California Health Plans to Refund Millions in Premium Rebates

Nonprofit health plans Blue Shield of California and Anthem Blue Cross must rebate thousands of small business customers $24.5 million and $12 million, respectively, as part of the health law's profit cap for health insurers, according to a report by the Los Angeles Times.

The Patient Protection and Affordable Care Act requires health insurers to spend 80 percent of premiums from individual and small-group markets on medical care or else refund customers the difference. The provision is called the medical loss ratio. Last year, when the rebate first went into effect, 12.8 million Americans received $1.1 billion in health insurance rebates, according to the report.

Blue Shield and Anthem, which are among California's largest health plans, will be refunding primarily small business customers rather than individuals, according to the report. Kaiser Permanente, another health insurance giant in California, will refund $2.7 million to 66,000 individual customers. UnitedHealth Group, which is dwarfed by Kaiser and the Blues plans in the California market, owes $3 million to its small business customers, according to the report.

California insurance regulators have criticized proposed rate increases for Anthem and UnitedHealth, which proposed 14 percent and 8 percent premium increases, respectively, next year for individuals.

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