For Once, Will Big Insurance Send YOU a Check?

You know what I love? Some unexpected cash! Walking to my mailbox and finding an unexpected check is pretty high on the list of things that make me happy. Thanks to the Affordable Care Act, close to 2 million Texans are going to experience one of my very favorite things this summer. How?

According to the 80/20 rule of the Affordable Care Act, insurance companies have to spend at least 80% of your premiums on your care or improving the quality of your care. The other 20% can go to administrative costs, advertisements, executive bonuses, and company profits. If, at the end of the year, companies have not spent 80% of your premium on patient care, they have to send out rebates.

A new report from the Kaiser Family Foundation has estimated that this year 1.8 million Texans will receive more than $186 million in rebates because of the 80/20 Rule. That’s an average check of $194 per person. True, it’s not enough to retire on, but when was the last time a health insurance company sent you money?

Before the ACA a lot of states already had rules about how much insurance companies can profit from selling health insurance plans, but Texas was not one of them. In fact, there were health insurers in Texas that were spending less than half of the premium dollars they collected on health care.

Texans will be getting the highest amount of rebates of any state. Almost 92% of all Texans who buy their own policies are likely to get a rebate. Why? As other states worked to protect their people from irresponsible hikes in healthcare premiums, Texas rates were left to grow unregulated. Basically Texans have subsidized insurance profits that were capped elsewhere in the country.

By August 1, millions of these checks will appear in mailboxes across the country.

Not getting a rebate? The 80/20 Rule is still helping you. Many insurance companies are changing the way they do business, devoting more money to quality improvements and health care. Others are lowering their premiums or not increasing them as much as they would have in order to comply with the law, so they won’t have to send out rebates in the future.

Unexpected money is great, but more importantly, the 80/20 Rule is another way that the Affordable Care Act is helping to control health insurance costs.

Written By: Juandrea Bates, guest blogger