As of August 1, 2012, nearly 13 million Americans were scheduled to receive $1.1 billion in refunds from the nation’s Health insurance companies under the terms of the federal Affordable Care Act (ACA).
The legislation requires insurers that spend less than 80¢ of every $1.00 in premium on medical care (as opposed to overhead – salaries, administrative costs, etc. – and profits) to inform policyholders of the excess cost and rebate the difference to them. Congress created this “80-20” rule as an incentive for insurance companies to improve coverage and/or reduce rates.
According to the Department of Health & Human Services (HHS), most Americans with Health insurance have their policies through carriers that meet or exceed the 80-20 requirement. However, HSS estimates that more than one in three (38%) of those with individual (rather than employer-provided group) coverage are entitled to a rebate from their insurer. These refunds will average $151 on a nationwide basis, with state averages ranging from $651 (Mississippi) and $582 (Alabama) to zero in six states (Arkansas, Hawaii, Iowa, Maine, New Mexico, Rhode Island, and Vermont).
