NEW YORK) — A new provision of the Affordable Care Act — called the Medical Loss Ratio, or the “80/20″ provision — could mean some Americans will see a rebate from their health insurance companies Wednesday.
The provision is aimed at holding health insurance companies accountable for how they spend the money collected through premiums. It compares the dollars they spend on health care costs vs. other overhead costs — like marketing, salaries and administrative expenses.
Under the law, small-group and individual-plan insurance companies that annually spend less than 80 percent of premium dollars on medical care owe their customers a rebate. For insurers to large businesses, the percentage split is 85-15.
This is the first year the provision is in effect, and insurance companies that owe rebates must pay them by Wednesday, Aug. 1.
Here’s a look at the health care rebates, by the numbers:
The employer could also use the rebates as a lump-sum reimbursement to the accounts that pay premiums, or spend it in other ways that “benefits its employees,” according to the Department of Health and Human Services. This can include lowering co-pays or adjusting cost-sharing to cut group insurance costs.
Employees should contact their employer for details about how their rebates will be distributed.
Whether they owe a rebate or not, insurance companies in every state have to notify their customers by Wednesday if they’ve met or failed this part of the law.
For information on how your health insurance company stacks up on the 80/20 provision, click HERE.
Copyright 2012 ABC News Radio
Julia Horowitz, CNN
Paul Menser, BizMojo Idaho