Consumers expected to receive $1 billion in rebates from health insurers

Private health insurers are expected to pay $1 billion in rebates to eligible consumers this fall, according to a Kaiser Family Foundation analysis released June 1.

By Tami Luhby, CNN

(CNN) -- Private health insurers are expected to pay $1 billion in rebates to eligible consumers this fall, according to a Kaiser Family Foundation analysis released Wednesday.

The payouts stem from an Affordable Care Act provision that requires insurers to spend the majority of policyholders' premium payments on medical care. The amount is based on insurers' experiences over the prior three years.

This year's preliminary rebate estimate is about half of last year's $2 billion payout, in part because it does not include 2018. Insurers hiked premiums for Affordable Care Act plans in 2018 because of the uncertainty of the law's future amid Republicans' repeal efforts.

Also, individual market insurers were likely less profitable in 2021, which reduces the amount of rebates they might owe.

But this year's rebate total continues to reflect the impact of the Covid-19 pandemic, which prompted providers to cancel elective procedures and Americans to skip care in 2020, leading to a sharp reduction in claims.

Some 4.3 million people in the individual market are expected to receive a total of $603 million in rebates this fall. About 1.8 million consumers in the small employer market are expected to share $275 million, while 2.2 million people in the large employer market are expected to get $168 million.

That comes to an average rebate of $141 for those in the individual market, $155 for the small employer market and $78 for the large employer market.

Not all policyholders are due rebates. Those with individual coverage receive their rebate as a check or premium credit, while those with job-based plans typically share the rebate with their employers.

The Affordable Care Act requires insurers to spend at least 80% of their premium revenues -- 85% for large employer plans -- on health care claims or quality improvement expenses.

The-CNN-Wire
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