Report: Michigan families to receive average of $138 in insurance rebates

Michigan residents to benefit from over $18M in rebates from insurance companies

LANSING, Mich. - Health and Human Services Secretary Kathleen Sebelius announced Thursday that 222,051 Michigan residents will benefit from $18,609,808 in rebates from insurance companies this summer, averaging $138 per family, thanks to the Affordable Care Act.

According to the U.S. Department of Health & Human Services, nationwide, 77.8 million consumers saved $3.4 billion up front on their premiums as insurance companies operated more efficiently.

Additionally, the department said consumers nationwide will save $500 million in rebates, with 8.5 million enrollees due to receive an average rebate of around $100 per family.

Created under the Affordable Care Act, the Medical Loss Ratio standard, which is also known as the "80/20 rule," requires insurers to spend at least 80 cents of every premium dollar on patient care and quality improvement.

If they spend an excessive amount on profits and red tape, they owe rebates back for the difference no later than Aug. 1, 2013.

"This new standard is increasing transparency and accountability, promoting better business practices and competition among insurance companies and ensuring consumers receive value for their premium dollars," said Sebelius. "Today's announcement shows that more Michiganians are benefiting from the tools created under the Affordable Care Act to keep consumer costs down."

The department says the law has motivated many plans to lower prices or improve their coverage to meet the standard. Other Michigan residents will see their value reflected through rebates later this summer.

HHS said Michigan residents owed a rebate will see their value reflected in one of the following:

  • A rebate check in the mail
  • A lump-sum reimbursement to the same account that they used to pay the premium if by credit card or debit card
  • A reduction in their premiums
  • Their employer using rebates to improve their health coverage

Insurance companies that do not meet the standard will send consumers a notice informing them of the rule. HHS said the notice will also let consumers know how much the insurer did or did not spend on patient care or quality improvement, and how much of that difference will be returned as a rebate.

The 80/20 rule works, along with the required review of proposed double-digit premium increases, to stabilize and moderate premium rates.

With new market reforms according to the department, including the guaranteed availability protections and prohibition of the use of factors such as health status, medical history, gender and industry of employment to set premiums rates, this policy helps ensure every American has access to quality, affordable health insurance.

Click here for an overview of insurers' MLR data in 2012. For more information on the MLR provision in the Affordable Care Act, click here.

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