The check’s in the mail

Updated
 
The check's in the mail
The check's in the mail

Quite a few Americans are going to go to their mailbox this week and next, open it, and find something unexpected: a check from their insurance company. It’s another side benefit from the Affordable Care Act that most Americans mistakenly thinks they don’t like.

When Laird Le found a check for $70.02 in the mail, he wasn’t quite sure why. Turns out, he’s one of the estimated 13 million Americans that will receive a rebate on their health insurance premiums as a result of the health care reform law recently upheld by the Supreme Court.

Look inside your mailbox: By the end of the month, you could be one getting one of these refunds, which are expected to total $1.1 billion this year. Health insurance companies have begun sending letters to customers informing them of a new rule requiring them to spend at least 80 percent of the premiums they receive on actual medical care, not on overhead, advertising, profits or other costs. Health insurers must cite the health care reform law, known as the Affordable Care Act, in the letter.

The technical name for this is the medical loss ratio (or MLR), but it’s much simpler than it sounds. “Obamacare” has an 80/20 rule, which requires insurance companies to spend roughly 80% of all premiums on actual health benefits, rather than company overhead (marketing, lobbying, executive salaries, etc.). When an insurer spends less than 80% on health care for its customers, the company is required to send the customer a check for the difference.

How many checks are we talking about? According to the Kaiser Family Foundation, nearly 16 million Americans will get rebates before the legal due date, which is Aug. 1. As a result, many of the checks – some of which will be small, some may be worth over $500 – will hit mailboxes this week.

The point of this policy in the law, of course, is to benefit American consumers, while at the same time, encouraging efficiency and lower premiums among insurers.

But there’s also a political angle to keep in mind.

As we talked about in May, folks like getting unexpected money in the mail. When they realize it’s because of Obamacare, maybe the law will start to look a little better in those consumers’ eyes.

That checks will hit mailboxes, along with a message explaining the reasoning behind the money, a few months before the election probably doesn’t hurt Obama’s potential benefit, either.

It’s also worth keeping in mind these rebate checks will disappear if Republicans kill the entirety of the law, replacing it with nothing, next year.

Affordable Care Act and Obamacare

The check's in the mail

Updated