Iowans set to receive health insurance rebate checks

More than 1,700 Iowans can expect to get a rebate from their health insurance company this summer due to a provision of  the federal Patient Protection and Affordable Care Act.

Under the Medical Loss Ratio standard, also known as the 80/20 rule, insurers are required to spend at least 80 cents of every premium dollar on patient care and quality improvement.

If they spend an excessive amount on profits and red tape, they must rebate the difference to policyholders no later than Aug. 1, 2013.

The U.S. Department of Health and Human Services on Thursday said 1,766 Iowa residents will receive an average rebate of $111 from $147,246 that insurers will pay out as a result of the 80/20 rule.

Iowans owed a rebate can receive it the form of a rebate check in the mail, a lump-sum reimbursement to the same account that they used to pay the premium if by credit card or debit card, or a reduction in their premiums. Their employer also could use the rebates to improve health care coverage.

Insurance companies that do not meet the 80/20 standard must send consumers a notice informing them of the rule.  The notice also will include how much the insurer did or did not spend on patient care or quality improvement, and how much of that difference will be returned as a rebate.

Nationwide, about 8.5 million consumers will get a share of $500 million in rebates or about $100 per family.