Individual Market News
Published August 12, 2019
Your clients with a Premera Blue Cross Blue Shield of Alaska individual health plan in 2018 may receive a Medical Loss Ratio rebate in the mail. Letters with checks begin mailing August 23, 2019 to eligible individuals.
The Affordable Care Act requires Premera to issue a rebate to individuals if Premera does not spend at least 80 percent of the premiums it receives on healthcare services (such as doctors and hospital bills) and activities to improve healthcare quality (such as efforts to improve patient safety). No more than 20 percent of premiums may be spent on administrative costs (such as salaries, sales, and advertising).
This requirement is referred to as the Medical Loss Ratio standard or the 80/20 rule. The 80/20 rule in the Affordable Care Act is intended to ensure that consumers get value for their healthcare dollars.
The Medical Loss Ratio rule is calculated on a state-by-state basis. In Alaska, Premera did not meet the Medical Loss Ratio standard. In 2018, Premera spent only 76.4% of a total of $163,489,576 in premium dollars on healthcare and activities to improve healthcare quality. Since it missed the 80 percent target by 3.6% of premiums it received, Premera must rebate 3.6% of health insurance premiums.
Questions?