A major health insurer in Missouri is sending checks totaling more than $1 billion to its individual policyholders. The payments are required because the company spent too little on medical care and too much on administrative costs, failing to meet federal standards set by the Affordable Care Act.
Ambetter from Home State Health, a subsidiary of Centene Corporation, is issuing the rebates after an analysis showed it did not meet the required spending threshold on healthcare services over a three-year period. The amount represents one of the largest such rebates in the history of the program.
Key Takeaways
- Ambetter from Home State Health is rebating $1.01 billion to its Missouri customers.
- The rebate is due to a violation of the Affordable Care Act's Medical Loss Ratio (MLR) rule.
- The insurer spent only 71.4% of premiums on healthcare, falling short of the required 80% minimum.
- The total rebate amount exceeds the national total for all insurers in 2023.
- Ambetter is the largest individual health insurance provider in Missouri, covering approximately 46% of the market.
A Record-Breaking Rebate for Missouri
Policyholders with Ambetter began receiving letters dated September 10, informing them of the incoming payments. For many, the rebate check will be equivalent to more than one month's premium payment.
This single rebate from Ambetter is a significant event in the state's insurance market. The $1.01 billion total is larger than all rebates issued by all insurers in Missouri combined over the past 12 years. According to historical data, insurers in the state have paid back $587.1 million to policyholders since the ACA's rebate provision began in 2012.
Unprecedented Scale
The Ambetter rebate surpasses the previous single-year high for all Missouri insurers, which was $192.7 million in 2019. It also exceeds the total amount all insurers nationwide were directed to rebate in 2023, which was $957 million, according to the Centers for Medicare and Medicaid Services (CMS).
Ambetter is not the only insurer issuing rebates in the state. United Healthcare also announced it would be sending payments to Missouri customers in both its individual and group markets. While the specific amount for Missouri was not disclosed, United Healthcare will rebate $167.1 million nationally for individual plans and $192.2 million for group plans.
Understanding the Medical Loss Ratio Rule
The rebates are mandated by the Affordable Care Act's (ACA) Medical Loss Ratio (MLR) provision. This rule is designed to ensure that a significant portion of the money customers pay in premiums is used for their healthcare, not for administrative overhead or profit.
The 80/20 Rule Explained
The MLR provision, often called the 80/20 rule, requires insurance companies selling individual or small group plans to spend at least 80% of premium revenue on medical care and activities that improve healthcare quality. The remaining 20% can be used for administrative costs, marketing, and profit. For large group plans, the requirement is stricter at 85/15. If an insurer fails to meet this threshold over a three-year average, it must refund the difference to its customers.
In the case of Ambetter, the company's filings with federal regulators showed it fell short of this standard. The letter sent to policyholders stated that over the three-year evaluation period from 2022 to 2024, the company collected approximately $12 billion in premiums for individual plans.
Of that amount, it spent only 71.4% on healthcare and quality improvement activities. This left a shortfall of 8.6%, which the company is now required to pay back. The total refund amount was calculated to be $1.01 billion.
Market Position and Future Premiums
Ambetter holds a dominant position in Missouri's individual insurance marketplace. According to data from KFF, a health policy analysis organization, Ambetter covers about 46% of the 270,275 people who buy their own health plans in the state.
Its closest competitor is Elevance (formerly Anthem), which holds a 28% market share, followed by United Healthcare with about 7%. The large rebate highlights the financial scale of Ambetter's operations within the state.
Impact on 2025 Insurance Rates
Despite the substantial rebate, customers of Ambetter may see relatively stable premiums next year. According to an August announcement from the Missouri Department of Commerce and Insurance, Ambetter has proposed an average premium increase of just 1.9% for plans starting January 1, 2025.
This proposed increase is significantly lower than those requested by most of its competitors. Seven other companies in the Missouri marketplace have proposed average rate hikes ranging from 4.6% to as high as 29.2%. Only one insurer, Blue Cross and Blue Shield of Kansas City, has proposed a rate decrease, averaging 4.2%.
State regulators are currently reviewing the proposed rates. The final, approved premium rates for all companies for the 2025 plan year are scheduled to be announced by October 31.
Regulatory Oversight and Consumer Protection
The process for determining these rebates is managed by the federal government. Every year, insurance companies must submit detailed reports to the Centers for Medicare and Medicaid Services (CMS) outlining their premium revenue and expenditures.
CMS officials then analyze this data, calculated on a three-year rolling average, to determine if an insurer has met the MLR standard. If a company has not, CMS calculates the total rebate amount owed to policyholders in that specific market.
The system serves as a key consumer protection mechanism of the ACA, ensuring accountability in how insurance premiums are spent. While Centene Corporation, Ambetter's parent company, did not respond to requests for comment on the matter, the rebate process is an automatic function of the federal law.
