Health insurers begin refunding premiums during COVID pandemic

The global coronavirus pandemic has caused many Utahns — and people nationwide — to postpone medical procedures, particularly elective surgeries. Although some of the delays are caused by hospital’s limiting such medical services, many are the result of people simply not wanting to go to medical facilities with the possibility of being exposed to the COVID-19 virus.

As a result, many Utahns are getting partial refunds of their healthcare insurance premiums, much the same way that automobile owners received premium rebates earlier this year. The insurers simple aren’t being asked to pay the number of claims they would in a normal year. Under provisions of the Affordable Care Act, which now governs most healthcare insurance operations, providers are required to spend between 80 percent and 85 percent of premiums collected on patient care. Therefore, with fewer claims, the insurance companies are building up unspent reserves that are now being refunded to their insured customers.

The Centers for Disease Control estimates that 41 percent of American adults have avoided medical care “because of concerns about COVID-19.”

The downside to the current refund situation will come when the pandemic eases or ends. When that happens, it is likely that “pent-up” demand for medical procedures will cause a greater demand that will require premiums to go back up.

According to data from the U.S. Department of Health, insurance companies are rebating almost $2.5 billion this year. Nationally, the average amount coming back to the insured person is $219. In Utah, the average is $136 per person.