Private Insurers Expect to Pay $2.7 Billion in Premium Rebates in 2020

	Of Interest
Private Insurers Expect to Pay an Estimated $2.7 Billion in Premium Rebates to Consumers in 2020 – Nearly Double Last Year’s Record High A new analysis estimates that private insurance companies expect to pay a record of $2.7 billion in rebates to consumers this fall due to excessive premiums in recent years. The rebates are nearly double last year’s then-record $1.3 billion total. The rebates result from the Affordable Care Act’s medical loss ratio (MLR) provision, which requires insurers to spend at least 80% of their premium income (85% for large group plans) on claims and quality improvement over the past three years. Insurers that do not meet that requirement must refund the difference as rebates. Individual market insurers account for the bulk of the estimated rebates – nearly $2 billion – following highly profitable years in 2018 and 2019 when uncertainties about the marketplaces and repeal of the ACA’s individual mandate arguably led to excessively high premiums. Rebates in this market will average $420 per customer. These amounts are preliminary estimates, and final rebate data will be available later this year. Insurers may issue the rebates in the form of a check to consumers or as a credit applied to the premiums consumers must pay. For people with employer coverage, the rebate may be shared between the employer and employee. Enrollment in individual market plans is expected to increase as millions of people lose their jobs and health insurance and qualify for a special enrollment period, though these individuals would not qualify for rebates being issued this year unless they were also enrolled in 2019. Filling the need for trusted information on national health issues, the Kaiser Family Foundation is a nonprofit organization based in San Francisco, California.
Contact: Craig Palosky | (202) 347-5270 | cpalosky@kff.org
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