Created through the Affordable Care Act law, the 80/20 rule, also known as the Medical Loss Ratio (MLR) rule, requires health insurers to spend at least 80 percent of premium money on patient care and quality improvement activities or pay a rebate back to consumers.
This month, the U.S. Department of Health and Human Services reported that since the rule took effect, more insurers year over year are meeting the 80/20 standard by spending more of the premium dollars they collect on patient care and quality, and not red tape and bonuses. If an insurer did not spend enough premium dollars on patient care and quality improvement, they must pay refunds to consumers in one of the following ways:
- A refund check in the mail.
- A lump-sum reimbursement to the same account that was used to pay the premium.
- A reduction in future premiums.
If the consumer bought insurance through their employer, their employer must provide one of the above options, or apply the refund in another manner that benefits its employees, such as more generous benefits.
In 2013, 9,605 Washington consumers received refunds totaling $792,846, an average of $122 per family.