BlueCross BlueShield of Tennessee said today it will pay $8.6 million to about 73,000 individual policyholders in August to meet a spending threshold set by the health reform law.
The threshold, called the medical loss ratio, was set to require insurance companies to spend a minimum of 80 percent of their premiums on health care, not on other business costs like executive pay or marketing.
All insurers will be required to report this figure by Friday, June 1.
BlueCross said it spent 76.6 percent of premiums on health care for individual policyholders in 2011 and the $8.6 million refund equals the remaining 3.4 percent to meet the rule in the Affordable Care Act.
“Our goal is to meet the (medical loss ratio) requirements by committing ourselves to efforts that rein in costs and make our members healthier,” Calvin Anderson, senior vice president and chief of staff for BlueCross, said in a statement.
“To achieve this, we’re putting an emphasis on healthy lifestyles and preventive care, as well as other important initiatives that focus on affordable, safe and high-quality health care for all Tennesseans.”
The amounts paid to the policyholders will be based on the amount that each one paid in premiums. BlueCross, Tennessee largest insurer, said about 84 percent of policyholders will each get less than $200.
The medical loss ratio for the small group market and large group market is 80 percent and 85 percent, respectively. BlueCross won’t make refund payments to those customers for 2011 as they spent 80.1 percent on health care for for their small-market customers and 87.7 percent for large-market customers.
Dollars remaining after paying for health care is used for profit, reserves and administrative expenses, according to BlueCross, a nonprofit organization. Premium dollars yielded a 3 percent profit margin for the group in 2011.
Rebate checks will be mailed to qualified BlueCross members by Aug. 1. For more information, go to bcbst.com/rebate.