Connecticut-based health insurance company Cigna is required to pay $2.6 million in premium rebates to more than 10,000 consumers this year as part of a provision in the federal Affordable Care Act. A provision in the act requires insurance companies to pay rebates to consumers if they spend too much of health care premiums on administrative expenses, such as salaries and marketing, instead of health care.
According to the U.S. Department of Health and Human Services, Cigna is the only health insurer in Maine required to pay rebates as of June 1, with a total rebate amount of $2,579,922. Cigna provides insurance to large employers, including Bath Iron Works and the University of Maine System. A total of 10,589 Maine consumers will receive a rebate, and the average rebate will be $463, according to a press release from U.S. Rep. Mike Michaud. Companies must provide rebates beginning Aug. 1. Cigna has an office in South Portland.
Under the Affordable Care Act, insurance companies are required annually to make publicly available the amount they spend on health care costs and administrative costs. They must devote at least 80% of premiums to medical care, and large insurers must put 85% toward medical care. If they don't, the law requires insurance companies to issue a rebate to consumers.
For many consumers, the rebate will be transferred to the employer who administers the insurance plan, and it will then be either directly passed on to the employee or applied to their health insurance costs. Consumers may also directly receive the reimbursement or get a reduction in future premiums.
"Health premiums should reflect how much insurance companies are actually spending on care, and this provision will provide relief to Mainers who have seen their insurance costs skyrocket while their health care services stay the same," Michaud said in the release.
Nationally, health insurance companies will pay more than $1.1 billion in premium rebates to nearly 12.8 million Americans.
This article was updated on June 27 at 2:15 p.m.
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