Personal finance

8.2 million people may soon get health insurance rebates up to an average $155 per person

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Depending on how you get your health-care coverage, you may soon get a rebate from your insurer.

An estimated 8.2 million policyholders are expected to receive a piece of $1 billion in rebates by Sept. 30 from various insurers, according to an estimate from the Kaiser Family Foundation.

The refunds generally work out to an average of about $141 per participant in plans through the public marketplace, $155 for those in plans through a small employer and $78 for enrollees in large-group plans (excluding those at companies that self-insure).

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However, the rebate amount can vary widely, depending on your location and insurer.

The aggregate total of $1 billion in refunds is down from $2 billion issued in 2021 and a record $2.5 billion in 2020.

“In the last couple of years we’ve seen some really large rebates — twice the size of this year’s amount,” said Cynthia Cox, a vice president at the foundation and director of its Affordable Care Act program. “But I’d say $1 billion is still significant.”

Insurers typically either send a check to policyholders or deduct the rebate from premiums (and send a check to individuals no longer enrolled but owed some money). Be aware that if you are in a group plan, your employer may split the rebate with you, Cox said.

Health insurers send rebates to meet ‘medical loss ratio’

So why are the rebates going out?

Basically, insurance companies that sell group or individual policies must adhere to a “medical loss ratio” requiring them to spend at least 80% of premiums paid by enrollees on health-care costs and certain other expenses related to patient health. (For large group plans, the ratio is 85/15.) If that threshold is not met, enrollees are reimbursed the difference.

Each year, the ratio is calculated based on a rolling three-year average. So the rebates this year derive from insurance companies’ financial data from 2019, 2020 and 2021.

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