June 22--More than 120,000 families in Colorado are eligible for an average rebate of $227 from their health insurance providers this summer, according to a report issued Thursday by the federal Department of Health and Human Services.
While the nation is expecting the Supreme Court to rule at any moment on the constitutionality of the Affordable Care Act, President Barack Obama and his administration have been stressing the popular features of the legislation -- like the announced rebates.
HHS Secretary Kathleen Sebelius said the rebates are coming from a new requirement, known as the 80-20 rule, that insurance companies spend at least 80 percent of policyholder premiums on medical care or quality improvements. If they spend more than 20 percent on administration, salaries and advertising, they have to rebate that portion back to their customers.
According to the HHS report, there are 121,000 Colorado families that are entitled to a rebate this year. Nationally, there are 12.7 million people due to receive $1.1 billion in rebates.
Those rebates are supposed to be paid by Aug. 1 and can come in the form of a direct payment, a reduction in premiums, or in another equivalent manner that benefits the policyholder.
"The 80-20 rule helps ensure consumers get fair value for their health care dollar," Sebelius said in a statement.
HHS officials acknowledged that some consumers, such as those in large employer-based insurance plans, could well see their rebates turned into slightly lower premium costs by their employer. But the law requires any excess administrative costs to be rebated to consumers, directly or indirectly.
According to the legislation, insured people will be getting a letter from their health insurance company explaining the 80-20 rule, whether the company met its requirement and how much money will be rebated to policyholders.
What is unknown is whether those rebates will be paid if the Supreme Court strikes down those portions of the health care legislation that involve the 80-20 rule.
During a campaign rally this week in Pueblo, first lady Michelle Obama said her husband had delivered on his 2008 campaign promise to overhaul health care. She said those reforms are in danger of being repealed by Republicans.
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