BCBS-IL: Premium Abatement - Good Idea?

[AllenChicago]

BCBS-IL: Premium Abatement Possible, in lieu of Rebates.

Blue Cross of Illinois sent out an e-mail last week stating that due to the MLR regulation, the company will "Abate" premiums to policyholders rather than issue premium refunds if they find themselves not paying out enough in claims.

Since issuing refunds is an Administrative expense, not charging a full premium in certain months seems to be a much more efficient and less costly method for staying within the Medical Loss Ratio criteria... or is it?
-Allen

 

[leevena]

Sorry, little confused, when you say "abate" and "not charging in a few months." Do you mean that BC will pass along the refund in the form of a reduced rate increase in the next year? Or are they saying that the premium charged could vary within the same contract year?

Most efficient method would be to pass the refund back via a premium rate decrease for the following year.

 

[dgoldenz]

Seems they would have to rebate anyone that cancelled their policy though...

 

[AllenChicago]

Sorry, little confused, when you say "abate" and "not charging in a few months." Do you mean that BC will pass along the refund in the form of a reduced rate increase in the next year? Or are they saying that the premium charged could vary within the same contract year?

Most efficient method would be to pass the refund back via a premium rate decrease for the following year.

Today I pulled up one of my BCBS-Illinois' client policy kits and re-read the Amendment Letter that is now included with all new individual policies.

Essentially, Blue Cross is letting the customer know that due to new Affordable Care Act regulations (the M.L.R.), the company may do any of these three things independently, or in combination, at any point in time:

1. Premium Rebate - (We all know what this is.)
2. Premium Abatement - Lower or eliminate the premium in a given month or months.
3. Reduce or Eliminate the Deductible for a period of time.

Blue Cross Illinois's Medical Loss Ratio in 2010 was 83%. Since commissions were cut and premiums barely increased in 2011, it's not likely that Blue Cross will be implementing any of the above 3 measures in the near future, I.M.O..
-Allen

 

[AllenChicago]

To Keep from adding new Threads, here's news on the current status of Health Insurer rebates expected later this year...

Fox News: 3-17-2012: Millions Could Receive Insurance Rebates In 2012, Despite Industry Opposition | Fox News

Why insurance companies put up with this level of government intrusion is beyond my comprehension. Perhaps its because insurance executives (aka the decision makers) won't take a pay cut no matter how much $$$ Uncle Sam extorts from their insurance company?
-AC