Rebates and Medical Loss Ratio

This summer, some members will get a notice from us about a rebate. Some will get a rebate, others will not. We want to provide you with information that will help you understand why you may or may not get a rebate. First and foremost, this isn’t the kind of rebate you get at a supermarket or discount store. It’s a result of the medical loss ratio (MLR), which is part of the Affordable Care Act (ACA or health care reform law).

What is MLR? The health care reform law sets guidelines for how insurers spend the premiums we collect from our members. We must use a certain percentage of premium dollars for medical claims and programs that improve the quality of health care, and not for administrative expenses. This is known as the medical loss ratio. When the MLR is below target, we must issue rebates to our policyholders. If rebate checks are due for the prior calendar year, they will be received by August 1.

Where to Learn More

We've created this short conversation to help walk you through some of the details. For more information on the Affordable Care Act, visit bcbsga.com, click on the “Resources” tab and go to the “Health Care Reform” section. You’ll find key features of the law, information for your state and a timeline that shows you what’s changing and when.

FAQ for Individual coverage | FAQ for group coverage

FAQ for Individual coverage

Q. Can I sign up for a rebate?

A. No. A rebate isn’t an offer or an incentive. It’s the money we and other insurers reimburse to policyholders when actual expenditures are lower than projected. MLR and rebates are based on a number of factors that can change from year to year, including the kind of health plan you have, or the state the policy was issued in.

Q. When will I know if I’m getting a rebate?

A. As required by law, we have filed a report by June 1 to the Department of Health and Human Services (HHS). If rebates are due, you should get your check by August 1.

Q. I got a check made out to my child who is under 18. Why wasn’t the check made out to me (parent / legal guardian)? Can you reissue the check and make it out to me?

A. The check is issued to the policyholder. If you have coverage only for the child, the policy is in the child’s name and, therefore, the check is addressed to him/her.

Q. Can you reissue the check and make it out to me?

A. Depending on state requirements we may or may not be able to stop payment and reissue the check. If we can, we’ll have to issue a stop payment on the current check and reissue the MLR Rebate check, which may take up to 12 weeks.

Q. Will I get a rebate again?
A. MLR and rebates are based on a number of factors that can change from year to year, including the type of coverage you have and where you live. Rebate eligibility will be determined on an annual basis and could change year to year. It is possible that you will not be eligible for another rebate.
Q. Why didn’t I get a rebate?
A. Your health plan met the MLR target for your state for the prior year.
Q. What is the MLR threshold for my state?
A. The MLR threshold per the Affordable Care Act for the individual market is 80%. However, some states were granted waivers to have a lower threshold for the Individual market. Go here for information on states that requested and/or were granted an MLR adjustment for the prior calendar year.
Q. Are rebate amounts a matter of public record?
A. The total amount we must pay in rebates becomes public information after we file an MLR report with HHS. The rebate amounts paid to each individual are not made public.
Q. Will I have to pay taxes on the rebate amount?
A. Please consult your tax advisor, as situations vary.
Q. Does getting a rebate mean you’ll lower my premiums?
A. No. There are many factors that contribute to premiums, such as consumer demand for services, the rising medical and prescription drug costs, and advances in medical technology. We are committed to finding ways to control these rising costs of health care.
Q. I got a rebate last year, so why did my premium rate increase this year?
A. Your premium rate is not affected by the rebate. It’s based on certain services, medical and drug prices, federal and state taxes, and other factors. In general, health care costs are rising faster than inflation, which causes your premium to increase. We are committed to finding ways to control these rising costs.
Q. Can you cancel the rebate check and apply the amount to next month’s premium?
A. No. Unfortunately, we cannot cancel the check. However, you can deposit the check and pay toward your next premium bill if that is how you would like to use the rebate.
Q. If you are sending out rebates, does that mean you’ve been overcharging me?
A. No. The rebates are a very small percentage of what we collect in premiums. We set our rates by looking at how much it will cost to administer the plan and to pay our members’ claims. But it’s hard to predict the future.

