Checks come as surprise under 'Obamacare'
Connie Kadansky recently received a $79 rebate check from her Arizona health insurance company.
July 27th, 2012
09:27 AM ET

Checks come as surprise under 'Obamacare'

Your check really might be in the mail.

By August 1, health insurance companies have to refund $1.1 billion in premiums to about 12.8 million customers, thanks to the Affordable Care Act.

The "80/20 rule" in the ACA mandates that health insurers spend at least 80% of their customers' premiums on health services, leaving no more than 20% for administrative costs and advertising. That means if an insurance company spends 78% of the money it collects on health benefits for customers, it has to send rebate checks for the additional 2%.

"The 80/20 rule in the Affordable Care Act is intended to ensure that consumers get value for their health care dollars," a letter accompanying the refund checks says.

Connie Kadansky recently received a $79 rebate check from her Arizona insurance company due to the rule.

"It was a surprise," says Connie Kadansky, who is self employed. "My insurance agent tells me that my insurance is going to skyrocket. He hates Obamacare. I read the letter and I said to myself, 'So what's wrong with this? This is good.'"

There's no way to know ahead of time if you qualify for a rebate, and although checks average $151 per household, there's a lot of variability. Check size depends on how your insurance company collected and spent premiums over the past year, specifically in your state.

In St. Louis, Rabbi Randy Fleisher received a $2,808 rebate check earlier this month for his synagogue, which pays 100% of the health insurance premiums for its ten full-time employees.

His Central Reform Congregation advocated for the Affordable Care Act and helped start "Missouri Healthcare for All."

"There's no doubt that it's a positive family value for people to have assurance that medical care will be coming to them in a way that's affordable and available, " says Rabbi Fleisher. "When you're sick, when there are health care challenges, that's about as vulnerable as you can get."

Not all rebates will come as checks in the mail. Companies have the option to refund credit cards used to pay premiums, or discount future premiums.

Insurers also decide under the health care law whether to charge customers more money upfront, knowing that they might have to refund that money later.

"The presence of a rebate should not be viewed as a sign that an insurer is deliberately over-charging its customers," says Adam Powell, a healthcare economist who consults for insurance companies.

soundoff (148 Responses)
  1. Timmy Suckle

    I kissed my way up to VP at a health insurance company. Now I take over $500,000 of your health care dollars for NO VALUE ADDED to your health care. And that’s just me. Now think about how many other VPs, Directors, Managers, etc. are at my company alone. Now multiply that by thousands of others at hundreds of other health insurance companies. From 10 to 25% of your health care dollars go towards administration that adds NO VALUE to your health care. But my company’s PAC dollars will continue to fool you little people into thinking that a single payer system will be bad. Little people like you are so easy to fool. Little people also don’t realize that a single payer system is the ONLY system that would allow little people (as an entire country) to negotiate better health care prices. Little people don’t realize that the Medical Cartels already know that. And that is the reason why the Medical Cartels spend so much PAC money from the hospitals and doctors lobbying against a single payer system. Some little people say that a single payer system would cost you little people more. But if that were true, then wouldn’t the hospitals and doctors WANT that extra money? Yes they would. So why do the Medical Cartels lobby against a single payer system? It’s because the Medical Cartels know it would allow little people to negotiate better health care prices. And that’s what the Medical Cartels are afraid of. Period.
    But us big wigs at insurance companies, hospitals, and pharmacy companies don’t ever need to worry about health care no matter what it costs. We get our health care paid for one way or another by you little people. And we get the little people that work at our companies to contribute to our PACs. And us big wigs say it’s to protect the little peoples’ jobs. But in reality it would be in the little peoples’ best interest to NOT contribute to the PAC. Again, little people are so easy to be fooled. I won’t ever have to worry about losing my job with so many little people being brain washed by the Medical Cartels’ PAC money. Not only that, the Medical Cartels’ PAC money is used to elect so many republicans that will never allow a single payer system. Republicans have always fought against any meaningful health care reform. But that’s what our Medical Cartels’ PACs pay them for. Politicians can be bought so easily.
    Pretty soon the only people that will be able to afford health care is us big wigs. And that’s the way it should be. We don’t want you little people using up the resources when we need them. And once again, I thank you little people for capping my SS tax at the $106,800 level. Now I only pay 1.3% SS tax and you little people pay 6.2%. Also, thank you for extending my tax breaks. I’m using the extra money on my vacation houses.

    July 30, 2012 at 12:08 | Report abuse | Reply
    • rntusnarky

      Hope you weren't intending to be helpful. I know how people 'kiss' their way up many a corporate ladder, however you're continued use of the term 'little people' makes me suspect that you all that high up. Maybe you are in the industry, and well informed, but your imaturity, rudeness and lack of regard for others makes me question your motive in sending this rant, which also came with 'no value added.'

