Will I Get Money Back From Health Insurance?

When getting an insurance policy, there are various things to keep in mind. One question that often seems to pop up in people’s minds is, “Will I get money back from health insurance?”

The answer is simple. Yes. But it also depends on the type of insurance policy you have or want to purchase. That’s what we will explore in detail.

How to Get Money Back From Health Insurance?

Is it possible to get money back from health insurance? Did you know that a significant number of Americans, around 8.5 million, are currently eligible for refunds from their health insurance providers this year?

Thanks to the Affordable Care Act, insurers must spend 80 percent of the amount they collect on medical claims and initiatives such as wellness programs. If an insurer spends less than the 80 percent set out, they must refund you.

The usual anxiety associated with receiving bills, many Americans were pleasantly surprised to discover refund checks enclosed in letters from their insurance companies. In 2012, 13 million rebates were distributed across all 50 states. Presently an additional 8.5 million rebates averaging approximately $100 each, are in the process of being sent out.

Insurers were recorded to owe a whopping $743 million in 2018 to 2.7 million individual policyholders, four times their pay in 2017.

The recorded amount is so large because the insurers put steep premium increases on the policies in 2018 so they could cover their uncertain costs. They ended up being able to pay less than 80 percent of it and, thus, owed many people a refund. Due to their concern about establishing rates without fully understanding the rules of the game, insurers priced cautiously, which resulted in high premiums being charged.

Refunds also vary from state to state. Some places offer better refunds, and some don’t. It depends on where you live, so it is encouraged to research and speak with an insurance agent before getting an insurance policy so your agent can help you file a claim.

The 80/20 Rule

The principle known as the 80/20 Rule establishes that insurance companies must allocate a minimum of 80% of the funds obtained from premiums to healthcare expenses and initiatives to improve the quality of care. The remaining 20% can be designated for administrative, overhead, and marketing costs.

This rule is alternatively referred to as the Medical Loss Ratio (M.LR). If an insurance company utilizes 80 cents from every premium dollar to cover medical claims and activities geared towards enhancing the quality of care, its Medical Loss Ratio stands at 80%.

For insurance providers catering to large groups (typically comprising over 50 employees), the requirement is to allocate at least 85% of premiums to healthcare and quality improvement.

If your insurance company fails to meet these criteria, you will be entitled to receive a rebate on a portion of the premium you have paid.

How to Get a Refund?

If you purchased your health insurance in 2018, there is a high likelihood that you are entitled to a refund. Investigating whether you have any outstanding funds from previous years is worthwhile. Below are the steps to determine if you have a refund due.

1. Keep an eye on your mail

It is important to keep a lookout for any mail from your insurer. They will likely notify you of the refund through the mail. It could either come in a lump sum amount or through installments. If, for some reason, you think insurers might not be able to reach you through the mail, be patient. Insurers must make a good-faith effort to contact you to pay the refund. If your email is inaccessible, they will contact you through another medium.

2. Call your insurer

If your insurer has yet to contact you, give them a call to see the status of your refund. You might have missed a notification. Keep yourself prepared with all the details of your plan in case they have any questions.

3. Contact the state

If your insurer cannot find you, they must hand the refund money to the state as abandoned property. The insurer can take a while to hand it over to the state, but that depends on state regulations. The duration of this process varies depending on state regulations and can range from one to five years.

You can check online databases governed by the National Association of Unclaimed Property Administrators. This database includes participation from approximately 40 states. If you have changed your residence, checking the state where you reside when you hold your insurance policy is crucial.

If you aren’t qualified for a refund, you can file an insurance claim if you have health insurance. Finding out what kind of health insurance coverage you have is essential to determine how to file a claim.

Types of Insurance Coverage

There are essentially two types of coverage for health insurance:

1.   Indemnity

In this plan, as per the terms and conditions of the policy, you can claim reimbursement for the expenses incurred compared to the amount insured for specified illnesses.

2.   Defined benefit plans

In the defined benefit plans, you are insured for any pre-agreed illnesses. You will get the insured amount if you contract any of these illnesses.

The difference between the two policies is that, in the defined benefit plan, the sum insured’s payment depends on you contracting the illness rather than any expenditures incurred as it was in the indemnity policy.

