Consumer Federation of California

Consumers across California will be getting rebate checks from their health insurers next week ‘ one of the first tangible results of the federal health care overhaul.

About 1.8 million Californians will be getting money back, either directly or through a reduction in their monthly premium. The average California rebate: about $65 a family.

Nationally, about $1.1 billion in health care premium rebates ‘ averaging $151 per family ‘ will go out to 12.7 million consumers by Aug. 1.

"It could be a welcome surprise to folks," said Marta Green, spokeswoman with the state Department of Managed Health Care. "Anything that can make health care more affordable is positive for consumers."

The rebates stem from the so-called "80/20 rule" of the federal health care law, which requires insurers to spend 80 percent of their premium dollars on health care costs rather than marketing, salaries or other nonmedical expenses. (The ratio is 85/15 for the large group insurance market, which covers employers with more than 50 workers.)

Insurers who didn’t meet the percentage ‘ also known as the medical loss ratio ‘ in 2011 are required to issue refunds to their customers by next Wednesday.

The reimbursement can come in a variety of ways: a straight check, a discount off future premiums or a lump sum into a credit card or debit account used to pay premiums.

Employers who pay all or part of their employees’ health care premiums will receive the rebates and are responsible for sharing them proportionally with workers.

Janice Rocco, deputy commissioner for the state Department of Insurance, said six of the eight largest health insurers providing individual or large-group coverage in California are issuing rebates: Blue Shield, Kaiser, Cigna, Anthem Blue Cross, Aetna and Pacific Care.

She said most of the insurers who are rebating money to policyholders came "pretty close" to meeting the new 80/20 rule in medical costs.

Anthem Blue Cross and United Healthcare are refunding a total of $42.4 million to policyholders in the small-group market, which includes employers with 50 or fewer workers, said the state Department of Managed Health Care, one of the agencies overseeing that segment.

Individual rebate amounts vary.

"On average, United Healthcare’s rebates have been about $30 per person and the checks have been going out this month," United spokesman Matthew Yi said in an email.

Overall, about 1.8 million California policyholders are expected to receive a total of $73.9 million in rebates.

"Most of the rebates are relatively small dollar amounts," said Rocco, who did not have individual breakdowns by company.

According to the federal data, the average California rebate per family is $30 for those insured in the individual market, $203 for those in the small-group market, and $43 for those covered by large-group employers.

The rebates will come as a surprise to most Americans, said Carrie McLean, health insurance expert with eHealthInsurance.com in Mountain View. In an informal online survey of 400 eHealthInsurance shoppers, 89 percent were "clueless" that the rebates even existed, McLean said.

"It wasn’t talked about much (in the health care debate), but it’s a big deal; $1.1 billion is nothing to sneeze about."

The rebates are one of the more obscure parts of the ground-shifting health care law, which recently survived a U.S. Supreme Court test but still faces an uncertain future.

Signed by President Barack Obama in 2010, some of the law’s better-known provisions are already in effect. These allow children to stay on their parents’ insurance plans until age 26, give tax credits to small businesses covering employees, ban denials of insurance coverage to children under 19 with pre-existing conditions and prevent insurers from retroactively canceling a policy due to honest mistakes on an application.

Other provisions are due to roll out through 2014, when almost all Americans will be required to have health insurance, either provided by an employer or purchased individually or through an exchange.

If you didn’t receive a letter from your insurer or employer about the rebates, contact them directly to ask.

You can also call the California Department of Insurance’s consumer hotline at (800) 927-4357 (HELP). The federal health care website, www.healthcare.gov, also lets consumers look up their insurer’s rebate requirement. Go to: https://companyprofiles.healthcare.gov/ and click on "MLR".