Monday, August 5, 2013

Health Insurance Premium Rebate Might Buy You a Cup of Coffee

Many ASHA staff received a letter from UnitedHealthcare informing us that ASHA will be receiving a rebate check. I heard some folks were pretty excited and ready to go shopping. Before you break out your credit card, you might want to read this. 

The Affordable Care Act essentially limits health insurance companies to spending no more than 15 percent of premiums on administrative costs like salaries, sales and advertising. Employers are not reviewed individually, we're lumped into a group based on our size and the state our plan is written. 

Last year, UHC collected 0.4% over this allowed amount from its' policy holders in Maryland. The Affordable Care Act requires that they refund this money by August 1 of the following year. ASHA received a check for $12,329. 

ASHA covers 87% of our premium, so 13% or $1,632 of the refund is due to employees and retirees participating in the plan. We will distribute this money by reducing employee premiums. We have 251 participants, so each participant will receive a premium credit of $6.50. In after tax dollars, that might just buy you a nice cup of coffee. 

In Q&A form:

  • Q. How much of a rebate did ASHA receive? A. 0.4% or $12,329 
  • Q. What percentage of the premium for our health insurance do staff members and retirees contribute? A. 13% 
  • Q. How much of the refund will ASHA distribute back to the staff? A. 13% or $1,632 
  • Q. How many employees (and retirees) participate in the plan? A. 251 
  • Q. How much of the refund will each participant receive? A. $6.50 
  • Q. How will this money be distributed? A. Active employees in our health plan will receive a premium credit which will reduce the amount owed for coverage. 
  • Q. When will participants receive this credit? A. In the check we receive on August 23. (Retirees will be mailed a check.) 
On the off chance you find all this fascinating and want to learn more, you can start with this information from the IRS on Medical Loss Ratio (MLR) FAQs

I heard a staff member express the expectation that our costs would not increase in 2014 if the insurance company is making so much money they have to issue refunds. Unfortunately, that's not the case at all. Our claims are very high right now and claims represent 85% of the cost of our coverage. There are also new taxes related to the Affordable Care Act going into effect in 2014 that will increase our costs. We're carefully reviewing our situation and the broader landscape and considering all the things we can do to provide affordable, comprehensive coverage to our staff, their families and our retirees. Stay tuned. 

Update 8/7/13: We had three people leave in the last pay period, so the rebates will be $6.58. Gary Dunham says that $6.58 will buy a beer during Happy Hour at That's Amore. A cold beer sure sounds good after all this hassle. I'd hate to calculate what it is actually costing ASHA to distribute this rebate. 

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