Blue Shield of California to issue rebates of $82.8 million

Blue Shield of California is set to issue rebate checks mandated by the Affordable Care Act to the tune of $82.8 million.

Most of the total--$61.7 million--will be divided up among 454,000 individual policyholders who had Blue Shield plans in 2014, reports the Los Angeles Times. The remaining sum--$21.1 million--will be sent to 19,000 small employers.

The reason for such lofty returns is because the insurer failed to spend a minimum of 80 percent of premiums on medical care for individuals and small-business consumers. Blue Shield spent only 76.8 percent.

The insurer says it didn't reach the mark because of the uncertainty surrounding the first year of enrollment under the Affordable Care Act, notes the article.

Yet some consumer advocates argue that rebate returns reflect how insurers overcharge their rates to begin with.

This is not the first time the insurer has issued returns to policyholders. Last year, Blue Shield paid $332 million in customer rebates, down from $500 million in 2013. In 2012, total payouts reached only $50 million.

Blue Shield of California has made headlines as of late, beginning back in March when the California Franchise Tax Board announced it revoked the insurer's tax-exempt status. Then, the insurer refused to disclose how much it plans to spend to purchase Medicaid nonprofit insurer Care1st, which raised concerns regarding whether Blue Shield's $4.2 billion in reserves is subject to charitable trust obligations.

Elsewhere, California's two other big insurers--Kaiser Permanente and Anthem--said they won't have to issue rebate checks this year, adds the LA Times.

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