4 On Your Side: Health insurers break rule, owe $1.1M

Posted at: 09/20/2013 10:47 PM
By: Ryan Luby, KOB Eyewitness News 4

Some health insurers in New Mexico owe or owed their clients for breaking the Affordable Care Act’s “80/20 rule” – also known as the Medical Loss Ratio.

Under the act, insurers can only keep up to 20-percent of premiums – for profit or administrative expenses --paid by clients on individual plans. Companies must return any amount more than that to clients in the form of a rebate or credit.

The remaining 80 percent must go toward a client’s medical care.

“They’re called health insurers.  They’re not called profit insurers,” Colin Morris said in downtown Albuquerque.

According to public records reviewed by the 4 On Your Side team, four insurance companies collectively owe more than $1,000,000 to New Mexicans over the last three years.  They include: MEGA Life and Health, United Healthcare, Reserve National, and Trustmark.

MEGA Life and Health owed the most in rebates: $478,635.

The company issued a statement about the rebates.  It reads, in part:

“MEGA and it affiliated carriers serve 663 policyholders in New Mexico. We were not surprised that we issued rebates due to the relatively small number of policyholders in the state. A small number of policyholders, and the general unpredictability of individual utilization and health care costs, makes MLR management more challenging for a carrier. The Company is not anticipating a reduction in premium costs to policyholders based on the medical loss ratio calculation or rebate amount due to the general unpredictability of individual utilization and health care costs from year to year.”

United Healthcare owed $267,000.  That company also issued a statement:

“While UnitedHealthcare’s total rebate nationally was less than one percent of UnitedHealthcare’s total annual premium across our commercial business, we also met the federal MLR requirements in 80 percent of the rebate pools. While rising medical costs continue to be the biggest driver of insurance premiums, we continue to innovate and invest in programs and services that expand consumers’ access to care, improve personal health, and slow the rise in health care costs.”

Both companies already issues rebates to clients, according to the statements.

Actuaries at the Office of the Superintendent of Insurance in New Mexico said every health insurer complied with the rebate reporting rules.  In years to come, they believe rebates may disappear.

“I would expect fewer rebates next year as health insurers get used to the Affordable Care Act,” actuary Alan Seeley said.