Health Insurers in Arkansas Owed More than $7.1M in Rebates for 2014

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Arkansas consumers and businesses are owed more than $7.1 million from health insurers because those companies collected too much in premiums last year than what they spent on medical care, according to federal officials.

The rebates were triggered by the Affordable Care Act, which states that plans covering individuals and small businesses must spend at least 80 percent of the premiums on medical care or other patient health initiatives, rather than on salaries and administrative expenses.

Plans covering larger employers — in Arkansas, companies with 51 or more covered employees — must allocate at least 85 percent of premiums for medical care.

If spending on medical care falls below the required percentage, known as the medical loss ratio, the insurer must issue rebates.

Of three companies that offered plans on Arkansas’ health insurance exchange, Centene was the only one that owed rebates based on its medical loss ratio for 2014, the Northwest Arkansas Democrat-Gazette reported.

The company spent about 75 percent of the $133 million it collected in premiums last year on medical care and related expenses, according to the U.S. Department of Health and Human Services’ Centers for Medicare and Medicaid Services.

Nationwide, 5.5 million consumers received $470 million in rebates, and the average rebate was $129 per family, according to the agency.

Minnesota-based UnitedHealth Group, which is offering plans on the exchange for coverage taking effect Jan. 1, paid $6.7 million in rebates for premiums it collected last year.

Other companies that paid refunds to consumers in Arkansas included Mid-West National Life Insurance Co. of Tennessee, which paid $294,893; Humana Insurance Co., which paid $94,531; and Companion Life Insurance Co., which paid $22,333.