8 Million People Could Get A Health Insurance Rebate This Year

Health insurance companies are projected to owe rebates to almost 8 million people this year. Are you one of them? According to the Kaiser Family Foundation, 7.9 million policyholders will receive some money back from an estimated $2.7 billion in premium rebates. This year’s rebate for those with individual policies or who participated in small or large group plans is twice what it was last year, but it is unclear whether the amount will continue to rise.

many question marks forming a large one

Why The Rebates?

Insurance companies that sell individual or group policies are required by law to spend a certain percentage of the premiums they collect on healthcare costs, as opposed to on their own administrative costs.  This “medical loss ratio” is usually 80/20, meaning insurance companies are allowed to put only 20% of premiums paid by enrollees towards their own marketing, administration, and profits. The rest has to go towards medical costs and quality improvements. If insurance companies do not meet this standard, then they must give a rebate to their policyholders. 

How Much Will The Rebate Be?

Each year, the medical loss ratio rebate is calculated based on a three-year average of insurance companies’ financial data. The rebates this year are based on data collected from 2017, 2018, and 2019. Insurance companies who were not in compliance with the 80/20 rule during these years will either send a check to policyholders or deduct a rebate from premiums. The average rebate for 2019 was $208, depending on the state and the insurance company.

So will rebates remain the same for next year or will they be affected by the coronavirus pandemic? Right now, it’s unclear, because it’s unclear how the health crisis will end up affecting the price of insurance premiums.  According to Karen Pollitz, a senior fellow with the Kaiser Family Foundation, “Insurance companies aren’t having a bad year, profit-wise. While they’ve paid out for claims related to treatment of coronavirus patients, they’ve paid far less than projected on claims related to elective medical procedures.”

Pollitz suggested that early estimates by insurers have been all over the board as to how much monthly 2021 premiums will cost. So far, insurers have changed their cost-sharing structures in order to reduce the amount that policyholders will have to pay out-of-pocket. “The thought was that people who are struggling during the economic crisis would appreciate this relief and help some to maintain coverage they might not otherwise be able to afford,” Pollitz said.

caucasian woman's eyes staring at twenty dollar bills in her hand.

It is estimated that next year there will be an even bigger rebate due to the pandemic, but “if insurers do reduce their premiums now, then the medical loss ratio looks better,” meaning that there is still a chance that the rebate will be smaller next year. 

Can Your Health Insurance Company Drop You?

Insurance companies are businesses, and, like most businesses, they have terms and conditions of service. It is possible for your health insurance to legally drop you, but only under certain circumstances. If this happens to you, don’t worry! EZ.Insure will help you find a new plan, for free. We know that you have a lot on your plate and might be feeling overwhelmed, so we will take that weight off your shoulders and help you to get back on your feet.

Reasons You Can Be Dropped

persons head with a mask on in a circle with the word "fraud" underneath it
Insurance fraud is one of the reasons that your health insurance company can drop you.

Insurance companies cannot drop you for any reason; there needs to be just cause. Here are some circumstances when you can be legally dropped:

  1. Insurance FraudIf you misuse your insurance policy in any way, then you have broken your contract with the company. Fraud can include faking your identity, or filing false claims. 
  2. Failure To Pay– Obviously,  if you fail to pay your premiums, then you will be in breach of your contract with the insurance company. If you have employer-based insurance that is  not automatically deducted from your paycheck, then make sure to pay your premiums on time. If you are lucky, you will have a grace period for unpaid premiums, although most insurance companies do not offer this. 
  3. Losing/Quitting Your Job – If you receive your health insurance through an employer, and lose your job, then your health insurance company has a right to drop you. You also forfeit your coverage if you voluntarily leave your job. 

While some people may think that you can get denied for filing too many claims, that is a myth. As long as your claims are legitimate, then you don’t have to worry. Health insurance companies in the U.S. are regulated by many laws on both the state and federal levels, so you can be sure that you won’t lose coverage just for making claims on your policy.  

picture with a road and 2 arrows poiting to an orange box with possibility written above it
EZ will find you an insurance plan after your company drops you. You have other possibilities.

There Is Hope

If you do end up losing your health insurance, don’t worry, you have options, and time. When a health insurance company drops you, they must give you 30 day’s notice before terminating  your plan. You also qualify for a special enrollment period when you lose health insurance, so take this time to compare other plans and sign up for a new one. If your plan was employer-based, then check to see if your employer offers COBRA plans to temporarily replace your old plan. 

Finding a plan can be overwhelming, especially after losing coverage, but we’re here to help. If you are lost, then EZ will provide you with a personal agent who will compare all the available options in your area, for free. Our highly trained agents will listen to your healthcare needs and budget, and advise you on which plan checks all of your boxes. To get free instant quotes on all plans, enter your zip code in the bar above, or to speak to an agent, call 888-350-1890. No hassle, no obligation.