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FL #1 in Rebates; Blue Owes $20M

Stethoscope on a pile of dollars.
Creative Commons

Insurers must pay $41.7 million in rebates to Florida individuals and employers this summer, an amount that far exceeds refunds in any other state, according to a federal report released Thursday. 

Companies affiliated with Florida Blue in Jacksonville -- Blue Cross and Blue Shield of Florida and Health Options Inc. -- owe a total of $20 million, nearly half of the total.

The latest round of paybacks brings Florida's three-year total from the Affordable Care Act's rebate program to almost $220 million. This  year's rebate will average $65 per family in Florida, according to the report from the U.S. Department of Health and Human Services. 

The companies that owe the most in refunds to Floridians, the report says, are:

  • Large-group market: Health Options Inc., $5.7 million;
  • Small-group market: Blue Cross and Blue Shield of Florida Inc., $10.1 million, followed by Health Options Inc. and UnitedHealthcare Insurance Co.
  • Individual policy market: Golden Rule Insurance Co., $4.1 million, followed by Humana Insurance Co., Time Insurance Co., and four others that must pay at least $1 million.
  • (For more specifics on companies paying rebates in Florida, see chart)

The rebates are triggered by a provision in the ACA that requires insurers to spend most of the premiums on patients’ health-care needs and on quality improvement.  For a large group plan, the minimum is 85 percent; for individual and small group plans, which have higher enrollment expenses, the minimum is 80 percent.
This means that companies may allocate no more than 15 to 20 percent for administrative costs, marketing and profits. If they go over the line, they must rebate money to consumers.

The Obama administration calls it the “80-20 Rule.” The industry traditionally calls it the “medical-loss ratio,” or MLR, although some companies have changed the lingo to “medical-benefit ratio” because it sounds more customer-friendly.

“We are pleased that the Affordable Care Act continues to provide Americans better value for their premium dollars,” Sylvia Burwell, the new Secretary of Health and Human Services (HHS), said in a press release. She added that “provisions such as the 80-20 rule are providing Americans with immediate savings and helping to bring transparency and accountability to the insurance market over the long-term.”

It's not clear why Florida’s $41.7 million rebate total is so much higher than that in any other state in the overall rebate rundown released by HHS. The next-highest is Maryland, at $17.3 million.

The most populous state, California, has a rebate total of under $12 million, slightly less than New York.  Texas, which also has more people than Florida, has a rebate total of $13.7 million.

Florida also has more individuals who are to receive rebates than any other state:  981,273.  Nationwide, the number who will receive refunds is 6.8 million, the report says. The average refund per family is $80.

Interestingly, the state's consumers may never have seen these rebates, if Insurance Commissioner Kevin McCarty had had his way. As Health News Florida reported in 2011, McCarty in a letter to HHS tried to get the state an adjustment of the 80-20 MLR, saying the rule "will cause permanent, irreparable harm to our market and the distribution channel for health products and services."

After that didn't fly, McCarty asked HHS for a waiver that would allow a four-year phase-in, to make it more palatable for the insurers. The Obama administration turned that down, as well.

The HHS report indicates that the main payoff for the 80-20 Rule is deterrence: Insurers have adjusted their spending habits to avoid having to pay rebates. This shows in the rebate totals, which have gone down each year since the program began in 2011.

Floridians received rebates totaling $124 million in the summer of 2012 for MLR violations the year before. In the summer of 2013, the rebates were $54 million. Now they are $41.7 million.

Even greater savings to consumers has come from reined-in premium costs, the report says.   While the consumer refunds for 2013 total $330 million nationwide, HHS says a much larger amount – $3.8 billion – was saved on premium costs up front.

For consumers who bought individual and family policies, rebates may come as a check in the mail, a reimbursement to a bank account or a direct reduction in future premiums. If the insurance came through the workplace, the employer must provide the refund in one of those ways or use it in another way that directly benefits employees, the law says.

In its report, HHS shows a dramatic reduction in overhead costs on individual policies and a small but significant reduction in overhead on employer plans since the rule went into effect. On average, overhead has dropped to 12.2 percent from 13.1 percent  during the three-year period.

--Health News Florida is part of WUSF Public Media. Contact Editor Carol Gentry at 813-974-8629 (desk) or e-mail at For more health news, visit

Carol Gentry, founder and special correspondent of Health News Florida, has four decades of experience covering health finance and policy, with an emphasis on consumer education and protection.