Most people don’t realize that healthcare reform might make them eligible for a rebate on the premiums they’ve paid for their health insurance policies since the law was passed.

Here are the details: Starting in 2011, the Patient Protection and Affordable Care Act will require health insurance carriers to spend at least 80-85% of your premium to pay medical claims. The other 20% can be spent on administrative costs, marketing, salaries, commissions and profit for the insurance company. This is referred to as the “medical loss ratio” or the “MLR”.

Insurance carriers who went beyond the threshold will be required to reimburse the policyholders by August of 2012. According to a recent report, about 15 million plus people will receive rebates this summer, but they amount will vary a great deal based on the plan you have and the State you live in.

Most insurance carriers and plans are running very close to their intended MLR numbers, so don’t expect to receive enough of a rebate to build that new addition to your house.

How do I know if I will I receive a rebate? Just so you know, only certain people will receive a rebate. If your health insurance policy did exceed the intended 80-85% MLR requirement, you should be due a refund. The health carriers are required to notify all insureds’ of how their plans complied under the law and whether or not they will receive a rebate. Most people should already know, but if not, call the Customer Service department of your health insurance company.

Will the MLR apply to both employer group plans and individual/family health insurance   plans?  It actually applies to all major medical individual/family plans as well as group health insurance policies offered through your employer. To be clear though, the rebate does not apply to Medicaid, Medicare or Medicare Supplement policies. Whoever is listed as the primary insured on your policy will receive the rebate on an individual/family plan, but your employer will receive the rebate on all employer group health insurance plans.

The law basically states that all rebates are to be made to the policyholder. If you have an employer group plan, the rebate will go to the employer, but the employer typically will owe a portion to their employees as to their respective share of the premiums paid. Make sure to ask your employer how any rebate received will be handled if you haven’t already heard.

Refunds due for all premiums paid in 2011 will be received no later than August of 2012. Also, refunds for 2012 premium payments will be paid out in 2013.