. 

According to the Centers for Medicare and Medicaid Services, last year, insurers paid out a total of $1.9 billion in rebates, including $1.3 billion to people insured through individual market plans. 

This year, checks will be divided almost evenly between people who get insurance through the individual market and group plans, with roughly 4.8 million people covered by individual insurance getting a rebate and 5 million people covered through group insurance. 

Most insurers were required to pay out rebates by the end of September, either through a premium credit, a check, or credit card reimbursement. 

Photo: JamesBrey, Getty Images

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