Obamacare results in health insurance rebates

Thursday, April 26th, 2012 By

Cash money

Obamacare is about to result in some consumers getting health insurance rebates. Photo Credit: 2bgr8/Wikimedia Commons/CC-BY-SA

A lot of people have not been thrilled about the Affordable Care Act, also dubbed “Obamacare.” However,  a lot of people are going to be happy with the health insurance rebates that are likely to be sent out this summer.

A medical loss

The Affordable Care Act, or “Obamacare” in the media, was lauded by some and decried by others. Opinion is still mixed, and the law’s fate is currently being decided by the Supreme Court. However, before the court renders its decision, a provision of the law might pay some dividends for a good number of people, according to the Huffington Post.

One of the facets of the law is the Medical Loss Ratio. The law mandates that for every dollar of revenue an insurance company receives, it has to spend a certain amount on treatment of insured patients and preventative or therapeutic services, such as gym membership discounts or physical therapy.

The MLR portion of the law mandates an insurance company has to spend 80 to 85 percent of income on patients. Thus, any company that spent less than 80 percent has to issue a rebate for the difference.

Check the mailbox

According to NPR, the Department of Health and Human Services estimated that insurers nationwide would have to issue rebates of $1.4 billion. A recent report by the Kaiser Family Foundation, a division of the Kaiser conglomerate separate from the company’s health insurance division Kaiser Permanente, estimates that insurers will issue $1.3 billion in rebates. A Goldman Sachs estimate pegged it at $1.2 billion.

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According to CNN, $426 million is going to be sent to 3.4 million consumers who purchased private insurance. There are approximately 215 individual plans from various insurers that will result in people getting a rebate. The rebate is also going to vary by state. People in Maine and New Mexico will get the least of the rebates, as the Kaiser report estimates they will get an average rebate of $1. Alaskans and residents of Maryland are estimated to receive $300. The average refund will be $127.

May not be a check

The insurance rebate is not necessarily going to be in the form of a check. Insurers may decide to credit the rebate against future premiums. The premium is also going to vary by insurer; it depends on how far under the medical loss ratio the individual insurer went.

The rebates are also not likely going to be seen by anyone in any sort of group plan, either governmental or through an employer. In that case, the rebate goes to the policy holder.


Huffington Post



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