Health insurers are expected to pay out $1.5 billion in rebates to people enrolled in individual health plans this year, after seeing the use of health care services plummet during the COVID-19 pandemic.

That’s according to a Kaiser Family Foundation estimate in April, which noted that insurers paid out $1.8 billion to individual plan enrollees in 2020.

The Affordable Care Act requires insurance companies that cover individuals to spend at least 80% of their premium income on health care claims and quality improvement, leaving the remaining 20% for administration, marketing and profit. If they spend less than 80%, the shortfall has to be returned to policyholders in the form of a rebate.

The rebates that will be paid in 2021 are based on a three-year average medical loss ratio (2020, 2019 and 2018). Rebates this year will be paid to enrollees in individual health plans in effect in 2020.

There are two main drivers of larger rebates this year:

Click here to read full article: Health Plan Rebates in 2021 to Be Second Highest on Record

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