A couple weeks ago, when everybody was hailing the power of the medical loss ratio to send rebate checks to health insurance subscribers, I pointed out that a large percentage of the rebates would just revert back to employers, who could then do with them whatever they pleased, within certain limits. This would potentially not benefit consumers, but could just become a back-door avenue for corporate profits. And since the majority of the country, and the vast majority of those who carry private health insurance, get this through an employer, the impact of these rebates was going to be muted. There was plenty of evidence of this in the data: the rebate notice I got said pretty plainly that the employer (I’m on my wife’s plan) would benefit and not me.
The New York Times decided to follow up, for those who didn’t get the message, and explained this again today.
Workers were notified in form letters from insurers this month that a “rebate” had been sent to their employer, who “must follow certain rules in distributing the rebate to you.” But even when employees paid a significant share of the premium, many employers are still deciding how, when or even whether to share the cash.
Calls are now pouring into human resources departments around the country, said Mendy Stein, a health benefits specialist with Mercer, a nationwide consulting firm.
“We’re seeing a very high increase in the number of calls that H.R. call centers are handling from employees saying, ‘Where’s my money?’ ” he said.
The law gives employers up to three months and considerable discretion to decide how to spend the employees’ money, so long as it is eventually used to benefit insurance plan participants. And while some employers are returning the money directly in paychecks, or planning “premium holidays” that increase take-home pay, others are weighing different options, benefits consultants said, like reducing next year’s premium, or spending the refund on so-called wellness programs that reward workers who lose weight or quit smoking.
What the article doesn’t say is that any money given back in reducing premiums could be clawed back by not increasing wages. There are all kinds of ways to game this so that the material benefit goes not to the employees who carry the health plans, but to the company. In addition, if a company is self-insured – and this includes a substantial number of large corporations – this doesn’t affect them at all, even if the insurance gets administered by one of the insurers delivering a refund.
I’m glad people are querying their HR departments and asking about the money, and that raises the possibility that many organizations will refund the money directly. But there’s no guarantee.