ACA requires CT insurers to issue $3 million in rebates

Washington – Thousands of Connecticut residents will get rebate checks or other types of credit from their health insurance companies. They are getting those refunds because the federal government says they paid too much for coverage last year.

The Department of Health and Human Services announced Thursday that Aetna must return $266,816 to those who bought the company’s individual health plans in Connecticut in 2013 and Oxford Health Insurance and Oxford Health Plans, both divisions of UnitedHealthcare, must refund more than $2.6 million to those who purchased  their large group plans last year.

That’s because the Affordable Care Act sets a limit on the amount of premium dollars a company can earn over the claims, taxes and fees it has to pay, a formula called the medical loss ratio. For individual policies, that ratio can’t be more than 80/20, for large group plans it is 85/15.

In a report, HHS said more than 69,000 individuals and families in Connecticut will receive refunds. Those covered by Aetna’s individual policies will receive an average of $14. Those covered by UnitedHeathcare’s group policies will receive an average of $183.

“We are pleased that the Affordable Care Act continues to provide Americans better value for their premium dollars,” said HHS Secretary Sylvia Burwell. “We are continuing our work on building a sustainable long-term system, and provisions such as the 80/20 rule are providing Americans with immediate savings and helping to bring transparency and accountability to the insurance market over the long-term.”

This is the third year in a row Aetna is required to issue rebates to purchasers of its individual policies.

Aetna had to issue more than $2.1 million in rebates in 2012 for policies that were in effect the year before. It continued to miss the 80/20 loss ratio and paid more than $1 million last year in rebates to individuals who held Aetna policies in 2012.

Like UnitedHealthcare, Aetna declined to compete in Connecticut’s insurance exchange, called AccessHealthCT, a move that would have put the companies under greater pressure to hold down premiums

The insurers, however, continue to sell their policies on the open market in Connecticut.

The HHS report said that since the ACA’s medical loss ratio rule took effect, “more insurers year over year are meeting the 80/20 standard by spending more of the premium dollars they collect on patient care and quality, and not red tape and bonuses.”

The report also said if an insurer “did not spend enough premium dollars on patient care and quality improvement,” they must pay refunds to consumers in one of the following ways:

— refund check in the mail;

— a lump-sum reimbursement to the same account that was used to pay the premium;

— reduction in their future premiums; or

— if the consumer bought insurance through their employer, their employer must provide one of the above options, or apply the refund in another manner that benefits its employees, such as more generous benefits.