July 29--When the $78 check showed up in David Knowlton's mailbox two weeks ago, he wasn't quite sure what to think.

The St. Petersburg businessman knew the rebate money from his insurance carrier was connected to federal health care reform. He'd seen something about it in the news. But the particulars were fuzzy, given the caustic political debate surrounding the 2010 law.

"I had heard things about the Affordable Care Act, but I didn't know about the details," said the owner of the Impulse Clics eyeglass shop.

Knowlton learned that the rebate -- for health coverage he buys as an individual -- was just a smidgen of the $1.1 billion being disbursed to individual Americans or the employers handling their insurance plans.

He's one of approximately 3 million Americans being notified by mail this month that they will get a rebate. Wednesday is the deadline for insurance companies to notify policyholders if they should expect a check.

The Affordable Care Act rule aims to prevent insurers from spending too much of customer premiums on administrative costs such as salaries, sales or advertising. It requires insurers spending less than about 80 percent of premiums on medical costs or quality improvement to return the difference.

"Where was the money going before?" Knowlton asked of his rebate, which equals more than half of one month's premium.

Florida Blue already has sent explanatory letters to all of its 4 million state customers, said Jon Urbanek, senior vice president of sales and marketing for the insurer formerly known as Blue Cross and Blue Shield of Florida.

"We're getting a lot of questions about what the rebate even is," Urbanek said.

Abut 230,000 Florida Blue members participating in small group employer policies were told they will receive part of $27 million in rebates. The rest of the policies met the cost standards.

An estimated 173 million Americans have private health care insurance. Some, like Knowlton, buy insurance directly from the carrier. But most are insured through their employers, which offer policies under small or large group packages.

Most of these carriers previously met the requirements of the new cost-control mandate, and the rebates are a small part of their overall business, said Teresa Miller, acting director of oversight at the U.S. Center for Consumer Information and Insurance Oversight.

For example, the rebates Florida Blue issued amount to less than half of 1 percent of its annual revenue, Urbanek said.

Nationwide in 2010, 62 percent of individual insurance plans, 83 percent of small group plans and 89 percent of large group plans met the cost requirement, Miller said. The final rebates will reach approximately 12.8 million Americans, including 1.3 million Floridians.

"The ... rule is causing issuers to be more efficient, giving consumers more value for their premium dollar," Miller said in an email.

Those in small and large group plans shouldn't assume they will see rebate checks. Insurance companies are required only to send rebates to the employer.

It's up to human resource administrators to look at individual company policies and decide who is eligible and how to break down the rebate. They can send checks or provide it in other ways, such as discounts on the next year's premiums.

"It really is an administrative challenge," said Florida Blue's Urbanek.

UnitedHealthcare leads the rebates in Florida, with nearly $33.3 million being distributed to small and large group plans, reports from the Centers for Medicare & Medicaid Services show. Golden Rule Insurance, a UnitedHealthcare company offering individual plans, will issue $21.9 million in rebates.

The average commercial rebate payment would translate to about $70 per person or $6 off a member's monthly premium, said Elizabeth Calzadilla-Fiallo, director of public relations for Florida and the Gulf States region.

Humana Health Insurance will return almost $7.4 million in rebates statewide, a vast majority of it going to individual plan members. Spokesman Mitch Lubitz said in statement that the unpredictable nature of health care costs will result in these annual rebate payments.

"It's not surprising that Humana and other insurers will pay rebates in certain states and certain market segments, particularly in this first year ... as we adjust to new payment and pricing requirements."

Urbanek said while he sees why insurers need to be "very lean administratively," this aspect of the health care law does little to make treatment more affordable for individual Americans. But he understands why the idea of a rebate would be popular, politically and with the public.

Knowlton, a supporter of the controversial Affordable Care Act, said he's heard favorable responses to the rebate, even among ardent opponents of the law. He posted a picture of his check on Facebook, and was surprised when friends applauded the rebate.

Knowlton said opponents to the law, which critics call Obamacare, turn a blind eye to the details in the overall plan.

"It makes me want to pay attention more," he said.

Q&A

This summer, $1.3 billion in rebates are being sent to private health insurance customers. Here's what you need to know about whether a rebate could be showing up in your mailbox soon.

What is the rebate?

The Affordable Care Act sets limits on how much insurers spend on administrative costs. Individual policies and small group employer plans can spend no more than 20 percent of customer premiums on administration; large group policies max out at 15 percent. If spending exceeds the limit, the difference is returned to policy holders.

Am I eligible to get a rebate?

You should find out in a letter your insurance company must send by Wednesday. It may tell you only if you qualify. If your insurance is handled through your employer, your employer will get the rebate and determine how much you receive.

What if I don't get a letter?

You can call your company human resources department or your insurance company directly. Or you can search online. Visit www.Healthcare.gov, select the "Get Help Using Insurance" tab and click on the "Your Insurance Company & Costs of Coverage" tab.

The letter and website is filled with jargon. What does "medical/loss ratio" and "80/20 rule" mean?

These terms address the percentages insurance companies spend on medical costs versus administration. For example, companies spending 86 percent of premiums on medical costs and 14 percent on salaries, sales and advertising do not need to issue rebates.

Will I get a check?

Maybe. Individuals who have insurance policies directly with a carrier will be reimbursed with a rebate check. Rebates for small and large plans will be sent to employers that offer the insurance. Workplace administrators will determine if rebates will be distributed via check or in other ways, such as a discount on future premiums.

Where can I learn more?

Several websites discuss the rebates, both pro and con. They include the federal government's www.healthcare.gov; America's Health Insurance Plans, www.ahip.org, and the Kaiser Family Foundation, www.kff.org/insurance.

Mary Shedden

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