Blue Shield Of California To Issue $82.8 Million In ACA Rebates For 2015

Date: August 21, 2015

Insurer Snagged By Healthcare

Premium Spending Requirement

Blue Shield of California, which already ran afoul of state auditors for accumulating $4 billion in surpluses and for the affordability of its premiums, will be shelling out $82.8 million in rebates for failing to meet a key Affordable Care Act requirement. Under the ACA, insurers are required to issue rebates to consumers and small employers if they fail to spend a minimum of 80 percent of the premiums collected on healthcare. Blue Shield managed to spend only 76.8 percent of premiums, reflecting the uncertain business environment in the first year of Obamacare. Blue Shield spokesman Steve Shivinsky told the Los Angeles Times, “It reflects a lot of the uncertainty in the marketplace we were entering into with the Affordable Care Act.” Blue Shield will be distributing $61.7 million to 454,000 individual policy holders, with refunds averaging $136 but amounts varying according to premiums paid, and $21.1 million to 19,000 small employers, who are expected to share the refunds with workers based on the percentage of their contributions.

What Comes Next

Of the three largest insurers in California, Blue Shield premiums are rising the least at 2.3 percent for 2016. Statewide, premiums for Anthem Inc. and Kaiser will be rising 5.9 percent and 5.2 percent respectively. While this reflects Blue Shield’s ability to account for the ACA’s impact on the business environment, the 2014 rebates no doubt played a role in the insurer’s premium setting process.

What This Means For Small Business

The rebates and lower premium increases are welcome for small businesses. However, as the Times notes, “While rebates are welcome, some consumer advocates say sizable refunds are a sign health insurers were overcharging to begin with.” In addition, the rebate issue demonstrates how cumbersome the ACA’s regulations are, and compliance will remain an ongoing cost for small businesses.

Additional Reading.

More coverage of the topic can be found in California Healthline, the San Francisco Business Journal, and the Los Angeles Times.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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