 

Sometimes those costs are higher than expected, and sometimes they’re lower. Setting our rates is a balancing act. We want our premiums to be low so that health care coverage is affordable. We also need to make sure that the amount of premiums we collect is sufficient to pay members’ claims and provide our members the information and other services their plans offer.
Q. Someone else I know has your insurance through work. Why did they get a rebate and I didn’t?
A. Rebates are calculated separately for Individual and group plans. So a health insurer may be issuing rebates in a state for their group plans but not for their Individual business, or vice versa.
Q. What are administrative costs?
A. These are expenses that indirectly support the delivery of health care services. They include, but are not limited to:
     
  • bullet Staffing customer service lines
  • bullet Updating computer systems needed to process claims and house medical claims data
  • bullet Negotiating contracts with doctors and hospitals in order to reduce medical costs
  • bullet Processing claims
  • bullet Implementing and administering regulatory requirements
Q. What are programs that improve quality of care?
A. These are programs that improve the quality of health care that members get. For example:
     
  • bullet Programs that help our members with chronic (long-term) diseases such as asthma, diabetes and heart disease
  • bullet Wellness programs that help members make positive health changes, like losing weight and quitting smoking
  • bullet Programs that help our members avoid potentially dangerous drug interactions
Q. Who is eligible for a rebate?
A. Any fully-insured individual or group who had an active health insurance policy during the prior calendar year is eligible for a rebate, including subscribers who ended their coverage mid-year or started coverage mid-year, assuming rebates are required per the rules in the Affordable Care Act.
Q. Who do I contact if I have further questions?
A. If you have additional questions, please call the Customer Service number on your ID card.

FAQ for Group coverage

Q. How will you send the rebate to me?
A. If a rebate is required, we will send the rebate to your employer, who can use the rebate to lower future premium rates or give each enrollee a portion of the rebate amount.
Q. When will I know if my employer got a rebate?
A. As required by law, we filed an MLR report by June 1 with the Department of Health and Human Services (HHS). If your employer decides to give enrollees a portion of the rebate amount, you will get a check by August 1.
Q. Why didn’t I get a rebate?
A. It means one of two things: Either your health plan met the MLR target for your state for the prior year and doesn’t have to send rebates, or your employer got a rebate and chose to use it to offset premium costs next year.
Q. Who is eligible for a rebate?
A. Any fully-insured individual or group who had an active health insurance policy during the 2012 calendar year is eligible for a rebate, including subscribers who ended their coverage mid-year or started coverage mid-year 2012, assuming rebates are required per the rules in the Affordable Care Act.
Q. Are rebate amounts a matter of public record?
A. The total amount we must pay in rebates becomes public information after we file an MLR report with the HHS. Because we have already filed a report for the prior year, that information is now public. Please note that the rebate amounts paid to each employer or individual are not made public.
Q. Does getting a rebate mean you’ll lower my premiums?
A. No. There are many factors that contribute to premiums, such as consumer demand for services, the rising medical and prescription drug costs, and advances in medical technology. We are committed to finding ways to control these rising costs of health care.
Q. If you are sending out rebates, does that mean you’ve been overcharging me?
A. No. The rebates are a very small percentage of what we collect in premiums. We set our rates by looking at how much it will cost to administer the plan and to pay our members’ claims. But it’s hard to predict the future.

 

Sometimes those costs are higher than expected, and sometimes they’re lower. Setting our rates is a balancing act. We want our premiums to be low so that health care coverage is affordable. We also need to make sure that we have enough money on hand to pay members’ claims that are submitted and to give our members the information and other services their plans offer.
Q. What are administrative costs?
A. These are expenses that indirectly support the delivery of health care services. They include, but are not limited to:
     
  • bullet Staffing customer service lines
  • bullet Updating computer systems used to process claims and house medical claims data
  • bullet Negotiating contracts with doctors and hospitals in order to reduce medical costs
  • bullet Processing claims
  • bullet Implementing and administering regulatory requirements
Q. What are programs that improve quality of care?
A. These are programs that improve the quality of health care that members get. For example:
     
  • bullet Programs that help our members with chronic (long-term) diseases such as asthma, diabetes and heart disease
  • bullet Wellness programs that help members make positive health changes, like losing weight and quitting smoking
  • bullet Programs that help our members avoid potentially dangerous drug interactions