New ruling on health care reform rebates for insurance coverage

Michigan health insurance

Health Insurance RebatesMedical insurers must now inform policyholders that their checks are from the Obama administration’s changes.

New federal guidelines have just been released, informing insurance companies that they must inform their policyholders that health care rebates that they are receiving are the result of the laws put into place by the Obama administration following the overhaul of the system.

This is the most recent step being taken by the President to highlight the benefits of the law ahead of the election this fall.

This move is being made despite the fact that the overhaul’s future is currently uncertain as the Supreme Court continues to make its decision – which is expected to be released before the end of June – as to whether or not the heart of the changes is constitutional. It is the element regarding the mandatory insurance coverage that has been called into question.

At the same time, if elected, Mitt Romney – the assumed Republican presidential candidate – promises to remove the law.

The health care reform rebates legislation from 2010 has stated that insurers are required to spend 80 percent of the income collected from premiums on actual medical tests and treatments. According to the Kaiser Family Foundation, a nonpartisan organization, the projected refunds to policyholders as a result of the law will total approximately $1.3 billion, and would be distributed among around 16 million policyholders who have either purchased individual coverage or who receive it through their employers.

The legislation states that if more than 20 percent of an insurer’s revenue is spent on administrative costs and other expenses that are not medical care, then the difference must be refunded to the policyholders.

The Kaiser Family Foundation has estimated that people with coverage through a large employer should receive an average health care reform rebate of $72, whereas those who have purchased individual policies will receive an amount closer to $127. The Department of Health and Human Services finalized the rules regarding this refund last Friday, at which time they informed insurers that when they sent the returned money to the policyholders, they must also include a notice that includes a statement in its first paragraph that informs the recipient that the check is the result of the changes made by the Affordable Care Act.


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