Health insurers owe $3 million in refunds to Connecticut consumers or their employers this summer because of a provision in the sweeping insurance reform law passed by Congress in 2010, according to data released Wednesday by the U.S. Department of Health and Human Services.
A provision in the Affordable Care Act, often called Obamacare, requires health insurers to spend a minimum amount of revenue from premiums on medical expenses for customers.
The refunds are for coverage provided last year. Consumers could get a refund check in the mail, receive a lump-sum reimbursement to a debit card or credit card that was used to pay premiums, or receive a reduction in premiums in the future.
But it’s possible people won’t ever see the refunds because their employers are allowed to use them “to improve their health coverage,” according to HHS.
Nationally, health insurers owe $332.2 million in refunds, benefiting 6.8 million policyholders and their beneficiaries, the department said. The average refund for families, or policyholders, it said, is $80. That means that, based on the total amount in refunds and the average refund, 4.15 million policyholders are owed money.
In Connecticut, HHS said, $3 million will benefit 69,186 consumers, which the department defines as policyholders and their beneficiaries. The average benefit to policyholders is $72. That works out to 41,943 policyholders.
The Connecticut average is less than the national average because health plans in Connecticut were priced more closely to the actual cost of providing medical care than they were nationally, the department said.
People who bought individual health plans in Connecticut are owed a total of $381,622 in refunds, the department said, with an average benefit of $14. That would bring the total number of policyholders to 27,259. HHS, however, said the refunds will benefit 37,452 consumers, factoring in both policyholders and their beneficiaries.
No refunds were due in the small-group market in Connecticut.
Among large-group health plans sold in Connecticut, health insurers owe $2.64 million for an average refund of $183 per policyholder, HHS said. That means a refund is due to 14,417 policyholders. HHS said refunds in the large-group health plans in Connecticut benefit 31,734 consumers — policyholders and their beneficiaries.
Refunds are a result of the “medical-loss ratio” provision in the Affordable Care Act. Health insurers must spend 85 percent of each premium dollar on medical expenses for large-group health plans. For small-group and individual health plans, the insurers must spend 80 percent or more.
The U.S. Department of Health and Human Services estimates that consumers across the U.S. have saved a combined $9 billion on health insurance premiums since the medical-loss requirements took effect in 2011. The first report on rebates was issued in the summer of 2012.