Kip Tips


Health Insurance Rebates Coming Soon

Cameron Huddleston

Insurers owe $1.1 billion to about 12.8 million Americans. Will you be getting a check? If so, how much?



If you have health insurance, you might be getting a check in the mail soon.

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That's because the health care reform law requires health insurance companies that don't meet a certain standard of value to reimburse policyholders. Under the law, health insurers cannot spend less than 80% of premiums -- 85% for large group plans covering 50 or more employees -- on medical care and quality improvements. Companies must reimburse policyholders if they fail to meet that standard, called the 80/20 rule.

Nearly 12.8 million Americans will receive $1.1 billion in rebates this year -- about $151 per household -- from insurance companies that didn't meet the 80/20 rule in 2011. Rebates must be paid by August 1 in one of the following forms:

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--Rebate check in the mail
--Lump-sum reimbursement to the account used to pay the premium (if paid by credit or debit card)
--Reduction in future premiums
--Rebate applied by employer in a manner that benefits employees

To find out whether you'll receive a rebate, you can use a new tool developed by the Department of Health and Human Services. Workers who are covered by an employer who is self-insured are not eligible for rebates.

If you do get a rebate, you might owe taxes on the amount you receive. See $1 Billion in Health Insurance Rebates: Taxable or Tax-free?.

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