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Will you get a health insurance rebate? Posted: May 1st, 2012

By Barbara Marquand

If your health insurance company spent too much money on administration and marketing and not enough on patient care and health care quality improvement in 2011, you or your employer are due a rebate this year.

The rebates will vary in size for individuals -- from next to nothing to hundreds of dollars. But together with rebates to employers they will add up to $1.3 billion, according to an analysis by the Kaiser Family Foundation.

Under the Patient Protection and Affordable Care Act, health insurance companies must spend a certain amount of premiums on patient care and quality improvement versus administration, marketing and profits. Large group plans must spend at least 85 percent of medical insurance premiums on health care and quality improvement, and small group plans must spend at least 80 percent. The spending requirement, which went into effect in 2011, is called the medical loss ratio.

If health plans didn't meet the ratio requirements in 2011, they must give rebates to the businesses and individuals who purchased policies. They must issue the rebates by August.

Health insurance rebate totals

Here's how Kaiser projects the rebates will shake out:

  • 31 percent of consumers who bought individual health insurance will get rebates, totaling $426 million.
  • 28 percent of small employers will get rebates, totaling an estimated $377 million.
  • 19 percent of large employers will receive rebates, totaling $541 million.

The percentage of individuals and employers who will receive rebates varies widely by state. In Texas, 92 percent of consumers with individual health insurance will receive rebates. In Hawaii, no one will receive a rebate.

The average value of the rebates also varies by state. Nationwide, the average rebate for consumers is $127.

According to Kaiser, the highest average per-person rebates by state are:

  • $305 in Alaska
  • $294 in Maryland
  • $243 in Pennsylvania
  • $241 in Idaho
  • $236 in Mississippi

No health insurance company expects to issue rebates in the individual health insurance market in Hawaii, Maine and the District of Columbia. The average rebate for individuals in New Mexico and Vermont is just $1.

Kaiser based its estimates on information provided by health insurance companies in filings to the National Association of Insurance Commissioners. The data was compiled by Mark Farrah Associates. Actual rebates will be based on information insurers submit later this year to the federal government, Kaiser said.