Why Your Health Insurer Might Owe You Money

Many Americans have not claimed their loot. Are you among them?

Chris Kissell • September 27, 2019

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There is a decent chance your health insurer owes you money — even if you don’t realize it.

In fact, each year, millions of dollars that insurers owe to their customers goes unclaimed, according to a recent analysis by the Kaiser Family Foundation (KFF). Since 2012, a total of $37.5 million has not been claimed.

The money owed to customers stems from a requirement of the Affordable Care Act (ACA) regarding the share of premiums that insurers direct to health care.

That 2010 federal health care reform law, also known as Obamacare, placed caps on the portion of customers’ premium dollars that insurers can use for their own administration, marketing and profits. According to KFF:

“The Medical Loss Ratio provision requires insurance companies that cover individuals and small businesses to spend at least 80% of their premium income on health care claims and quality improvement, leaving the remaining 20% for administration, marketing, and profit. The MLR threshold is higher for large group insured plans, which must spend at least 85% of premium dollars on health care and quality improvement.”

Since 2012, insurers who fail to meet these standards have been required to pay rebates to consumers. That includes customers who get health insurance through an employer, not just customers who bought Obamacare plans through an insurance exchange, according to Consumer Reports.

However, many rebate checks never are cashed.

Cynthia Cox, a vice president at the Kaiser Family Foundation, told Consumer Reports that many people are unaware of the medical loss ratio provision. So, they may actually throw away these checks when they come, assuming the envelopes contain junk mail.

Medical loss ratio rebates for 2019

Consider all those millions in unclaimed cash a warning sign to be more vigilant when you look through your mail this fall. Insurers have until Sept. 30 to begin paying out rebates.

KFF estimates that insurers will issue at least $1.3 billion in rebates this year. The total is expected to be especially high because insurers raised premiums in 2018 out of fear that Republicans in Congress would repeal or replace the Affordable Care Act, Cox told Consumer Reports.

According to KFF, insurers in Virginia will pay out the highest total rebates at $149.6 million. Pennsylvania ($130 million) and Florida ($107.4 million) round out the top three states.

Average payouts for individual-market insurance will be highest in Pennsylvania ($990 per subscriber), Virginia ($770) and Minnesota ($670).

What about Medicare plans?

The medical loss ratio provision also applies to certain types of Medicare plans, according to the federal government’s Centers for Medicare & Medicaid Services.

However, if health insurers that offer these federally subsidized plans are required to issue rebates under the provision, the rebates go to the federal government.

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