Health insurance rebates on their way for many

A new rule on health insurer spending will deliver nearly $20 million in policy rebates to Georgians by Aug. 1.

Several other states, including Tennessee and Florida, have much higher rebate totals.

But in the small-employer market, the rebates in Georgia for 4,614 consumers will average $811 — a higher average payout than in any other state. The next highest is Ohio, with an average of $783. No other state is close to those figures.

The Georgia insurance department said Thursday that the high rebates in small-group plans were due from only two health insurers — John Alden Life Insurance Company and Nippon Life Insurance Company of America.

Under the medical-loss ratio requirement, created by the federal health reform law, insurers are required to use no more than 20 percent of premiums for overhead and profit, with at least 80 percent going to cover the cost of medical care and quality improvements. For large-group plans — those covering more than 50 employees — insurers must spend at least 85 percent on medical care.

Glenn Allen, a spokesman for the state insurance agency, said state officials did not know what factors led two companies in particular to have lower “medical-loss ratios” than other insurers.

“In Georgia, as in other states, most insurers met or exceeded the required targets and didn’t have to pay rebates,’’ Allen said.

Rebates in the small- and large-group markets generally will be returned to employers rather than directly to the employees.

Allen added that the insurance department is monitoring the small-group rebate issue, but that the state “does not plan to take any action at this time.”

Roughly 85,000 Georgia residents with individual insurance policies will get an average rebate of $51.

The U.S. Department of Health and Human Services allowed Georgia health insurers to meet the 80 percent level gradually for individual health policies, with a 70 percent mark in 2011, 75 percent in 2012 and 80 percent in 2013.

In the larger employer market, 153,757 Georgia consumers will get an average rebate of $172.

In the employer market, rebates must be used to benefit employees to an extent at least proportional to the employees’ share of premium payments, according to Community Catalyst, a consumer advocacy group. For example, if insurance premiums are split 50/50 between employer and employee, then employers would have to return 50 percent of any rebate to their employees, either by check or as a credit toward premiums, the group says.

“So most Georgians who get their coverage through a small or large employer may not necessarily get a personal cash rebate check,” Allen said.

Nationwide, health insurers will have to pay an estimated $1 billion in rebates.

The rebate rule went into effect in January 2011. It does not apply to health plans offered by self-insured employers — mainly large companies and health plans.

Cindy Zeldin of the consumer advocacy group Georgians for a Healthy Future said Thursday that the reform provision on medical-loss ratios is intended to increase transparency, value and accountability in the health insurance market.

“Now consumers have information about how their premium dollars are being spent,” she said. “Insurance companies are held accountable for providing value in their products.”

State Insurance Commissioner Ralph Hudgens, an opponent of the health reform law, issued a statement on the rebates in April. “In this economy, I am certain individuals and companies will be pleased with any amount of rebate they may receive,’’ he said. “Unfortunately, when these rebates are put in the context of the impact President Obama’s Affordable Care Act [the reform law] has on health care and health insurance, the future is bleak.”

Since then, the U.S. Supreme Court has substantially upheld the reform law, but Republicans have pledged to scrap it or at least roll it back if the fall elections give them the leverage to do so.

America’s Health Insurance Plans, an industry trade group, said in April that the spending rule could have unintended consequences, potentially causing some insurers to withdraw from certain markets.

“The new medical-loss ratio requirement does nothing to address the real driver of premium increases: the underlying cost of medical care,’’ AHIP said in a  statement.

Have you or your employer received a rebate? Georgia Health News would like to hear from you. Please email us at: