Nearly 4,400 small businesses in California will share in $3.5 million in rebates from insurance giant UnitedHealth Group Inc. this summer as insurers nationwide prepare to return millions of dollars to customers as a key benefit of the federal healthcare law kicks in.
The first of these California rebates, amounting to about $98 each for nearly 36,000 small-business employees and dependents covered by UnitedHealth, comes because the company's spending on medical care fell short of new government requirements.
Insurers must notify federal and state officials of how much they may owe policyholders by June 1st if they failed to spend a minimum amount of customers' premiums on medical care last year. Consumer groups pushed for this provision in President Obama's Affordable Care Act to ensure that companies aren't raising premiums to pay for executive salaries, shareholder dividends and other expenses unrelated to customers' care.
Healthcare experts say the rebates probably will be modest on a per-person basis and most of the money may go to employers. As of Wednesday, UnitedHealth was the only insurer that had filed rebate information with the state Department of Managed Health Care. Other companies are expected to disclose the size of their customer rebates later this week and send out money by August 1st.
UnitedHealth, the nation's largest insurer, said checks will go out in July to those small businesses affected. The Minnetonka, Minn., company said that under the federal rules it did not owe rebates to individual policyholders or large employers in California.