An estimated 240,000 Tennesseans will get rebates in August on the health insurance premiums they paid last year unless the U.S. Supreme Court strikes down the health care reform plan adopted by Congress two years ago.
The U.S. Department of Health and Human Services announced today that health insurers will collectively pay back $28.8 million to their Tennessee subscribers because the insurers did not pay at least 80 percent of their premium income last year to health care providers. These rebates will average $201 for the 143,000 Tennessee families covered by a policy.
Nationwide, about 12.8 million Americans will receive $1.1 billion in refunds from insurance companies.
The rebates are required under the Affordable Care Act, or ObamaCare health plan, because some insurers spent too big of a share of premiums on administrative, sales and other non-health care expenses. Insurers under the law are required to spend no more than 20 percent of premium on individual policies and no more than 15 percent of premium income on major employer plans on non-health care related expenses.
"The 80/20 rule helps ensure consumers get fair value for their health care dollar," Health and Human Services Secretary Kathleen Sebelius said in a statement today.
The payments are due to subscribers by Aug. 1. But they could be held up or canceled if the U.S. Supreme Court strikes down ObamaCare next week when it is expected to issue its decision on the constitutionality of the new law.
Republican critics of the law claim the individual mandate to buy insurance is unconstitutional.
But supporters claim the law will help ensure that health insurers spend most money on health care and not on administrative expenses.
"These refunds are a powerful example of what ObamaCare does for hard-working families, seniors and small business owners," said Ethan Rome, executive director of Health Care for America Now, which is supporting ObamaCare.
HHS said persons owed a rebate will see their value reflected in:
• a rebate check in the mail
• a lump-sum reimbursement to the same account that is used to pay the premium if by credit card or debit card
• a reduction in their future premiums
• their employer providing one of the above, or applying the rebate in a manner that benefits its employees.