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Show Me the Money! How HR is Responding to ‘The Great Health Insurance Giveback’

by on
in HR Soapbox

 It started last week and really picked up steam this week: Calls and walk-in questions to HR departments around the country from confused employees who received letters—or, in some cases, unexpected rebate checks—from their health insurer.

The New York Times called it the “Great Health Insurance Giveback”: $1.1 billion in premiums returned to policyholders under a provision in the Affordable Care Act (ACA). The ACA requires the refunds when insurance companies spend more than 15% of premiums they collect on administrative costs, like salaries and advertising.

The rebates average $151 per covered employee and more than 12.7 million policyholders will benefit, says the U.S. Department of Health and Human Services. This is the first year the rebate provision has taken effect, and insurers were required to dole out the rebates to employers by Aug. 1.

As the letters from insurers explained, the “Medical Loss Ratio” rule could result in reduced premiums for the upcoming year or a direct check rebate. Employers had the choice.

In fact, the law actually gives employers up to three months to decide how to give back the employees’ money, says The New York Times. And it gives them considerable discretion. Some employers plan on creating “premium holidays” that increase take-home pay or spending the refund on wellness programs.

Employees, understandably, want to know whether this is a pay-me-now or a pay-me-later situation. Thus, the flood of calls and visits to HR.

Smart HR departments headed off these questions with preemptive letters or an email blast to employees explaining what the rebate means and how they'll see the benefits.  

If your company received a refund, how did you pay it back … how did you spread the word to employees … and what reaction have you received?

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{ 1 commentsῂ read them below or add one }

Maggie L. August 13, 2012 at 10:36 am

We’re applying our rebate money to reduce next year’s premiums. We made the mistake of not getting the word out before employees got the letters at home. So our HR person had a lot of heads popping into her office from people thinking they’d won the rebate lottery. Most said they would rather have had the money now than reduce their premiums next year.

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