Tuesday, July 29, 2014

6 Ways to Spend Your Health Insurance Premium Rebate

Many ASHA staff received a letter from UnitedHealthcare informing us that ASHA will be receiving a rebate check. You may recall that last year's rebate was $6.58, so this year's $20.17 may feel like a windfall. Read on to see why you're getting a rebate and how it will be issued.

The Affordable Care Act essentially limits health insurance companies to spending no more than 20 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 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 $42,130.76. 

ASHA covers 87% of our premium, so 13% or $5,627.66 of the refund is due to employees and retirees participating in the plan. We will distribute this money by reducing employee premiums. We have 279 participants, so each participant will receive a premium credit of $20.17. Last year, I suggested that the premium credit might buy you a nice cup of coffee, but $20 opens up a whole host of possibilities. I ran across this article on bankrate.com that suggests you do something that will make a lasting change like (1) purchase a garden hose attachment to clean your windows, (2) invest in a personal finance book, (3) beef up your tool box, (4) have the interior of your car detailed, (5) plant some herbs, or (6) donate it to charity. 

My little herb garden at the start of the season.
  • Q. How much of a rebate did ASHA receive? A. $42,130.76 
  • 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 $5,627.66 
  • Q. How many employees (and retirees) currently participate in the plan? A. 279
  • Q. How much of the refund will each participant receive? A. $20.17
  • Q. How will this money be distributed? A. Active employees in our health plan will receive a premium credit reducing the amount owed for coverage. 
  • Q. When will participants receive this credit? A. In the check we receive for pay period 17 on August 22. (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 2015 if the insurance company is making so much money they have to issue refunds. Unfortunately, that's not how it works. 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. 

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