June 21, 2012 | last updated June 22, 2012 11:27 am

CT consumers due $12.9M in health insurance rebates

Connecticut health insurers will be delivering $12.9 million in rebates to individuals and employers in the state, thanks to a crucial new part of the federal health care reform law that requires insurers to spend a minimum percentage of premiums on medical care.

Under the Affordable Care Act, if an insurance company spends less than 80 percent of individual or small group market premiums on medical care and quality (or less than 85 percent in the large group market), it must rebate the portion of premium dollars that exceeded the limit.

The 80/20 rule is commonly known as the Medical Loss Ratio (MLR) rule.

The federal government made public Thursday morning the first round of rebates insurers will be making to customers in each state.

In Connecticut 137,452 consumers will receive a total of $12.9 million in rebates, or about $168 per person.

The bulk of those funds, or $8.5 million, will be allocated to 85,179 consumers in the large group market, who will see an average rebate of $202.

About 47,990 consumers in the individual market will receive a total of nearly $4 million in rebates, while another 4,283 small group market consumers will see a total rebate of $459,952.

In June, insurance companies nationwide submitted their annual MLR reports for coverage provided in 2011 to the Department of Health and Human Services (HHS). Based on that data, insurers that didn't meet the 80/20 rule will provide nearly 12.8 million Americans with more than $1.1 billion in rebates this year

Under the new health care law, rebates must be paid by Aug. 1. The money will be paid in one of the following ways:

  • a rebate check in the mail
  • a lump-sum reimbursement to the same account that was used to pay the premium if it was paid by credit card or debit card
  • a direct reduction in their future premiums
  • their employer providing one of the above rebate methods, or applying the rebate in a manner that benefits its employees.

Consumers in every state will also receive notifications from their insurance company about the 80/20 rule. Under the Affordable Care Act, insurance companies will send a letter to subscribers every year they miss the 80/20 mark. The letter will explain the purpose of the 80/20 rule, how far the insurance company fell short of this goal, and the percentage of premium it owes in rebates.

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