Checks will be going out to more than 8,000 Minnesotans and a number of businesses in the coming weeks in a rebate program established as part of federal health care reform.
The Affordable Care Act requires health insurance companies to spend at least 80 cents of every dollar collected in premiums on medical care, as opposed to marketing, commissions, administration and profits. Insurers that fall under the mark must return the difference to consumers and businesses in a check or premium rebate.
Minnesota will get about $1.43 million back from two insurers, compared to $8.9 million last year, the first year the law's requirement was in effect. Nationally, the amount of rebates dropped as well, with insurers paying out about $504 million, down from $1.1 billion the previous year.
"It's working," said U.S. Sen. Al Franken, who championed the provision that's based on a Minnesota law passed in 1993. "Companies are meeting the [requirement] more, that's why there are less rebates this year. People are saving the money up front … and companies are using the 80 or 85 percent of premiums on actual health care. Which is the point."
The rebate program, fought by insurers, is one of the more prominent consumer protections in the Affordable Care Act and was one of the earliest to take effect.
Rebate checks are tax-free and must be sent before Aug. 1.
PreferredOne is paying out about two-thirds of rebates in Minnesota. The Golden Valley-based insurer will return $983,686 to 8,060 households that have purchase individual policies, for an average rebate of about $122.
Connecticut General Life, better known as Cigna, will return $451,574 to Minnesota companies that purchased policies through the insurer's large-group market.
