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Florida Insurers Owe $41.7 Million in Rebates to Individuals and Companies, Topping Nation

| July 24, 2014

The insurance industry owes rebates to comply with the Affordable Care Act. (Tobi Gaulke)

The insurance industry owes rebates to comply with the Affordable Care Act. (Tobi Gaulke)

Insurers must pay $41.7 million in rebates to Florida individuals and employers this summer, an amount that far exceeds refunds in any other state, according to a federal report released Thursday.

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Companies affiliated with Florida Blue in Jacksonville — Blue Cross and Blue Shield of Florida and Health Options Inc. — owe a total of $20 million, nearly half of the total.

The latest round of paybacks brings Florida’s three-year total from the Affordable Care Act’s rebate program to almost $220 million. This  year’s rebate will average $65 per family in Florida, according to the report from the U.S. Department of Health and Human Services.

The companies that owe the most in refunds to Floridians, the report says, are:

  • Large-group market: Health Options Inc., $5.7 million;
  • Small-group market: Blue Cross and Blue Shield of Florida Inc., $10.1 million, followed by Health Options Inc. and UnitedHealthcare Insurance Co.
  • Individual policy market: Golden Rule Insurance Co., $4.1 million, followed by Humana Insurance Co., Time Insurance Co., and four others that must pay at least $1 million.
  • (For more specifics on companies paying rebates in Florida, see chart)

The rebates are triggered by a provision in the ACA that requires insurers to spend most of the premiums on patients’ health-care needs and on quality improvement.  For a large group plan, the minimum is 85 percent; for individual and small group plans, which have higher enrollment expenses, the minimum is 80 percent.

This means that companies may allocate no more than 15 to 20 percent for administrative costs, marketing and profits. If they go over the line, they must rebate money to consumers.

The Obama administration calls it the “80-20 Rule.” The industry traditionally calls it the “medical-loss ratio,” or MLR, although some companies have changed the lingo to “medical-benefit ratio” because it sounds more customer-friendly.

“We are pleased that the Affordable Care Act continues to provide Americans better value for their premium dollars,” Sylvia Burwell, the new Secretary of Health and Human Services (HHS), said in a press release. She added that “provisions such as the 80-20 rule are providing Americans with immediate savings and helping to bring transparency and accountability to the insurance market over the long-term.”

It’s not clear why Florida’s $41.7 million rebate total is so much higher than that in any other state in the overall rebate rundown released by HHS. The next-highest is Maryland, at $17.3 million.

The most populous state, California, has a rebate total of under $12 million, slightly less than New York.  Texas, which also has more people than Florida, has a rebate total of $13.7 million.

Florida also has more individuals who are to receive rebates than any other state:  981,273.  Nationwide, the number who will receive refunds is 6.8 million, the report says. The average refund per family is $80.


Interestingly, the state’s consumers may never have seen these rebates, if Insurance Commissioner Kevin McCarty had had his way In 2011,  Insurance Commissioner McCarty tried to get the state an exemption from the rebate program, saying that insurers would abandon the individual and small-group markets otherwise.

After that didn’t fly, McCarty asked HHS for a waiver that would allow a four-year phase-in, to make it more palatable for the insurers. The Obama administration turned that down, as well.

The HHS report indicates that the main payoff for the 80-20 Rule is deterrence: Insurers have adjusted their spending habits to avoid having to pay rebates. This shows in the rebate totals, which have gone down each year since the program began in 2011.

Floridians received rebates totaling $124 million in the summer of 2012 for MLR violations the year before. In the summer of 2013, the rebates were $54 million. Now they are $41.7 million.

Even greater savings to consumers has come from reined-in premium costs, the report says.   While the consumer refunds for 2013 total $330 million nationwide, HHS says a much larger amount – $3.8 billion – was saved on premium costs up front.

For consumers who bought individual and family policies, rebates may come as a check in the mail, a reimbursement to a bank account or a direct reduction in future premiums. If the insurance came through the workplace, the employer must provide the refund in one of those ways or use it in another way that directly benefits employees, the law says.

In its report, HHS shows a dramatic reduction in overhead costs on individual policies and a small but significant reduction in overhead on employer plans since the rule went into effect. On average, overhead has dropped to 12.2 percent from 13.1 percent  during the three-year period.

–Carol Gentry, Health News Florida

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9 Responses for “Florida Insurers Owe $41.7 Million in Rebates to Individuals and Companies, Topping Nation”

  1. Genie says:

    I’d like to know how many of these “rebates” are going to “valid” accounts.

    http://www.nationaljournal.com/health-care/the-gao-launched-an-obamacare-sting-operation-and-almost-all-fake-insurance-applications-were-approved-20140723

    Obviously, there is a huge potential for fraud here.

    • Obama 2014 says:

      Give me a break with that story.

      I can go to every credit card company in the US and get “approved” for a credit card with a fake SS number and a valid mailing address. I actually made a mistake on a online form for CITI and I was told I was approved and I got a letter 6 days later they needed more information. More GOP punishment BS because they don’t like the ACA. I would like an Democrat investigation into all the dark money GOP and TEA Party candidates get and tell the world what they donated.

      The rebate is yest another great part of the law that forces the company that should be in the business of your health to spend your payments on your health. An insurance company should make a small profit, but not at the expense of it’s policyholders.

  2. Charles Ericksen Jr says:

    The State of Florida also owes, Flagler County over $5,000,000 for over charging us on Juvenile Justice charges over the past 3-5 years. They informed us, that we would not be getting a refund..Nothing..

    • Obama 2014 says:

      Flagler County needs to get a lawyer to get that money.

    • Dont accept No says:

      Charlie, I suggest you not accept what you are being told and go to your legislators to get it back. You wasted time going to Tallahassee over vacation rentals, why was this not a priority then? It aint over till its over. Dont give up on our money so easily.

  3. Sandra Reynolds says:

    I hope the company doesn’t penalize the employees by denying raises. Maybe they will cut into the CEO’s bonus. Don’t hold your breath.

  4. Genie says:

    Not one person here realizes this money will be paid by the people, by raises in premiums. “THAT” money is OUR money. We are taxed for it.

    Nice to know so many of my neighbors are independently wealthy. Wow…do I feel better!

    • Are you Serious? says:

      Well said, new High Deductible policies are being born…..huge upfront deductibles. Couldn’t agree more, no one truly believes the insurance companies will pay this??? WE WILL …..

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