Insurance companies that did not meet the medical loss ratio specified by the Affordable Care Act will pay more than $1.1 billion to nearly 13 million Americans this year, Health and Human Services Secretary Kathleen Sebelius announced June 21.
Also known as the 80/20 rule, the medical loss ratio rule requires that companies spend 80% of premium dollars collected on medical care; the remaining 20% may be spent on salaries, administration, and marketing.
Under the ACA, insurance companies that do not meet the specified loss ratio must rebate to consumers and other health insurance purchasers the portion of premium dollars that exceeded the limit, HHS officials said.
Loss ratio reports are filed yearly on June 1, and based on preliminary reports, the rebates will amount to an average $151 per household for Americans receiving the rebate. The rebate will go to individuals and small and large employers. Rebates will be distributed by Aug. 1.
Meanwhile, nearly 70 million insured Americans are covered by companies that met the 80/20 rule, Michael Hash, director of the HHS Office of Health Reform, said during a press conference. He added that the provision was "a critical piece of the Affordable Care Act."
Information on average rebate by state and market is available and additional information about insurance companies will be posted in the coming weeks, HHS officials said.