Marylanders received $17M in insurance refunds under health reform rule
By By Scott Dance and The Baltimore Sun
Jul 24, 2014 | 5:18 PM
Health insurers refunded more than $17 million to Marylanders last year because of a rule in the Affordable Care Act limiting the amounts the companies can spend on overhead costs as opposed to providing care, according to federal data.
About 206,000 consumers in Maryland received the refunds, an average of $140 per family, according to a report from the Department of Health and Human Services released Thursday.
The refunds are owed under a rule that requires insurers to spend 80 percent or 85 percent of the dollars they collect in premiums on medical care or activities that improve health care quality. If they spend more than 20 percent or 15 percent on other costs, they must repay customers the difference.
The rule, known as the medical loss ratio, sets the 80-20 standard for insurers selling directly to individuals or to small businesses, and the 85-15 standard for insurers selling to larger companies or corporations.
Insurers issued $332 million in refunds across the country.
In Maryland, those who buy insurance through a large employer, generally with more than 50 employees, benefited the most from the refunds. Nearly 145,000 of those consumers received an average refund of $157.
Among those who buy individual insurance policies, 52,000 consumers received an average refund of $126 in the state. Small businesses saw the smallest and fewest refunds, with about 9,100 receiving an average of $7.
The refunds went to more Maryland consumers last year than in 2012, but they were slightly smaller. In that year, insurers repaid $13 million to nearly 150,000 consumers in the state, an average of $143.
Nationally, insurers had to pay less in refunds last year than in 2012, when they repaid $504 million.