Health insurance regulators in North Carolina have identified nearly $156 million in refunds owed to Blue Cross policyholders because of changes coming under the nation’s new health law. Consumers with policies at other companies around the country also may deserve refunds, according to North Carolina Insurance Commissioner Wayne Goodwin. The Commissioner plans to urge other states to probe potential overcharging for a type of reserve fund.
The health care law will dramatically change how health policies are sold in 2014, and many plans in effect now will cease to exist that year in their current form. Yet state regulators who scrutinized a recent rate increase request by Blue Cross and Blue Shield of North Carolina say they discovered the insurer was collecting reserves to pay claims beyond 2014.
Blue Cross has agreed by year’s end to send refunds to more than 215,000 North Carolina policyholders with individual plans in force on March 23rd – the date the new health law was enacted. The refunds in North Carolina will vary depending on premiums paid, but will be worth about a month and a half’s premiums. For an average policy holder, that’s $690, according to Blue Cross.
The reserves being refunded are portions of consumers’ premiums that the insurer set aside in the early years of a policy to keep monthly payments more stable over the life of the policy, as the person’s medical expenses increased. It appears that Blue Cross’ group policies may not have used this kind of reserve.
It’s unclear what percentage of health policies nationwide use similar “active life reserves” formulas in setting rates and whether policyholders in other states also deserve refunds. According to Steve Larsen, who heads insurance oversight at the U.S. Department of Health and Human Services, there may be others. He said in an interview with USA Today that he thinks “there may be a bigger issue at work here.” It will be most interesting to see exactly how this situation in North Carolina will play out in other states. The North Carolina Insurance Department did an outstanding job in this matter.
Source: USA Today
Contact us today for a free legal consultation with an experienced attorney.
Fields marked *may be required for submission.
If you would like to subscribe to the Jere Beasley Report digital edition, simply visit our Subscriptions page and provide the necessary information or call us at 800-898-2034.
Attorney Advertising - Prior results do not guarantee a similar outcome.