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Rates and rebates: Online tool calculates data on medical insurance spending Posted: July 20th, 2012

By Maryalene LaPonsie

Maryalene LaPonsie has been writing professionally for more than a decade on topics including education, insurance and personal finance. She holds a Bachelor's Degree in Political Science from Western Michigan University.

The federal government launched a new online tool to help consumers better understand how their health insurance premium dollars are being spent. Maintained by the U.S. Department of Health and Human Services, the tool allows consumers to review their insurer's medical-loss ratios as well as determine whether their medical insurance company is planning to raise rates.

Tool to promote transparency

In announcing the tool, government officials say it complements provisions of the Patient Protection and Affordable Care Act that promote greater transparency within the health insurance industry. Specifically, the tool allows consumers access to details about medical-loss ratios and medical insurance rate reviews.

Under the health reform law, insurers are required to spend 80 to 85 cents of every premium dollar on direct health care costs. Known as medical-loss ratios, these are intended to encourage affordable health insurance and prevent companies from raising rates simply to pay for administrative costs such as salaries.

In addition to publishing information on medical-loss ratios, the new government tool includes information regarding potential premium hikes. Consumers can search by state or by company to find rate increase requests. They can also then view details about the request as well as its status.

Health insurance rebates headed to some consumers

Consumers using the new government tool can search for health insurance plans and see whether their insurer is meeting the medical-loss ratio required for their type of plan. Companies that are not spending the required minimum on health care must refund excess premiums back to their policyholders.

According to the HHS, 13 million Americans will receive a total of $1.1 billion in rebates by this August. The online tool will provide the average rebate amount going out to all policyholders, but individual rebates may vary in amount.

The rebates can be issued in several different ways:

  • A rebate check
  • Credit or debit card reimbursement
  • Credit toward future premiums
  • Through a method selected by your employer for certain group plans

All health insurance companies are required to notify their policyholders of the medical-loss ratio rule and whether their health insurance coverage has met the standard. Policyholders eligible to receive a rebate will be also provided details about how that rebate will be distributed.

Consumers wishing to use the government's new tool may do so on the federal health care website.