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Employers and individuals will receive a total of $330 million in rebate checks from their health insurers this year, in accordance with the Affordable Care Act.

The ACA requires that insurers spend more than 80% of the premiums they collect on medical care under the ACA’s medical loss ratio rules. Looked at another way, the rules limit spending on administrative costs, salaries and bonuses to 15-20% of premiums.

If insurers fail to meet these rules, they are required to send their insureds rebate checks for the difference.

This year’s rebate is less than in 2013, when insurers paid out $500 million. The decline indicates that more insurers are charging lower premiums than they would have if the law were not passed, according to the White House.

According to the Department of Health and Human Services, rebate checks – on average about $80 per family – will be sent to about 6.8 million people. The law requires that they were to be sent by Aug. 1 directly to consumers that purchased plans in the private market, or to employers that sponsored the health plans for their employees.

Employers that receive the checks are required to pass the savings on to their employees in one of two ways:

  • Reducing premium for the upcoming year; or
  • Providing a cash rebate to employees or subscribers that were covered by the health insurance on which the rebate is based.