Health insurance rebates on their way to millions

Stethoscope on U.S. flag

If you have health insurance -- whether you buy it for yourself or it's supplied by your employer -- you could be getting a refund soon.

This is a provision of the Affordable Care Act, the much-maligned health care overhaul often referred to as Obamacare, that hasn’t received much attention.

It mandates that insurance companies must spend at least 80% of premiums on actual health care and quality improvement.

That grows to 85% for group plans that cover 50 or more people.

If the health insurance company misses the mark, they must send customers rebates.

For 2011, 12.8 million Americans qualify for a total of $1.1 billion in rebates to be paid by Wednesday (Aug. 1).

We're not talking about a big chunk of change here. Most households will receive $30 to $150, depending on whether or not you pay all or a fraction of the premium. But every dollar counts.

To determine if you're due a rebate, go to, a website set up by the U.S. Department of Health and Human Services.

Input your state and insurer, then click on the "Medical Loss Ratio (MLR)" tab. At the bottom of that page, you can see the rates and what they should be. If your insurer doesn't meet the requirements, you're due a rebate.

A major reason you might not be due a check is that your employer is self-insured. If your medical bills are paid directly by your company and insurer only acts as the administrator of your coverage, you won't be eligible.

You should also be mailed a letter by your insurance company letting you know you'll be getting a rebate soon, whether you buy your own health insurance or get it through your employer.

You'll get your rebate in one of four ways: check, discount on future premiums, or a credit back to your account if you pay premiums by credit card.

If you get insurance through your employer and pay part of the premium, look out for a memo from your HR department. Your employer will receive the rebate and then decide how to distribute it to employees.

One thing to keep in mind: Your rebate could be taxed.

If you buy your own health insurance and deduct the premiums, your rebate is taxable. If you take a standard deduction, your rebate is tax-free.

If you get health insurance through your employer and pay your share of the premium with pretax dollars, your rebate is taxable. If not, your rebate is tax-free.

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