How to Submit a Health Insurance Claim?

A health insurance claim can be submitted through two means:

1. Whenever you buy health insurance, your insurance provider will give you a list of hospitals they cover as part of their network. If you go to any of these hospitals, you can use your insurance e-card and continue to be hospitalized without paying any cash. These are the cashless benefits provided by your insurance company.
2. The second way an indemnity claim is paid is by reimbursing expenses. You can pay for all your expenses upfront and get a bill that can then be submitted to your insurer, who will reimburse your expenses. This reimbursement feature can come in handy if you have been submitted to a nonaffiliated hospital in the case of an emergency.

Is There a Time Limit to Submit a Health Insurance Claim?

Most health insurance policies typically mandate patients to submit claims within 24 hours of treatment. The specifics of claim procedures and benefits will be outlined in your policy agreement. Remember, if your policy lapses, you won’t be able to submit any claims.

While it might seem daunting to review the entire policy agreement, it’s crucial to do so. This will help you understand if there are any time limits, claim amount restrictions, caps on room rent, or waiting periods for specific illnesses. It’s not uncommon for health insurance policies to impose waiting periods for certain diseases. This can affect the time limit for claiming insurance, potentially delaying your ability to receive benefits.

Rebates Vary By State and Insurer

The rebate amount can vary from state to state and differ amongst insurance companies.

Insurers issuing large rebates include:

• Santara (Optima)
• Centene (at least $216.9 million)
• HCSC ($78.5 million)
• Cigna ($55.9 million)
• Highmark ($50.8 million)

Note: Not all insurers owe rebates, and the absence of a rebate does not indicate overcharging. Group plans have a lower likelihood of owing rebates, and when they do, the refund amount is typically split between the employer and employee, resulting in relatively smaller refunds.

How do Health Insurance Claims Get Paid?

If a hospital is on an insurance network, it is bound to have an insurance desk set up. All you need to do is fill out a pre-approval form for planned hospitalization. If it’s an emergency hospitalization, intimation can be done within 24 hours. The only thing required for cashless benefits is the insured’s identity proof and the health card.

It is advised to immediately communicate with your hospital about your policy coverage details so they can better assist you. If your policy coverage runs out, the hospital staff can inform you beforehand.

For reimbursement claims, it is important to have an insurance claim form filled out along with the doctor’s reports, diagnosis, and admission reports. All the bills should also be stamped and signed properly. A crucial document needed for a reimbursement claim is the discharge summary that you need to provide with your claim. All original documents must be provided, although it would be helpful to keep copies with you.

Once your insurer has viewed and accepted the claims, they will transfer the amount to your provided account. Thus, it is important to double-check all the details before submitting the form.

How Do I Claim My 80/20 Rule Rebate?

As an individual policyholder, you don’t need to directly claim the 80/20 rule rebate. The responsibility for complying with the rule and distributing rebates lies with the health insurance company.

If your insurance company fails to meet the minimum MLR requirement and owes a rebate, they will contact you directly to inform you about the rebate and how it will be provided. The rebate can be given as a premium credit, a check, or a reduction in future premiums. The specific method of rebate distribution should be communicated to you by your insurance company.

It’s important to update your contact information with your insurance company, as they will use the information they have on file to contact you regarding any rebates.

Suppose you have questions about the 80/20 rule or believe your insurance company needs to comply. In that case, you can contact your state’s Department of Insurance or the relevant regulatory authority for assistance and guidance.

Although not all insurance types have a money-back guarantee. With money-back health insurance, you can claim your amount. And if the amount you claim is less than 80 percent of the sum insured, health insurance companies must refund you. So when it comes to the question, “Will I get money back from health insurance?” The answer is yes.

Conclusion

It’s entirely possible to receive refunds from your health insurance under specific circumstances. The Affordable Care Act mandates that insurers allocate a minimum percentage of premiums towards medical claims. Should they fall short of this requirement, policyholders are entitled to refunds.

Refund amounts can differ from state to state, underscoring the importance of grasping your coverage details and adhering to proper procedures when making a claim. While not all insurance policies guarantee refunds, some offer them if the claimed amount falls below a certain threshold. Staying informed and taking proactive steps can significantly boost your chances of securing money back from your health insurance.