Health insurance companies are expected to pay $743 million in refunds to consumers this month because of an Affordable Care Act rule, according to a new analysis from the Kaiser Family Foundation. The Obama health law requires insurance companies that cover individuals and small businesses to spend at least 80% of the money they take in as premiums on paying out claims and improving quality. Large group insured plans must spend at least 85%.
The $743 million is about four times the amount paid last year. It will go to some 2.75 million consumers, with average refund expected to be about $270, though some insured individuals could reportedly get as much as $2,000 or so.
The size of the 2019 rebates are the result of individual market insurers overpricing their plans last year, Cynthia Cox, a vice president at the Kaiser Family Foundation, told The Wall Street Journal.
The insurance rebates, which are calculated based on a three-year average, will total an estimated $1.3 billion across the individual and employer markets, according to the Kaiser foundation.
Correction: An earlier version of this story said the refunds to consumers would total $743 billion instead of $743 million. We regret the error.