Health insurance members surprised to learn they may be eligible for rebates
When Caryn Kaufman received the letter from her health insurance company telling her that she was entitled to a rebate of part of her insurance premiums under the new Affordable Care Act, she was confused and skeptical.
Kaufman lives in Bridgeport, owns her own business, Caryn Kaufman Communications, and buys her insurance through ConnectiCare.
She received the letter more than a week ago, and wasn't sure what to think about it.
"I read it through and it didn't really make any sense to me," Kaufman said. "I thought for sure that it was a mistake."
It wasn't a mistake.
The rebate is part of a little-known -- and fairly confusing -- provision of the sweeping health care reform legislation passed in 2010.
The law requires insurance companies to reveal how much of the premium is spent on health care, and how on administrative costs, such as sales and marketing. This information has not been shared with the public, until now.
If an insurance company spends less than 80 percent of its premiums on a customer's medical care, it must rebate the difference. Some insurance companies, mainly those who provide insurance through large employers, are required to spend at least 85 percent of their premiums on medical costs.
According to the U.S. Department of Health and Human Services, about $1.1 billion will be made available in rebates nationwide -- about $13 million in Connecticut. According to the Connecticut Insurance Department, about 137,000 Connecticut consumers are technically eligible for the refund.
Many companies owe rebates to Connecticut customers, including Cigna, ConnectiCare, and Aetna. Kaufman's rebate from ConnectiCare was $263.33, about half of a typical month's premium, she said.
Even if you have received a letter informing you of the rebate, you still may not receive a check.
A consumer could receive the rebate through a direct reduction in future premiums, a rebate check or a lump-sum reimbursement to the account used to pay the premium if paid by credit or debit card.
If you buy coverage as an individual, like Kaufman, you likely will receive the rebate benefit directly.
But those in large or small group plans might not, as the law only requires insurers to send rebates to the employer. From there, the decision of what to do with the rebate is largely left to the employer, said Mary Ellen Breault, director of the state insurance department's division of life and health filings. For instance, the employer can use the rebate to reduce future premiums or give the money to employees based on employee contributions to the health plan.
"Our advice to anyone who gets insurance through their employer and has questions on how the rebate will be distributed is to check with their HR office," Breault said.
About half of the roughly 2.9 million Connecticut residents with health insurance are covered through self-insurance plans -- meaning the employer pays the claims itself. Those plans aren't eligible for the Affordable Care provision. Medicare and Medicaid plans aren't eligible, either.
Even with the caveats, Kaufman said she favors the provision. An unabashed supporter of the Affordable Care Act, she said it's exciting when its provisions take effect. "People are going to start realizing how much this law is going to help them," she said.
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