MLR rule hands $330 million back to consumers News added by Benefits Pro on July 24, 2014

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Joined: September 07, 2011

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By Kathryn Mayer

Health insurance companies will send out about $330 million in rebates to employers and individuals this summer under the medical loss ratio rule under the Patient Protection and Affordable Care Act, the U.S. Department of Health and Human Services said Thursday.

All told, since 2011, carriers have returned about $9 billion to consumers because of the PPACA provision.

About 6.8 million people will receive rebates, and the average family will receive about $80 this year, HHS said in a report. Rebates are to be sent by Aug. 1 either directly to consumers or to the employer providing the health coverage, who is required to pass the savings onto employees.

HHS Secretary Sylvia Mathews Burwell touted the MLR provision Thursday for saving consumers money.

“We are pleased that the Affordable Care Act continues to provide Americans better value for their premium dollars,” Secretary Burwell said. “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.”

Under the MLR provision, carriers must issue refunds to customers if they spend less than 80 percent of the premiums they collect for plans sold on the individual and small group markets and less than 85 percent of plan premiums in the large group market on health care.

The MLR provision has garnered criticism from those in the industry, with industry groups arguing the impact of the MLR rules on agents and brokers has been damaging since many insurance carriers have cut their agent compensation significantly to comply.

In May, America’s Health Insurance Plans argued the MLR requirement is doing nothing to help consumers.

“The medical loss ratio requirement does nothing to address the main drivers of health care costs and puts an arbitrary cap on what health plans spend on a variety of programs and services that improve the quality and safety of patient care,” AHIP spokeswoman Clare Krusing said.

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