Insurers owe $1.3B in medical loss ratio rebates for 2019: KFF 

A dollar sign created by Monopoly game houses is surrounded by Monopoly money. Dice and the car token appear next to the dollar sign as well.
A new Kaiser Family Foundation report estimates how much insurers will pay this year in medical loss ratio rebates. (Getty Images/martince2)

Insurers are projected to pay out a record high $1.3 billion in medical loss ratio (MLR) rebates in 2019, according to a new analysis from the Kaiser Family Foundation.

The MLR requirement was established under the Affordable Care Act and is designed to limit the amount of premium dollars insurers can apply toward administrative costs, marketing and profit. For individual and small group plans, 80% of the money brought in through premiums must be applied to medical costs, and that increases to 85% for large group plans. 

MLR rebates are calculated using a three-year average. So 2019 figures are based on data from 2016, 2017 and 2018, according to the report.

Insurers have the option of paying rebates in premium credits or checks and have until Sept. 30 to make the required payments. 

Much of the premium rebates for 2019 will be for plans in the individual market, KFF found. Insurers will pay back $743.3 million in rebates to more than 2.7 million plan members, according to the study. 

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That’s an average of $270 in rebates per member, the report shows. The large volume of rebates highlights the financial rebound insurers are seeing in this market. 

“So far in 2019, insurer financial performance in the individual market remains strong, despite the effective repeal of the individual mandate penalty effective this year,” the authors wrote. “It is likely that individual market insurers will continue to owe large rebates next year.” 

By contrast, the foundation estimates that $250 million in rebates will be owed to employers with small group plans, and $284.1 million to those in large group plans. Small group employers will receive $1,180 each on average, with an average payout of $10,650 per employer in the large group market. 

The $1.3 billion is a new high, according to the analysis. The total number of MLR rebates hasn’t crossed the $1 billion mark since 2012, when insurers paid out $1.1 billion. 

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Among individual insurers, Centene will have to pay back the largest amount in rebates, according to the analysis, owing $216.9 million across seven states. KFF noted that Centene has not filed MLR data in two states—Kansas and Nevada—so it may owe additional money in rebates. 

That’s a $420 average rebate per member, KFF found. 

Optima Health, operated by Sentara Healthcare, will owe the largest per member payout, according to the report. It will need to pay out $98.9 million in Virginia for an average of $1,850 per member.