Michigan consumers will get about $13 million in refunds from health insurance companies that kept too much of their premiums instead of improving coverage or reducing rates, a report released Thursday by the U.S. Department of Health and Human Services said.
The refunds will go to 184,297 Michiganians, as required by the federal Affordable Care Act. A provision known as the 80/20 rule requires companies in the individual and small-group markets to spend at least 80 percent of premium dollars to improve health care, or return the money to customers. Profits and administrative costs can’t exceed 20 percent.
In the large-group market, 85 percent of premiums must be invested to improve health care, with profits and administrative costs capped at 15 percent.
Among companies listed by the U.S. Department of Health and Human Services on Thursday, Golden Rule Insurance Co. will refund the largest amount: $2,289,185. HealthPlus Insurance Co. follows with $1,719,591 in refunds.
Rick Murdock, executive director of the Michigan Association of Health Plans, said there are nearly 150 health insurers doing business in Michigan. Most of the companies required to pay refunds have few customers in Michigan.
“The Michigan companies are very, very sensitive to the medical claims and to this very issue, so they’ve cut their administration costs in order to comply,” Murdock said
This year, 6.8 million consumers nationwide are set to receive more than $330 million in refunds, with an average refund value of $80 per family, federal officials said. Health insurance companies are required to provide the 2013 refunds by Aug. 1.
The Michigan consumers will see an average refund of $118 per family, according to the Health and Human Services department.
“The 80/20 rule is bringing transparency and competition to the insurance market, ensuring that consumers are continuing to receive value for their premium dollars,” Health and Human Services Secretary Sylvia Burwell said in a statement.
Staff Writer Mark Hicks contributed to this report.