Insurance News

N.Y. health insurers ordered to refund $114.5M to policyholders

Posted on: November 12, 2011

ALBANY, N.Y.—Eleven health insurers have been ordered to refund $114.5 million to policyholders in New York under minimum medical spending requirements similar to those being enacted nationwide under health care reform beginning this year.

The refunds will be paid to holders of group and individual health insurance policies that cover 573,748 people in New York, according to a spokesman for the state’s Department of Financial Services.

Under a change to New York state insurance law implemented in June 2010, health insurers are required to spend 82 cents of every dollar collected in premiums on medical care or refund the difference to policyholders. The federal Patient Protection and Affordable Care Act implements a similar minimum medical loss ratio requirement on health insurers nationally beginning in 2011, mandating that insurers must spend at least 80% of premiums on medical care in the individual and small group markets and 85% in the large group market or refund the difference to policyholders.

Who is getting refunds

According to a department statement, most of the refunds—$44.7 million—are being made to large employers, defined as those that provide health care coverage to 51 or more plan members. Another $25 million is being refunded to small group plans, defined as those with 50 or fewer members. And $27.2 million is being refunded to 16,773 people who purchased health insurance coverage as individuals, while another $14.9 million is being paid to 96,719 people with Medicare supplement policies.

Refunds already have been paid to policyholders in the individual and small group markets. The department has instructed insurers to make refunds to affected policyholders in the large group market by Dec. 15.

“In this economic climate, every penny counts and in this case, insurance companies were overcharging New Yorkers to the tune of millions of dollars,” said New York Gov. Andrew M. Cuomo, in a statement. “This should serve as a message to companies that we are watching, and we will not tolerate any action that wrongly hurts the finances of the people of New York.”

Copyright © 2011. Crain Communications, Inc.


%d bloggers like this: