Insurers nationwide are set to pay out nearly $2.5 billion in medical loss ratio rebates, according to new data from the Centers for Medicare & Medicaid Services.
More than 11.2 million Americans will be eligible for a rebate across the individual, small group and large group markets, according to the data. The average rebate is $219 per person, CMS said.
The medical loss ratio was established under the Affordable Care Act to limit the amount of premium revenue that insurers can apply to profit. For individual and small group plans, 80% of premium revenues must go to medical costs and for large group plans, it's 85%.
The bulk of rebates will come to people enrolled in individual market plans, according to the data, with rebates totaling more than $1.7 billion to close to 5.2 million people. The average rebate is $322 per person.
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In the small group market, CMS projects that about $423.3 million in rebates will be paid out to 3.4 million enrollees, for an average rebate of $124.
The data are based on MLR reports through Oct. 16. Rebates are calculated on a three-year average, so payouts this year are based on data from 2017, 2018 and 2019.
The Kaiser Family Foundation estimated earlier this year that insurers could owe $2.7 billion in rebates, as their performance on the individual markets proved quite profitable in 2018 and 2019. That's more than double the previous record set for rebates paid out in 2019, which was $1.3 billion.
Strong financial performance in those markets has convinced some insurers to reconsider the markets, including UnitedHealthcare, which filed to expand its offerings on the Affordable Care Act exchanges after scaling back significantly in 2016.