Florida insurers must refund $107 million to customers

Sep. 13--The premiums that some private insurers charged over the past three years were too high, so now they will have to return some of that money -- a total of $1.3 billion -- to their customers, according to a new analysis by the Kaiser Family Foundation.

Florida insurers, including health and life insurance companies, are paying $107 million in rebates. Almost $21 million of the total is being refunded to individuals and the rest to employers that have small and large group plans.

The refunds are the result of a measure put into place under the Affordable Care Act to limit insurers' profit.

Called medical loss ratio, that formula requires private insurance companies to spend at least 80% of their revenues from premiums on claims and quality improvement. They can use the other 20% for administration, marketing and profit.

The formula applies to private health and life insurance companies, whether or not they offer Obamacare plans.

"When the ACA first went into effect in 2014, insurers had a lot of trouble figuring out how to price these plans ... and a lot of them lost a lot of money," said Rachel Fehr, a research assistant and one of the report's authors at the Kaiser Family Foundation. "But last year is when they started to make real profits and in many cases they were actually more profitable than they ever were before the ACA went into effect, so they have to return some of these profits to consumers in the form of these rebates."

Most of the refunds in Florida are paid out by the state's largest insurance company, GuideWell, the parent company of Florida Blue and Health Options.

The company is refunding almost $90 million, $14.6 million of which is going to people with Florida Blue individual plans.

"We began processing checks for distribution in early August. The average amount per recipient is $33," said Christie Hyde DeNave, a spokeswoman for Florida Blue, referring to rebates to individuals.

She said the rebates are "proof of our commitment to address the overall affordability of health care for our members."

Other insurers issuing rebates in Florida -- to individuals and employers -- include United States Life Insurance Company in the City of New York, Connecticut General Life Insurance Company, Aetna Life Insurance Company, Aetna Health Inc Florida, Reliance Standard Life Insurance Company and UnitedHealthCare, according to the Kaiser Family Foundation.

Insurers can issue the rebates in the form of a check to consumers or as a credit applied to the premiums. For people with employer coverage, the rebate may be shared between the employer and employee, according to the analysis.

By law, the insurers must start issuing the rebates to eligible members by the end of this month.

The rebates don't apply to all customers.

Florida insurance companies issued the third-largest amount of rebates behind Virginia and Pennsylvania, which are paying t $150 million and $130 million respectively. In 13 states insurers don't have to issue any refunds.

This is not the first time insurers are giving refunds to their customers, although it's the largest amount since 2012. Last year, they refunded more than $700 million.

The analysis found that millions of dollars in rebates from previous years have gone unclaimed, including $37.5 million by people who had individual plans.

Analysts expect that insurers will continue to owe large rebates next year.

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