Some Maine residents who work for larger employers are expected to receive $2.6 million in rebates from insurance companies this summer as a result of the federal health reform law.
The rebates will benefit 10,600 individuals in Maine, according to a press release from the U.S. Department of Health and Human Services. The average benefit for the 5,600 Maine families receiving the rebates will be $463.
The premium rebates are part of more than $1.1 billion that will be paid out to nearly 13 million Americans under the Patient Protection and Affordable Care Act.
The health reform law requires health insurers to spend at least 80 cents of every premium dollar on medical care and quality improvement. The other 20 cents can go to administrative costs.
Insurers that don’t meet this so-called “80/20 rule” must send their customers a rebate for the difference no later than Aug. 1. Insurance companies are required to notify policyholders whether they have met the 80/20 rule and, if not, how much of a rebate they will receive.
Unlike most other states, Maine will see rebates paid out only by insurers offering policies through the large group market, which serves bigger employers. Insurers dedicated to the individual market, or people who buy health insurance on their own, were exempted from the 80/20 rule last year.
The federal government granted insurers a waiver, holding the spending at Maine’s existing rate, which requires 65 cents of every premium dollar to go toward medical costs.
Former insurance superintendent Mila Kofman requested the waiver after Megalife, one of just three health insurance companies that sells individual, nongroup coverage in Maine, indicated it might leave the market in Maine if the 80/20 rule was implemented.
The rebates to Maine consumers will be sent to the employer administering their insurance plan. The money must then be transferred directly to the employee or used to offset their health care costs.
Congressman Mike Michaud praised the HHS announcement.
“Health premiums should reflect how much insurance companies are actually spending on care, and this provision will provide relief to Mainers who have seen their insurance costs skyrocket while their health care services stay the same,” he said in a statement.
The fate of the federal health reform law, including the rebate provision, are tied to a U.S. Supreme Court ruling on the law’s constitutionality. The court is expected to issue a ruling next week.