Missouri Insurer to Pay $87.5 Million in Rebates to Policyholders

Ambetter from Home State Health, Missouri's largest individual health insurance provider, is required to pay $87.5 million in rebates to its customers. The payments are mandated under the Affordable Care Act because the company spent less than the required minimum on medical care and quality improvement activities.

The insurer, a subsidiary of Centene Corporation, failed to meet the federal Medical Loss Ratio (MLR) requirement, which dictates that at least 80% of premium revenue must be used for healthcare services. Letters notifying policyholders of the rebates, which are equivalent to more than one month's premium for each customer, were sent out in early September.

Understanding the Medical Loss Ratio Rule

The rebates are a direct result of regulations established by the Affordable Care Act (ACA). The law includes a provision known as the Medical Loss Ratio, or MLR, which is designed to ensure that a significant portion of health insurance premiums is spent on actual healthcare for policyholders.

Under the MLR rule, insurance companies must spend at least 80% of the money they collect in premiums 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 threshold is higher at 85%.

Each year, insurers must report their financial data to the Centers for Medicare and Medicaid Services (CMS). The agency reviews this information on a three-year rolling basis to determine if rebates are necessary. The current rebates from Ambetter are based on its financial performance from 2022 through 2024.

"This is a standard and required process under the Affordable Care Act that ensures health plans return a portion of premiums to members if spending on medical care falls below federal thresholds," Centene stated in a prepared announcement.

Impact on Missouri Consumers

Ambetter is the dominant player in Missouri's individual insurance market. According to data from KFF, a health policy research organization, the company provides coverage for approximately 46% of the 270,275 people who purchase their own insurance plans in the state.

This makes the $87.5 million rebate one of the most significant in the state since the ACA was implemented. Policyholders began receiving letters dated September 10 informing them of the incoming payment. The amount for each customer is calculated to be more than a full month's premium.

Another major insurer, United Healthcare, has also announced it will be issuing rebates to its Missouri customers. While the company did not specify the exact amount for Missouri, it confirmed that nationwide rebates would total $192.2 million for group plans and $167.1 million for individual plans across various states.

Future Premium Rate Changes

In addition to the rebates, Ambetter customers may also see relatively stable premiums in the coming year. The Missouri Department of Commerce and Insurance reported that Ambetter is seeking an average premium increase of just 1.9% for plans starting on January 1. This is among the lowest proposed increases in the state.

Other insurance providers in Missouri are requesting significantly higher rate hikes. Proposed increases from seven other companies range from 4.6% to as high as 29.2%. In contrast, one company, Blue Cross and Blue Shield of Kansas City, has proposed an average rate decrease of 4.2%.

"Missourians should expect to see premium increases for many of the individual market plans as well as changes to coverage areas and networks," the department stated in an August 1 news release.

Final, approved premium rates for all insurance companies operating in the state are scheduled to be announced by October 31. This will give consumers time to review their options during the open enrollment period for 2025 health plans.