The refund checks will help everyone to see lower premiums each year.
More than $1 billion in health insurance rebates have been issued to consumers in order to allow insurers to comply with the regulations of the Affordable Care Act, and are now effectively making it less expensive for Americans to maintain coverage.
This may also help to push premiums down in the future.
According to the Center for Medicare Services acting director of the office of oversight, Teresa Miller, “Consumers who are not getting rebates are benefiting from the plan.” She added that “Insurers are keeping their premiums down.” This is good news as consumers start to think about the coverage that they will need to buy in 2014 when the health insurance system reforms go into full effect.
The law requires health insurance companies to spend at least 80 percent of premiums on medical expenses.
Of all the income that they collect from their policyholders, a maximum of 20 percent (15 percent for insurers of large companies of 50 employees or more) can be spent on expenses other than medical costs, such as payroll, marketing, overhead, and profit. When insurers fail to comply with this ratio, they are required to issue a rebate to the policyholders to make up for the difference.
The hope is that it will help to encourage health insurance companies to keep their premiums as low as possible, so that they will not be forced into a situation where a refund must be issued. However, Miller also pointed out that the benefits of this strategy go beyond reduced monthly payments for coverage.
She stated that it is also making health insurance providers have a look at their spending and cut the costs that are considered to be excessive. This is encouraging them to make greater investments into quality measures and to improve equal care standards. For example, it means that every patient with heart disease will be able to obtain the same types of tests and treatments. The healthcare reforms may have been just what was needed in order to create system-wide improvements in the quality of the medical care that Americans receive.
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