South Carolinians Due $13 Million in Health Insurance Refunds

Thousands of South Carolinians may soon see checks in their mailboxes because health insurance companies spent too much money on "profits and red tape" last year, according to federal data released Thursday.

The Affordable Care Act requires insurers to spend at least 80 percent of premium dollars on "patient care and quality improvement activities." Because the companies spent too little in those areas, the "Medical Loss Ratio" rule mandates that they return some money to South Carolina customers.

The federal government reports 205,229 consumers insured in the individual and small group markets in South Carolina will benefit from about $13 million in refunds, or an average $92 per family. Residents insured through large groups will not receive refunds in this state. About 4 million residents in South Carolina are covered by some type of health insurance, according to U.S. Census data. The refunds apply to 2013 health insurance policies.

This is the third year the Medical Loss Ratio rule has been enforced, said S.C. Department of Insurance Director Ray Farmer. In 2011, insurance companies were required to refund $19.6 million to South Carolina customers. In 2012, total refunds dropped to $6.2 million. Although companies must return about $13 million to residents statewide this year, it does not mean insurers aren't complying with the rule, he said.

"It's difficult to gauge how much the 80 percent . will be for a given year," Farmer said. "Rates are set on a prospective basis, so they're never going to be right on the mark."

Customers in South Carolina will receive more back from insurance companies than both the national average and refunds expected in neighboring states.

In Georgia and Tennessee, residents will receive an average $53 refund. In North Carolina, the average is $77. Nearly 7 million people across the country will receive an average $80 refund.