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Health insurers owe nearly $74 million in rebates to Californians

July 31, 2012|By Chad Terhune
  • Health insurance companies owe California businesses and consumers millions of dollars in rebates under the federal Affordable Care Act.
Health insurance companies owe California businesses and consumers millions… (Susana Gonzalez/Bloomberg )

Nearly 2 million Californians will receive $73.9 million in rebates from health insurers as part of the federal healthcare law, according to state officials.

Insurers notified government regulators in June of how much they owed customers in rebates or premium credits because they didn't spend at least 80% or more of 2011 premiums on medical care. The minimum threshold is 85% for employers with more than 51 workers.

Figures released Tuesday mark the final tally for California; insurers must issue refunds by Wednesday. Many employers and consumers have already received letters informing them of their rebate amount.

The average rebate is $65 per family, according to the state insurance department.

"The Affordable Care Act requires that more of our health insurance premium dollars be spent providing healthcare, rather than on administrative costs and profits," said California Insurance Commissioner Dave Jones.

Anthem Blue Cross, the state's largest for-profit insurer and a unit of WellPoint Inc., owed nearly $40 million in rebates and Blue Shield of California had to return about $11 million to customers.

Nonprofit Kaiser Permanente, the state's biggest insurer, owed $277,000 in rebates to policyholders.

UnitedHealth Group Inc., Aetna Inc. and Cigna Corp. each owed California employers about $3.4 million.

Nationwide, federal officials said health insurers owed $1.1 billion in rebates to 12.8 million Americans. The average rebate nationally was $151 per family, according to the federal government.

For people who receive their health coverage through work, the rebate check or credit goes to their employer. Under the law, employers can share the proceeds with employees based on how much they contribute to annual premiums or apply the savings to future healthcare costs.

Individuals and families who purchase their own policy will receive the rebates directly. Consumer advocates praised the new limits on insurers' expenses and profit.

"The check is a symbol of the new oversight over the industry to ensure patients got the best value for their premium dollar," said Anthony Wright, executive director of Health Access California, a consumer advocacy group.

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