Anybody ever get a Medical Loss Ratio rebate check from their medical insurance provider? Got one in the mail today of a pretty nice size. Never knew about such things and it was a welcomed surprise. Guess all insurers aren’t losing money after all under ACA?
It basically means that their premiums were too high in the first place.
I believe the ACA requires that the medical loss ratio (that is, the % of premium that the insurance spends on claims and not on any other stuff) is not greater than a certain amount. If it is, the insurance company is required to reimburse you to bring their % down to the right level.
I think it is an 80/20 rule. Premiums were in line with what others were charging for similar coverage. I guess that claims were just lower than anticipated for this particular pool of individual coverage. Maybe our resident expert @“Cardinal Fang” will chime in to share knowledge.
I guess, in addition to being happy to receive a check, I found it interesting in light of the fact of much talk of unprofitability under ACA for healthcare. If they are falling below their 80%, things can’t be that desperate right?
It must be for my carrier. They are dropping out at the end of the year.
I’m sure it varies from carrier to carrier and from state to state, as does profitability for any business. Even within markets, some companies manage costs and overhead better than others.
But the reality is that claims are claims. Insurance companies are very good at predicting how much claims will be in a huge population, but when you divide it into smaller and smaller groups, the prediction is a lot less certain.
So…one of my kids has a policy that is full pay…no subsidy, purchased directly from the insurance company. She had a physical…and gets monthly BC pills…that’s it. Wondering if she will get anything back? I doubt it!
The health insurer I am working for on contract is making so much money this year that they are scrambling to find ways to spend it all so they don’t show too much profit this year. The current uncertainty is making them unhappy, but this year they are very profitable.
@thumper1 I think we rarely use our coverage. A physical for each of us adults, not even for the college kids. I think a lot of people are that way. It’s mainly just an insurance policy for the really, nasty expensive stuff in my view. I guess we got a bit lucky that our specific plan/pool underutilized vs. projections. Still a lot of $ even with the rebate check, though.
I’m sure the insurance companies are as antsy as we are about what the landscape will be in the future.
For one of my kids…their provider is supposedly pulling out of the county where she resides. No idea about replacement…so a little rebate would be nice. This is the full pay kid…policy purchased directly from the company (Anthem). Anthem is pulling out of the individual exchange market in her county. I seriously doubt they will be sending her any money!
The Medical Loss Ratio rule is a part of the Affordable Care Act. The rule is that 80% of the total premiums for your insurer have to go to health care if you have individual insurance, and 85% have to go for health care if you have group insurance. Any money over that has to be refunded to enrollees.
The refunds go to the enrollees, even if the person had premium subsidies. That is strange.
To be clear, you don’t get a refund if YOU are healthy. Of course not; your premiums go to pay for sick people. You get a refund if EVERYONE buying your insurance was healthier than the insurer expected.
I got checks the first couple of years after ACA, but not recently. I assume that means that my insurer got better at predicting costs in setting premiums.
There is likely to be a big bump in premiums for 2018 because of uncertainties in the market related to the Trump administration, especially with respect to payment of direct-to-insurer cost-sharing subsidies. See http://www.latimes.com/business/hiltzik/la-fi-hiltzik-csr-20170815-story.html ("The CBO’s findings are timely because the so-called CSRs are the subsidies that President Trump continually threatens to withhold, as a tool for forcing Obamacare to “implode.”)
If the 2018 premiums go up because of this concern, but then if the government continues to pay the CSR’s despite threats to discontinue them, then I would anticipate sizeable refunds next year ---- but of course the insurers have to set premiums now. It’s estimated that in California this uncertainty accounts for about 3% of the premium rates. See http://www.ocregister.com/2017/08/01/covered-california-announced-increased-rates-of-12-5-percent-for-its-2018-health-insurance-plans/
Geez, if my insurance premium goes up any higher I am going to have to come up with some kind of Plan B. I just refuse to pay more than my $1,000/month for high deductible worthless insurance just for my 21 yr old D and myself.
Hmmm, I gave regular group coverage and we have never gotten a check like you’ve described – so far.
I got one this year and it was a total surprise
In California, the insurers were required to submit two different sets of rates, one assuming the cost sharing reimbursements (CSRs) were paid by the federal government, and another higher set of premiums assuming the cost sharing reimbursements were not paid. In some other states, insurers simply assumed the CSRs would not be paid, and priced premiums accordingly.
The extra money to pay back the CSRs is, in most states, applied to on exchange Silver plans only. Especially in these states, but also in any other state where the CSRs are priced into the premiums, the federal government will pay higher premium subsidies, since subsidies are based on the cost of the second-lowest Silver plan. It would be cheaper for the Feds to pay the CSRs than to pay the higher cost of the subsidies.
Insurers have also raised rates (and they say this openly) because they don’t think the federal government will enforce the individual mandate-- and even if it does, potential buyers might not know that when making the purchase decision. In addition, HHS has cut the enrollment period in half, and has slashed funds for outreach, advertising and enrollment assistance. Sick people will buy insurance, but healthy people might not if they don’t see advertising and if they don’t get help, making costs higher for all who have insurance.
@“Cardinal Fang” what is the open enrollment period this year?
We know one of our kids has a plan that will not be offered on her county next year. Her provider is pulling out (kid has an individual policy purchased through the company…no subsidized…not exchange…but this company is pulling out of the individual market). So far…the kid has NOT gotten notification that the policy won’t be available.
When will that happen?
So…are you saying that to get this refund…the folks on the individual plans my kids have…all of them…need to come in with lower costs for,the year…and it really doesn’t matter about my specific kids!
@thumper1 Open enrollment will be the same as past years - 11/1 through 12/15.
Don’t expect to hear about it as much this year as the new administration seems intent on hiding it under a rock.
@thumper1, the open enrollment for states on the federal exchange is November 1 to December 15. About eight of the states that operate their own exchanges have set up longer enrollment periods. Enrollees should sign up by December 15th even if their state allows a later signup, because after December 15th, the insurance would start in February, not January.
I don’t know when your child will officially hear from their insurer that the insurer is pulling out of the individual market. It doesn’t matter, however. Your child can’t renew their policy, so they will start shopping when the enrollment period begins. Consulting an insurance agent isn’t a bad idea; it costs the enrollee nothing.
As to the MLR refunds, your description is right. Your children would be best advised to continue to get care when they need care. There is no refund waiting at the end of the year for people who don’t go to the doctor.
In past years, open enrollment was November 1 to January 31. Although it would be confusing, IMO they should change open enrollment so that it’s something like February 15 to April 15, syncing up with tax day.