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Under Tierney Rule, Millions of Families and Employers Now Receiving Rebate Checks from Insurance Companies

Press Release

Location: Washington, DC

Americans across the country are now being sent rebate checks from their insurance companies as a result of the "Tierney Rule," included as part of the Affordable Care Act. The Tierney Rule" also called the medical loss ratio' or the 80/20 rule, requires insurance companies to spend generally at least 80 cents of every dollar that Americans pay in premiums on health care versus CEO pay and bonuses and other administrative costs . If this requirement is not met, insurance companies must pay consumers a rebate. Today is the date by which such rebate must be sent by. All told, more than 12 million Americans, including 163,949 in Massachusetts, will receive more than $1 billion in rebate checks because of the Tierney Rule.

"The health insurance premiums Americans pay should be used to make people healthy, not wasted on unnecessary paperwork or excessive CEO pay. At the insistence of Congressman Tierney and Democrats in Congress, this important principle is now the law of the land and millions of policyholders are receiving billions of dollars in rebates starting today. Washington Republicans should drop their agenda to repeal these important patient protections and instead work with us to strengthen America's middle class," said Congressman George Miller, the senior Democratic member of the House Education and the Workforce Committee.

"The 80/20 rule helps ensure consumers get fair value for their health care dollar," Health and Human Services Secretary Kathleen Sebelius said.

"Health insurance companies are being held accountable and millions of Americans are receiving rebate checks as a result of important provisions that I included in the Affordable Care Act," said Congressman John Tierney. "This rule empowers consumers with the knowledge of which companies are playing by the rules, and holds financially accountable those which are not. This kind of transparency and accountability is critical to our efforts to protect consumers and keep health care costs down."

Congressman Tierney successfully led the effort to include the Tierney Rule in the Patient Protection and Affordable Care Act. This protection ensures value to millions of Americans by requiring health insurers to spend at least 80 percent of individual and small group plan premiums on medical claims or quality improvements rather than administrative costs, and at least 85 percent of large group premiums. Health plans that do not meet the ratios must refund the difference to policyholders. Today, August 1, 2012, is the deadline for insurance companies to send these checks.

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