Private insurers could pay record $1.3B+ in rebates for overcharging premiums

Across individual and employer insurance markets, private health insurers are slated to pay back at least $1.3 billion in rebates this year, according to an estimate by the Kaiser Family Foundation.

According to CMS data analyzed by KFF researchers, private payers face $743 million in rebates for coverage on the individual market, $250 million for small group plans and $284 million for large group plans. In total, this exceeds the previous record of $1.1 billion in rebates issued in 2012, a number that was based on 2011 performance.

The rebates are required by the ACA. Under the law, health insurers must spend at least 80 percent of their premium revenue on healthcare claims and quality improvement. For large group plans, it's 85 percent. The remainder can be used for administration, marketing and profit.

If an insurer doesn't spend at least 80-85 percent of revenue on claims and quality costs, it is required to pay back members. For people with individual coverage, rebates can either be a premium credit or a check. For people with employer coverage, the rebate can be shared between the employer and employees.

Insurers have to begin issuing rebates by Sept. 30.

Read more here.

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