Insurers Can Gain Politically From Early Premium Rebates with Chart: Health Insurers Offer Premium Discounts Amid COVID-19

Since the beginning of the COVID-19 pandemic, which saw health care utilization crater — and insurer margins grow as a result — payers have refunded billions of dollars to members and plan sponsors. Experts say that the premium rebate trend is primarily driven by the desire of payers to manage cash flow and future medical loss ratio (MLR) obligations, but is also likely an attempt by insurers to improve their public image as the prospect of major health care legislation looms after the election.

The Affordable Care Act (ACA) MLR rules require commercial insurers to spend at least 80% of their premium revenue from individual and small group plans and 85% of their large-group revenue on claims and quality improvement. The ACA requires any profits above those rates to be rebated to plan members. MLR rebate amounts are calculated on a rolling three-year average, meaning financial figures from 2017 to 2019 are the basis of 2020’s MLR calculations. Rebates accrued in a given plan year must be paid out by Sept. 30 of the following year.

© 2021 MMIT

Peter Johnson

Peter has been a reporter for nearly a decade. Before joining AIS Health, Peter covered a wide variety of topics in his hometown of Seattle, where he continues to live. Peter’s work has appeared in publications including The Atlantic and The Stranger. Peter attended Colby College.

Related Posts
October 22

With COVID Testing Set to Surge, Insurers Fret About Costs

READ MORE‘Dance-Partners.jpg
October 22

Could Payers, Plan Sponsors Pick Retail ‘Dance Partners?’

READ MORE‘Virtual-First-Health-Plan-Fray.jpg
October 22

UnitedHealthcare, Cigna Join ‘Virtual-First’ Health Plan Fray

Read More


Sign up for publications to get unmatched business intelligence delivered to your inbox.

subscribe today