Insurer premium rebates could total $2.7B this year

Insurers offering commercial health plans to employers and individuals could issue roughly $2.7 billion in premium rebates this year, nearly double 2019's $1.4 billion record, the Kaiser Family Foundation said, citing data from Mark Farrah Associates.

The 2018 and 2019 financial performance of insurers in the individual market is leading to more rebates. Rebates sent out in 2020, either as a premium credit or a lump-sum payment for members, are based on 2017-19 performance. During that time frame, insurers in the individual market saw their financial performance improve substantially.

The rebates are a relatively new requirement of the ACA. The health law limits the portion of premium dollars health insurers can use for administration, marketing and profits. The "medical loss ratio" provision, as it's referred to, requires insurers to spend between 80 percent to 85 percent of their premium income on healthcare claims. If the medical loss ratio is below that percentage, rebates have to be issued to members.

Kaiser Family Foundation said rebates will vary by market and are preliminary estimates. Insurers in the individual market will issue about $2 billion in rebates; small-group insurers will send out about $348 million; and large-group insurers will issue about $341 million.

View the full KFF data note here.

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