      July 30, 2012 at 19:19 | Report abuse |
    • Hahahahahahahahahhaha

      Just replace Timmey Suckle with ANY insurance company executive of your choice and then it's ALL TRUE!!!!!!!! Hahahahahahahahahaha

      July 31, 2012 at 10:15 | Report abuse |
    • Ed Tazelaar, II

      I doubt very much Timmy Suckle that you are even connected to the health insurance industry and the only thing you did was post a lot of words.

      October 30, 2012 at 23:09 | Report abuse |
  2. Andrew

    I would like to know if this policy also applies to the government's version of health care, medicaid, and medicare. It would only be fair that they be subject to the same rules that they make for the private industry. Anyone have any data on that?

    July 30, 2012 at 12:10 | Report abuse | Reply
    • rntusnarky

      It does NOT apply to government officials or they would have voted it down.Be real, socialism is for everyone except the socialist.

      July 30, 2012 at 19:21 | Report abuse |
    • Craig

      The requirements for Federal employees and elected officials are MORE stringent.


      July 30, 2012 at 21:03 | Report abuse |
    • alfredo

      Overhead for Medicare is something like 3% or 11% depending on which think tank including the CBO says. That is pretty good in comparison to the average overhead for private plans (some are better than others as the story shows).

      Congress and other government employees have access to the Federal Employee Health Benefit plan. Because of the size of their pool the risk is spread out, and the sheer numbers gives the plan clout with providers. I think it should be opened for all Americans, not just government employees.

      July 30, 2012 at 23:35 | Report abuse |
    • Jonah Gibson

      Medicare does not pay executive bonuses nor shareholder dividends so Medicare's administrative costs are only 20% of what private insurers pay relative to benefits provided. In other words and in spite of what we've been led to believe, Medicare is 5 times more efficient at delivering patient services than private insurance companies. Medicare is not subject to the refund provisions of the Affordable Care Act, but if it were, it would not have to pay.

      October 9, 2012 at 11:26 | Report abuse |
  3. SheilaKA

    Don't get too excited. Lots of companies will NOT be required to send out rebates because they are paying out 80% or more in health care benefits. You can check your carrier's MLR (medical loss ratio) at:
    Click on "Get Help Using Insurance" and then choose "Your Insurance Company & Cost of Coverage"

    July 30, 2012 at 12:13 | Report abuse | Reply
    • Tim

      Also, am not sure but I think any plan that is "grandfathered in" is not required to send out rebates under the new law, because they are not covered by the new law. I know Kaiser is doing that for preventive care (supposed to be for free, but is not). Applies as long as no substantive changes are made to the law (whatever that means).

      July 30, 2012 at 17:37 | Report abuse |
    • Shaban

      Because of the health care bill mttnreiay on individual policies are fast disappearing. In my state BCBS has one of the two available HMO's that still has mttnreiay and the premium is outrageous. The last quote I did for a family of three in their late 20 s was $1056 per month. The other company has a longer waiting period but the premium dropped to $875.

      October 14, 2012 at 01:05 | Report abuse |
  4. Andrew

    found the answer. Medicare administrative costs are in the range of 12-30% depending on who you source for information. This number is skewed by the fact that Medicare is administrated in a large part by private insurers who then bear the costs of billing and other administrative fees. The vast majority of private insurers also fall into the 12-15% average administrative costs including the added billing costs so in terms of efficiency, the private plan still wins out. It's likely that there will be very few of these refunds sent out. Interesting law though.

    July 30, 2012 at 12:23 | Report abuse | Reply
  5. Thomas B.

    Keep my $79 check. The small company I work for is having to drop BlueCross as it's employee's health coverage due to Obama jacking up the price. Getting bids on United Health of which I've only heard bad things about... but can't promise anything with the skyrocketing premium prices the Hokey Hawaiian is scheming while out golfing... again.

    July 30, 2012 at 12:50 | Report abuse | Reply
    • Jensen

      You're a Teathug idiot, the point of the ACA is for prices to go down you ignorant boob, but nice try hater.

      August 25, 2012 at 21:24 | Report abuse |
  6. Doc A.

    I just learned an interesting dynamic from the company that I was laid off from at the end of 2011. I inquired to the HR person about the status of this rebate, and the reply was that "its all going back towards 2012 premiums" ..Now Im not a bright guy, but something tells me that is the wrong answer, knowing that all the "laid off" folks paid in to the 2011 premiums FOR WHICH this rebate was created for. Something tells me in some bi law somewhere that this is NOT being handled correctly for those of us so fortunate to lose our jobs, thus not get to partake in the 2012 premiums for which they are allocating this rebate from 2011... Hmmm , any thoughts from someone more informaed than myself ?

