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So Those Health Insurance Rebates Are Real

By Tom Allison

I was sorting through my mail the other day and in the stack of bills and solicitations I saw an institutional looking letter from UnitedHealthcare, my health insurance provider. Ugh, I thought to myself, this is the last thing I need. What is it this time? Denied coverage? Increased premiums? You only get bad news from an insurance company.

Turns out, UnitedHealthCare owed me money.

In a White House  address last month President Obama said that 13 million people got rebate checks from their insurance company last year under a provision of the Affordable Care Act. The provision requires insurance companies to spend premiums on care.  Obama said that another 8.5 million are expected to receive a check in the mail as early as this summer.  I was one of them.

Is there a better feeling than getting an unexpected check in the mail? No, not really.  Thanks to the ACA, millions of people are getting that “finding an old five dollar bill in your jeans” happy feeling. With student loans to pay back, I can attest, this relief is more than welcome.

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So why did I get this?

The Medical Loss Ratio provision of the ACA is a measurement requires insurers in the individual and small group markets to spend 80 cents out of every dollar on actual care (doctors, services, etc.) and 20 cents for less of each dollar on profit and administrative costs for the insurance company (advertising, office space, salaries, etc.). For the large market plans, the ratio is 85%.

If insurers don’t reach that threshold statewide, they send checks making up the difference. In D.C., UnitedHealthcare spent 77.2% of its customers’ premiums on care, missing the mark by 2.8%. That means UnitedHealthcare will be reimbursing over $1 million to its customers this summer.

Compared to student loan debt to I need to repay, this rebate won’t go very far. It won’t pay my rent or book a fabulous vacation. But the fact that there’s a law on the books that guarantees I’m getting a good value for the health care I buy is just awesome.