Affordable Care Act means insurance rebates for some residents

Nov 16, 2012

David Swift, a commercial photographer, and Colleen Thompson, a computer consultant, are both self-employed and self-insured. Getting health insurance for their family costs $1,500 a month. Looking for relief from the Affordable Care Act, they were pleased to get a rebate from their health insurance company.
Credit Rebecca Taylor

Some Teton County residents have found something surprising in their mailbox - a refund check from their health insurance company. Since when do health insurance companies send refund checks? Since the Affordable Care Act instituted something called the Medical Loss Ratio, or 80/20 rule. Rebecca Huntington explains.

HUNTINGTON: Jackson Hole resident Colleen Thompson manages her family's health insurance bills. A computer consultant, she's scanning bills into a digital archive. She says that she was SHOCKED by the amount of the health insurance refund sent to her family.

COLLEEN THOMPSON: This is a rebate check for $829.53. And that's for one person, and it's essentially, two months premiums. Seventeen percent of our premiums from last year that we got rebated, which is awesome! And I thought that can't be right that's so much money.

HUNTINGTON: Thompson and her partner, David Swift, are both self employed. So they're both self-insured. They spend fifteen hundred dollars a month to cover themselves and their 16-year-old son. With health care taking such a big bite out of the family budget, she's been active in the health care debate. And while she was surprised by the amount, she understood what triggered the rebate.

THOMPSON: Oh yeah, cuz I'd been active in the whole health care debate with a local group that was agitating for the health care reform bill, whatever it was that we were going to end up with, and so I was familiar with the 80/20 rule.

HUNTINGTON: The 80/20 rule is a provision in the Affordable Care Act that requires insurance companies to spend at least 80 percent of premiums on direct medical care or improving care for individuals, like Swift and Thompson, or for small groups. The ratio for groups with more than 50 employees is 85 percent. While Swift gets his insurance from Salt Lake City-based Intermountain Healthcare, Thompson and their son use BlueCross BlueShield of Wyoming. 

THOMPSON: I got a letter from BlueCross on my policy too, that said, 'Sorry, you don't get any money back because we were good.'

HUNTINGTON: This year, is the first year the law requires insurers to issue refunds based on 2011 premiums. Thompson says they immediately put the 800 dollars in Swift's health savings account, a tax-free account that can be used for health expenses. 

THOMPSON: And eventually some doctor will get it I 'spose.

REBECCA HUNTINGTON: Across town, Linore Wallace researches the timeline for implementing the Affordable Care Act.


HUNTINGTON: Wallace has been in the insurance game for almost 30 years. She and her husband, Jim, run Jackson Hole Insurance Services out of their log home in an East Jackson neighborhood. Her clients were baffled when they started getting refund checks and thought they were phony before she explained the Affordable Care Act's 80/20 rule. Wallace says she's happy to see her clients get refunds. And she says she's also seen some premiums drop as a result.

WALLACE: Cuz a lot of the companies that did do the refunds they either didn't do a rate increase for 2012 or it was a much lower rate increase at renewals. So I think that's a reflection that there probably won't be as many refund checks because they'll have made sure they stayed within those guidelines.

HUNTINGTON: So she says people shouldn't bank on getting refunds next year. Wallace has experienced first-hand how health insurance companies are cutting costs.

WALLACE: That was a significant impact on the agents was that was the first thing that they cut were agent commissions.

HUNTINGTON: Although Wallace says her commissions have been cut by 30 to 50 percent, she says she still supports health care reform. But she warns that the 80/20 rule won't necessarily drive down health care costs. That's because while it regulates how insurance companies price their products, it does not alter what doctors, hospitals or other health care providers can charge.

HUNTINGTON: For Wyoming Public Radio, I'm Rebecca Huntington in Jackson.