Friday, November 12, 2010

No health insurance rebates yet, despite lower healthcare volumes

Wait ‘til next year!! This is a chant that we Chicago Cubs fans are often heard to say, sometimes as soon as May or June of each year. However, people with health insurance may be soon be saying the same thing, too.

You see, under the new health reform law, starting in 2011, health insurers must meet certain minimum “medical loss ratios,” which essentially require insurers to spend at least 80 percent (for individual and small group plans) or 85 percent (for large group plans) of the premiums they collect on actual medical care. If they don’t meet these rules, insurers have to send rebates to their customers. This rule applies to insurers offering both group and individual coverage and takes effect starting in 2011.

Now, you might be saying, “but my insurance premiums go up every year, how could this be?” Well, it’s like this.

In tough economic times, such as these, more than a few people tend to put off elective surgeries and otherwise skimp on their healthcare expenses. What this amounts to is what one analyst calls a “broad-based slowdown in health care volumes.” Fewer doctors’ visits, fewer lab tests, and fewer elective surgeries should mean fewer health insurance claims and, ultimately, reduced healthcare premiums, right? Alas, health insurance premiums are expected to increase by about 9 to 12 percent for 2011 but, down the road, some experts suggest that this could change if healthcare claims continue to remain flat.

Don't count your savings yet. Other factors could play a role in determining whether you get a rebate. Not to mention that deciding exactly what should count towards the minimum medical loss ratios has been a bone of contention, though recently, after much debate, the National Association of Insurance Commissioners (NAIC) sent its medical loss recommendations to the HHS.

Perhaps a “wait and see” approach is best but hey, it could happen.

For more information. For a comprehensive analysis of the Patient Protection and Affordable Care Act, and additional information on health reform and other developments in employee benefits, just click here.


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