Health Insurers That Overspent On Overhead Face Deadline For Refunding Customers

Insurers Are Required To Spend 80 Pct. Of Budget On Insurance-Related Costs.

80 percent of health insurance company expenditures must go towards health-related costs, as opposed to overhead costs. Photo: Michael Krigsman (CC-BY-NC-ND).

Aug. 1 is the deadline to give consumer refunds for health insurers that spent too much on overhead costs instead of medical care.

Data from the federal government shows more insurers are spending less on overhead costs and more on health care. That requirement, formally known as “medical loss ratio,” is part of the Affordable Care Act. It requires at least 80 percent of premiums be spent on delivering care. Insurers that don’t comply have to issue refunds.

The latest round of refunds to Wisconsin consumers total more than $2.5 million. Robert Kraig — the executive director of Citizen Action of Wisconsin, a group that supports health reform — said the medical loss ratio is a key part of health care reform.

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“We really think it’s important that now that insurance companies play a central role in guaranteeing everyone has access to affordable health care, that they be held accountable,” said Kraig.

The 70,000 people who bought insurance in Wisconsin on the individual market last year will get an average rebate of $52. That rebate can be a check, a credit on the customer’s account or lower premiums in the future.

This year’s refund of $52 is a bit smaller than last year’s, which was $58.

The four health insurers operating in Wisconsin that owe consumer rebates are:

  • Time Insurance Company, which owes $1.16 million
  • Golden Rule Insurance, which owes $750,000
  • Compcare Health Services Insurance Corporation, which owes $524,000
  • The MEGA Life and Health Insurance Company, which owes $144,000