Did you get your rebate? As part of the Affordable Care Act, health insurers are required to give out annual rebates (by Aug. 1) to employers and individuals if less than 80% (85% if it’s for a large employer) of the premium dollars they receive goes toward medical care. In other words, if your health care insurance provider is spending more than 20% (15% for large employers) of your health insurance premiums on things such as salaries and marketing, they have to cut you a check. According to HealthCare.gov, the national payout total is about $1.1 billion.
Jeff Fox, controller and CFO of Landis Construction, in Washington, D.C., says that his company received a check for $1,428 for employees using the HMO option and $9 for the four employees on the PPO plan. Landis pays 50% of the policy premium for its 35 employees. Aida Pollard, the business manager at CG&S Design Build, in Austin, which has 21 employees, received $5,300.
Not whopping sums by any means, but getting the check is just the start. Employers have 90 days to figure out what to do with the money.
HealthCare.gov language is vague about how to handle the rebate: “[Deposit] a lump-sum reimbursement to the same account that was used to pay the premium if it was paid by credit card or debit card; give a direct reduction in [employees’] future premiums; or appl[y] the rebate in a manner that benefits its employees” [italics added].
Since Landis pays 50% of the premium, it took 50% from the total amount and then gave the rest of the money back to employees in the form of a health care premium holiday, i.e., participants won’t see the usual $78 deduction from one paycheck. If Landis paid it directly to employees, the employees would have to pay taxes on it.
CG&S, which pays 100% of its employees’ premiums, had to prove they are in compliance or end up rebating the money to employees. Pollard wanted to make sure her company did the right thing and attended a seminar that discussed how to create a compliance document. In the end, she says they’ve “decided to hire a company that would help us with our health insurance package and manage it for us. It’s going to be more cost effective that way.”