Are You Eligible for a Health Insurance Rebate?

Two billion dollars.

That’s the aggregate amount of health care rebates in 2020 that is expected to be paid back to plan holders over the coming months – and it’s about twice as much as it was one year ago. In fact, this year’s health insurance premium rebates could set a record for what gets paid back to consumers – and it’s all because insurer profitability is through the roof and they have to comply with certain standards. This means that depending on your healthcare situation, you could be eligible for several thousand dollars in rebates.

In this post, we’ll take a closer look at why rebates are issued, who is likely to qualify for them and more.

Why Are Health Insurance Rebates Issued?

It’s a bit of a complicated answer, but we’ll do our best to explain this clearly. Simply put, insurance companies that offer either group or solo policies must abide by an 80-20 medical loss ratio. That means 80 percent of paid premiums need to be spent on healthcare and related medical costs, while no more than 20 percent on administrative necessities. The ratio is determined based on a three-year rolling average, so the rebate that consumers can expect this year is actually based on results from the years 2017, 2018 and 2019.

The rebates aren’t indicative of poor years from insurance companies, just that they need to meet the aforementioned medical loss ratio. Most insurance companies will deduct any savings from the forthcoming year’s premium costs. If consumers are no longer enrolled in a particular healthcare plan that they’re owed a rebate on, they’ll likely be sent a check.

It’s estimated that about 8 million Americans are eligible for a rebate this year – and even more could be due a rebate next year when the number is expected to be even higher than $2 billion due to a decrease in spending on elective medical treatments and procedures in 2020 amid the COVID-19 pandemic. Qualifying Americans are more likely those that hold individual healthcare policies or those on small group plans.

What Does This Mean for Premiums in 2021?

The Open Enrollment period is coming up this fall when consumers can make any adjustments to their healthcare coverage. And one of the biggest questions is how much premiums will be impacted by the coronavirus pandemic? We don’t have a great answer, as estimates have been all over the board. Some experts have predicted a decrease in healthcare costs, while others have predicted a double-digit increase in premiums. There’s a lot of uncertainty, as the big worry is that delayed care during the pandemic will result in more medical care sought by Americans next year to make up for avoiding the doctor’s office and hospitals as the pandemic raged. To be safe, expecting a premium increase of anywhere from 3 to 5 percent would likely be wise.

Featured Image by Nick Youngson


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