By Emily Miller
As result of the Affordable Care Act, consumers have been saving money of their health insurance premiums for the first time since 2011. Health and Human Services Secretary Sylvia M. Burwell announced savings have totaled $9 billion.
“We are pleased that the Affordable Care Act continues to provide Americans better value for their premium dollars,” said Secretary Burwell in a press release.
Through the Affordable Care Act, insurers are required to spend at least 20 percent of premium dollars on patient care and quality improvement activities. This was part of the 80/20 rule, also known as Medical Loss Ratio (MLR) rule, which was created in conjunction to the new medical care law.
“We are continuing our work on building a sustainable long-term system, and provisions such as the 80/20 rule are providing Americans with immediate savings and helping to bring transparency and accountability to the insurance market over the long term,” said Burwell.
An HHS report released today shows that last year alone, consumers nationwide saved $3.8 billion up front on their premiums as insurance companies operated more efficiently. Consumers nationwide saved an additional $300 million in refunds, with 6.8 million consumers due to receive an average refund benefit of $80 per family.
This standard and other Affordable Care Act standards contributed to consumers saving approximately $4.1 billion on premiums in 2013, for a total of $9 billion in savings since the MLR program’s inception.
The report shows that since the rule took effect, more insurers year over year are meeting the 80/20 standard by spending more of the premium dollars they collect on patient care and quality, and not red tape and bonuses.
If an insurer did not spend enough premium dollars on patient care and quality improvement, they must pay refunds to consumers in one of four ways.
Below is a summary of these four refund methods:
If a refund is due, the insurer may simply send a check to the insured via postal mail. A similar process is having the insurer send a lump-sum reimbursement to the same account that was used to pay the premium.
An alternative to providing an immediate refund is to reduce an insured’s future premium payments to reflect that of the refund due.
However, if the consumer bought insurance through their employer, their employer must provide one of the above options, or apply the refund in another manner that benefits its employees, such as more generous benefits.
Consumers are expected to see changes regarding their health insurance policy in the near future, as the Affordable Care Act is in full swing.
