Medical Loss Ratio rebates and 2020

[Paul der Krake]

I kinda-sorta knew they were a thing, but what I did not know is that the rebate check goes entirely to the insured regardless of subsidies received.

What?!

http://acasignups.net/20/09/03/mlr-rebates-are-coming-rebates-are-coming

Apparently 2019 is already going to be a record year. But 2020, oh boy. With so many hospitals delaying costly electives and struggling to stay afloat, that can only mean one thing: the checks are going to be insane, bringing some of us in negative health costs territory. This blows my mind.

Have any OGs here received those checks for previous years?

[seattlecyclone]

Wow, I'd never considered that before.

Makes me think...

I've heard that some rural counties struggle to convince even one insurer to offer policies on the ACA marketplace. What's to stop someone in one of these counties with just one existing silver plan on the marketplace, starting a new insurance business, and offering a second plan with a crazy high premium, like $5,000 per month? That second plan, being the second cheapest out of two, would then be the benchmark for all the premium subsidies. This would cancel out the premiums on the existing plan for anyone under 400% of the poverty level. But if you do enroll in that expensive plan you'll pay a modest premium after subsidies and also at the end of the year the insurance company would say "Whoopsies, we charged you $5,000 per month but the claims we paid out were a small fraction of that. Sorry about that! Here, have a $50,000 refund." Seems like a great way to get some federal money flowing to the pockets of the people living in that rural area.

[Paul der Krake]

Fun to think about, but we have broad fraud statutes that would land you in prison pretty fast, right?

That’s if you can even get past all the regulatory approval to even get your plan off the ground with nobody at the insurance commissioner’s office noticing the wildly inflated premiums.

I’m torn as to how this was allowed to happen.

Theory #1: just an oversight. Maybe the MLR section of the law was one of the first things that were drafted, before subsides entered the picture. Nobody caught it when they put the 2,700 pages of the law together. And nobody caught it either when they put together the 20,000 pages of additional regulations together.

Theory #2: someone was aware of it but it was deemed not a big deal, because like stonks, health costs only go up. The idea that you could have substantial rebates is a long shot scenario, whatever, we don’t need regulations around splitting rebate payments, nobody will notice, it’s late and I want to go home.

[Paul der Krake]

Thread resuscitation! It's MLR rebate season!

Only Delaware has announced their results so far. Contrary to what I predicted, the rebates appear to be roughly the same as 2019:

20,857 individual policyholders will receive rebates totaling over $8.4 million, with the average rebate being $405. This will be the second time in state history that rebates will be distributed to the participants of the individual market, with more than $12.6 million being sent to over 19,000 residents last year.

Source: https://news.delaware.gov/2021/08/31/12-3-million-in-health-insurance-rebates-for-individuals-and-small-businesses/

This is just one data point though, and more states should announce their rebates in the coming weeks. If you were on the ACA in 2020, it'd be smart to make sure your insurer has your current address and keep an eye on your mailbox.

[geekette]

We got a whopping $23.26 refund for 2019.  It was applied to our May 2020 premium.

[cupcakery]

We get these every year.  I just cut checks for my employees a few weeks ago.  The largest check was for $138, the smallest for $22.