American Consumers to Receive $500 Million in Health Insurance Rebates
The Federal government has announced that millions of consumers will receive health insurance rebates this summer. This is the second year that the government has offered rebates based on health care reform guidelines that require insurers to refund money if they donâ€™t follow the rules of the law.
Health Care Reform Law Penalizes Insurance Companies
The rules of the Affordable Care Act require health insurance companies to distribute millions in health insurance rebates to consumers, which will occur this summer, Federal officials announced this week.
Under the new law, which will fully take effect in 2014, insurers are required to spend at least 80 percent of the premium dollars they receive on medical claims or quality improvements. The remaining money can be spent on administrative costs, marketing and profits.
Any funds not properly spent on health care expenses must be returned in the form of a rebate to consumers.
This year, the Federal government is requiring insurance companies to rebate their customers a total of $500 million, which is a huge decline from last yearâ€™s rebates that totaled $1.1 billion.
Health Insurance Rebates to Average $100 Per Consumer
Approximately 8.5 million people are expected to receive health insurance rebates in the near future with the average being valued at $100, according to officials.
Consumers could receive their refunds in one of three ways:
- Physical check
- Discount on next yearâ€™s health insurance premiums sent to individuals
- Discount sent to employers that provide health benefits
In addition to providing consumers with a refund, the Obama administration says the health insurance rebates have helped keep premiums throughout the year lower for 77.8 million consumers because companies have opted to charge less money up front.
The health insurance rebates are expected to begin arriving after August 1.
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