UPDATE: Receiving A Health Insurance Rebate? Don't Spend It All At Once

Village employees may see a reduction in their healthcare premiums next year or receive a check directly from the Village’s health insurance company because of health insurance industry reforms. 

For larger employers, the Affordable Care Act mandates insurance companies to spend at least 85 percent of all premium dollars on health care services and health care quality improvement. If the goal isn’t met, they have to rebate the difference to consumers.

Craig Vaughn, of David Insurance, told the Village Board that United Healthcare has to refund $17,852.00 to the Village.

There are about 130 employees, but not everyone is insured through the Village. The amount would be divided by the number of people who are insured, but the Village pays a significant amount of the premium so employees would likely receive less than $20, he said. "It's definitely not going to amount to much."

A lot of companies are also finding it cost prohibitive to administer the small rebates.

But Vaughn explained to the Village Board on July 17:

“This has to be distributed to the employees. It could be through a rebate directly or it could be used to reduce premiums in the future year."

Wally Leininger, firefighter and secretary for the Caledonia Professional Firefighters Union, said he knew of two or three members that received letters from United Healthcare telling them that they qualified to receive the rebate, but a check wasn’t attached to it.

“We don’t know if it will go to us directly or to offset the premiums,” Leininger said. “The letter didn’t give any information of who makes that determination, but knowing the Village it will probably be used to offset the cost for 2013 premiums… but I personally wouldn’t be opposed to them using it for premiums.”

J.P. Wieske, public information officer with the Wisconsin Insurance Commission, said more than 300,000 people — less than 10 percent of the state's population in Wisconsin — will receive an average of $86.

“A lot of people believe they are getting a rebate, when in fact they aren’t,” Wieske said.

The national average for the rebates has been $151. The rebate for Village employees may exceed the national average and that’s because the group didn’t file a lot of claims in 2011.

“Those rebates relate to their overall loss ratio and it’s not out of the realm of possibilities. A couple of states had an average rebate of $300 to $400,” Wieske said.

Wieske explained that insurance companies set their rates based on an estimate of the amount of claims they’ll have to pay out for the following year and they were only off by less than a half of a percentage point.

 “It’s nice that some people in Wisconsin are getting the rebates, but it’s also reflective of the insurance companies here doing a good job at setting their rates,” he said.

Racine County and the Racine Unified School District employees won't receive rebates because they are self-insured.