Today, Congressman Henry Cuellar (D-Laredo) announced that many Texans will soon be seeing a check in the mail from their health insurance company thanks to the medical loss ratio provision of the Affordable Care Act.  Under the provision’s “80/20 rule,” health insurance companies are required to spend at least 80 cents of every dollar they receive in premiums on health care or activities that improve health care quality, rather than on administrative costs.  If insurance companies fail to meet this standard, the Affordable Care Act requires the companies to pay their customers a rebate.

“When Texans receive these rebate checks, they will have evidence they can hold in their hand of one of the ways that the new health care law is improving people’s lives,” said Cuellar.  “The 80/20 rule helps keep insurance companies accountable and makes sure that consumers are receiving top value for their premium dollars—not supporting excessive advertising, lavish executive bonuses or inefficient overhead costs.”

Insurance companies that failed to meet the medical loss ratio standard in 2011 are required to process these rebates no later than August 1, 2012.  Companies that owe rebates will send customers a letter informing them how much they will receive. 

According to early estimates from the nonpartisan Kaiser Family Foundation, insurance companies will provide 15.8 million Americans with $1.3 billion in rebates in 2012.  Texas consumers and businesses are expected to receive an estimated $186 million in rebates.  Kaiser estimates that 92 percent of Texas consumers in the individual insurance market will receive rebates, which is the highest figure for any state in the country.  Small group and large group market plans are each projected to pay about $30 million in rebates to Texas consumers. 

“Texans deserve to know whether their health insurance companies are being responsible with premium dollars,” said Cuellar. “The 80/20 rule is only one of the ways that the Affordable Care Act is increasing transparency and helping to provide quality, accessible health care for hard working individuals and families in our state.”

Starting this summer, consumers can view their health insurance company’s medical loss ratio on HealthCare.gov.  This tool will help consumers know whether they are due a rebate or if their insurance company is providing fair value for its premium dollars.  More information about the medical loss ratio provision is available at http://www.healthcare.gov/news/factsheets/2010/11/medical-loss-ratio.html.