Health insurance carriers have been announcing they will be making refunds of a small percentage of 2015 premiums to some large and small groups and individuals because of lower-than-expected medical costs last year. Carriers are required to send notice by mail both to affected employers offering coverage and members enrolled in coverage.
NEW THIS YEAR:
De Minimis Rule: Carrier are not required to provide rebates to groups if the total rebate is less than $20.
Why are Premium Rebates Being Provided?
Under the Affordable Care Act (ACA), 80 percent of a premium must go toward health care claims for small group and individual coverage. For large groups, 85 percent of the premium must go toward health care claims. By this calculation, some carriers’ groups may qualify for a rebate this year.
How Will Employers Receive the Premium Rebates?
Carriers are required to send the rebates directly to employers. Employers are responsible for using the rebate according to federal requirements.
Employers must either:
1. Use it to lower the subscriber’s portion of the premium for the upcoming year
2. Give covered employees a cash refund of the rebate. The federal rules have a number of options for employers to calculate this amount.
• If eligible, employers will receive a letter and check.
• Members will also receive notification from the carrier if an employer received a rebate.
How Will Individual Policy Holders Receive the Premium Rebates?
Individuals will receive their rebate (if applicable) directly by mail, or by a deposit into the account used to pay for the premium if a credit/debit card was used.
- If you call into your carrier, they will not be able to provide specific information regarding the rebate such as the amount to be refunded.
- The 80/20 rebate does not apply when an insurance company has fewer than 1000 enrollees in a particular state or market.