    July 30, 2012 at 20:34 | Report abuse | Reply
    • Gmarco

      Doc. According to the ACA, the rebates are to be sent to the Employer first (it can be a check or premium credit). The employer can then decide how the rebate is distributed, whether directly to the employees, or offset current insurance costs. If an employer is no longer in business, the checks are sent to the members who were last in the group plan. You should also be aware that not all insurance policies are the same. For example, an employer can offer an HMO and a PPO. The MLR maybe 82% on the HMO and 78% on the PPO. The rebate would be the 2% on the PPO even though the average is still 80% for the Group. The ACA dictates the rebate should only be applied to those who currently have coverage through the emplorer. I work at a non-profit insurance company (yes, there are non-profit insurance companies) and though our overall MLR was 83% for all markets/products, we still paid out over $6mil in rebates for one product in 3 markets (we have 6 products in 14 markets). The dynamic that should truly concern you will be the premium increases that you will see as insurance companies (particularly those "for profit") try to maximize their 20% on all products/markets

      July 31, 2012 at 13:33 | Report abuse |
    • Lsugrl22

      I just found this out myself! I am no longer an employee of the company I was with in 2011! I am fuming! So, they are using a portion of what should have been mine back, to put towards their employees premiums for 2012!! I am not their employee in 2012, nor do I even have that insurance company any longer! Sounds to me that should be MY money! They should have rebated the ex employees what they should have gotten and then used the balance toward their current employees premiums!!

      August 6, 2012 at 12:11 | Report abuse |
  7. just wondering

    So How much should the government get for this.........

    July 30, 2012 at 20:59 | Report abuse | Reply
  8. sam

    I work on an Service Contract Act (SCA) Government Contract. Basically, important government jobs are outsourced to tiny towns where a good paying job is hard to come by. We used to earn a Health & Welfare cash benefit, totaling about $245 bi-weekly. Recently, after the contract was renewed, the company chose a health insurance provider with 3 available policies for us to purchase with that money, and take what we had left over from the H&W benefit & deposit it into a 401k. Somehow, over the course of a 5 year contract, this would save the company approximately $5 mil. Basically you have residents of a rural community, working very hard for too little- being paid $10.51 per hour and paying $490 a month for health insurance. I'm hoping my rebate doesn't get lost in the SCA jumble. Not to mention that since many couples work there together, such as me and my husband, we weren't allowed to buy one family policy. We each had to purchase separately, so $980 for a family of two working adults' healthcare for one month, excluding dental and vision. I could have purchased private insurance for less than $250 to cover us both. The executives living in bigger cities with much larger salaries have no issues with these expensive plans, so we're stuck with it. A rebate would be incredible!

    August 1, 2012 at 19:12 | Report abuse | Reply
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    August 5, 2012 at 12:13 | Report abuse | Reply
  10. spoilers4me

    It's hard to take you seriously;

    1) Bigwig
    2) Our social security tax is 4.2%
    3) Your cap is not 106,800.00, it's $110,100.00

    Three strikes, you're out.

    September 5, 2012 at 01:38 | Report abuse | Reply
  11. Med

    I don't know what type of insurance opniots you have in your area but out here in Canada we have BCAA (British Columbia Automobile Association) and they also offer medical insurance for trips. You might want to look into something like that from your area. Some travel agencies might offer a decent plan as well. Just make sure you ask them specifically if you will be covered in BC. BCAA is who I go to when I travel to the US because the US doesn't accept our policies.I hope you have a great trip. I just got back from Whistler today and we had some great boarding, it snowed the whole time but visibility was great.

    October 11, 2012 at 07:38 | Report abuse | Reply
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  13. saamantharuthprabhu

    In my opinion it takes a lot of time to anyone to get a perfect insurance policy for themselves and one need to check that they get an ideal health policy for the price that they can afford to pay comfortably !


    December 20, 2012 at 04:25 | Report abuse | Reply
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    January 9, 2013 at 07:47 | Report abuse | Reply
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    April 19, 2013 at 18:35 | Report abuse | Reply
  16. Bob

    Pay $20,000 in premiums and copays and you too can get a check for $79 at the end of the year. There's a reason why democrats are also known as low information voters.

    July 20, 2013 at 01:46 | Report abuse | Reply
    • Bob

      I am not sure it it's due to biased reporting or incompetence, but you failed to state exactly how much money Connie Kadansky paid for health care or how much it's gone up since Obamacare was passed. Please tell us. Exactly how much did she pay to get $79 back??

      July 20, 2013 at 01:53 | Report abuse |
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