Smart Benefits: No Healthcare Rebates for RI Employers

Smart Benefits: No Healthcare Rebates for RI Employers

One of the provisions of healthcare reform that went into effect on January 1, 2011 will come to fruition next month.

As part of the Patient Protection and Affordability Act (PPACA), insurance carriers must make sure that they spend at least 80% of premium income from small group employers on claims and quality improvement projects, and no more than 20% on their own administrative costs.

The ratio is slightly different for larger groups with more than 50 employees.  In the case of larger groups, insurance carriers must spend at least 85% on claims and quality improvement projects and no more than 15% on administrative costs. This rule does not apply to employers who self-insure.

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Time for insurers to pay up

Now that the time is fast approaching for insurers to pay up, employers everywhere are hoping that they are due a rebate.

The rebates amount to much more than pocket change. According to the Kaiser Family Foundation, it is estimated that there are rebates due totaling $1.3 billion dollars.

But not in Rhode Island

Interestingly, RI is one of only a handful of states where employers will not be issued rebates. All three of the insurance carriers in Rhode Island are on target with the required medical loss ratios. This includes Blue Cross & Blue Shield, UnitedHealthcare and Tufts. 

As far as the rule goes, these three insurers in RI are spending the right amount of money on patient care and quality improvements rather than too much on administration and profits. 

In RI, employers not getting a rebate on health insurance costs may actually add up to a good thing.

Amy Gallagher has over 19 years of healthcare industry experience. As Vice President at Cornerstone Group, she advises large employers on long-term cost-containment strategies, consumer-driven solutions and results-driven wellness programs. Amy speaks regularly on a variety of healthcare-related topics, is a member of local organizations like the Rhode Island Business Group on Health, HRM-RI, SHRM, WELCOA, and the Rhode Island Business Healthcare Advisory Council, and participates in the Lieutenant Governor’s Health Benefits Exchange work group of the Health Care Reform Commission.

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