Health insurers to give $27.9 million in rebates

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Arizona residents and businesses will receive nearly $27.9 million in rebates from health-insurance companies by Aug. 1 under a requirement of the nation's new health-care law.

The U.S. Department of Health and Human Services on Thursday released the estimated payout for businesses and consumers under the Affordable Care Act, which requires health insurers to spend at least 80 percent of premiums on medical care and quality rather than administrative costs such as salaries and profit.

The federal government estimates that insurers will pay an average of a $118 rebate to 235,000 Arizona families.

"None of us are used to insurance companies sending money back, but that is exactly what is happening thanks to the new law," Health and Human Services Secretary Kathleen Sebelius said in a Thursday conference call with reporters.

Health insurers must spend 80 percent of premiums in medical care or quality for policies that are sold to consumers and small employers. For policies sold to larger employers, health insurers must spend at least 85 percent on medical care or quality.

HHS estimated that health insurers that market policies in Arizona will rebate $12.7 million to consumers, $8.9 million to small employers and $6.3 million to larger businesses. Companies that provide health insurance are expected to split any rebates with employees based on the share that workers paid for coverage.

The federal agency has not yet detailed which Arizona insurance companies must pay rebates. The rebates, due Aug. 1, can be paid by check, reimbursement to credit or debit cards, or credit toward future premiums. Health-insurance companies also must send customers a notice about the federal requirement and details on their health-care spending.

The wild card in the expected rebates is the U.S. Supreme Court, which is expected to rule as early as Monday on the constitutionality of all or parts of the new U.S. health-care law.

A report issued last month by Washington, D.C.-based Consumers Union projected that health insurers would rebate more than $36 million to Arizona customers. The report, based on estimates provided by health-insurance companies on April 1, said Blue Cross Blue Shield of Arizona and Golden Rule Insurance would pay out the largest rebates to consumers. The report also projected that Blue Cross Blue Shield, Humana, Aetna and Trustmark Life Insurance Co. would refund small businesses.

The state-by-state rebate report released Thursday was based on the U.S. Department of Health and Human Services' preliminary analysis of health insurers' June 1 reports for coverage in 2011. HHS representatives said more detailed information, including reports for individual insurance companies, will be posted later this summer on

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