U.S. health insurers will be paying a record-breaking $1.3 billion in rebates to consumers this year based on their medical loss ratios for the prior three years. The amount, driven by the individual market, exceeds 2012's $1.1 billion in rebates and is nearly double the 2018 rebate total.

The payment of rebates to consumers is based on the Patient Protection and Affordable Care Act's 80-20 medical loss ratio formula. The Act requires insurers in the individual and small group markets to pay the rebates if they do not spend 80 percent of premium revenue on health care and quality improvement. The insurers are limited to using 20 percent of revenue for profits, marketing and administration. (The ratio for large group insurers is 85-15.) Rebates can be remitted as premium credits or lump-sum payments.

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Dan Cook

Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.