These rebates are coming through because a number of insurance companies failed to meet the ACA’s medical loss ratio threshold in 2020, which requires insurers to spend at least 80% of premium revenues on health care claims or quality improvement activities. ALPA PROD / Shutterstock Last year, some companies fell short of their threshold as health spending and utilization dipped during the pandemic.
Here’s what you need to know about how these rebates will work. For the average consumer who bought health insurance on the individual market, that means an average cash rebate of $299 in the fall.
Why are we getting these rebates? That sum will be the second-highest amount ever issued under the Affordable Care Act (ACA) after last year’s record-breaking $2.5 billion in refunds.
Joshua Resnick / Shutterstock Not every policyholder can expect some cash back and how much you’ll get varies by market. Who should expect a rebate?
But everyone continued to pay their premiums, resulting in higher levels of profits for the insurance companies who had set their rates well before the pandemic hit. This happened in part because providers cancelled elective procedures and consumers opted to forgo routine care to avoid potential exposure at a doctor’s office.
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