Kaiser Report Estimates that Insurance Rebates Will Amount to $1.3 Billion in 2012

April 27, 2012 Author: Megan Fanale Engel


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On April 26, 2012, the Kaiser Family Foundation released a report finding that health insurance policyholders will receive approximately $1.3 billion in rebates starting in August due to a requirement in the Patient Protection and Affordable Care Act ("PPACA").  Starting in 2011, PPACA requires that insurance plans spend a minimum percentage of premium dollars collected on quality improvement activities and health care expenses while limiting the amount of premium dollars spent on marketing and administrative costs.  The law refers to this percentage as the Medical Loss Ratio ("MLR").  PPACA requires large group plans to spend at least 85% of premium dollars, and small group plans must spend at least 80% of premium dollars.  If an insurer is unable to meet the MLR within a certain state's market segment, it must issue a rebate to consumers and employers.

Kaiser's analysis found that 15.8 million health insurance policyholders will receive rebates totaling $1.3 billion starting in August.  Insurers will give approximately $541 million to 7.5 million large group market enrollees, $377 million to 4.9 million small group enrollees, and $426 million to 3.4 million individual plan enrollees.  Overall, the report predicts that consumers and businesses in Texas and Florida will receive the largest rebate amounts.

To arrive at its rebate estimate amounts, Kaiser used filings provided by insurers to the National Association of Insurance Commissioners ("NAIC") in the 2011 Supplemental Health Care Exhibit.  In addition, it used the Health Coverage Portal, a market database that contains information from the NAIC, as the source of its data.  The actual rebate amounts will be calculated based on insurer reports to the federal government filed later this year.

To review Kaiser's press release and report, click hereMegan Fanale Engel

Fulbright & Jaworski L.L.P. Washington's Health Care Group

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