California Tells Insurance Companies to Issue Rebates

Dentistry Today


California insurance commissioner Ricardo Lara has notified state health insurance and specialized health insurance companies that they should issue refunds to policy and certificate holders because consumers largely refrained from seeking medical care during the pandemic due to stay-at-home orders by state and local public health officers.

Savings from the months-long deferral of medical care and treatments for ailments unrelated to COVID-19 has resulted in record net profits this year for health insurance companies and specialized health insurance companies such as dental insurance plans, Lara said.

“Health insurance companies are seeing record net profits this year due to lower policy benefit use, so I am urging they return some of those profits back to consumers, families, and businesses that they insure, many of whom are struggling financially due to COVID-19,” said Lara.

“As the regulator of the largest insurance market in the nation, it is my duty to make sure consumers are protected and insurance companies remain solvent. I am doing all within my authority to strike that delicate balance but, right now, the scales are not balance for consumers and businesses with health insurance,” said Lara.

“With this notice, I am expecting health insurance companies to help contribute back to the recovery of services by businesses and get money back into the hands of consumers when they need it the most,” said Lara.

The notice asks health insurance companies to provide premium refunds on either the November 2020 or December 2020 consumer statements in the form of a refund, credit, premium reduction, or other adjustment.

Specialized health insurance policies such as dental insurance that have a maximum annual benefit may also comply with this request by increasing the 2021 annual benefit by a percentage equal to the period during which covered services were not available during 2020.

For example, Lara said, since dental practices were essentially closed for a quarter of the calendar year 2020, the 2021 maximum benefit would be increased by at least 25%.

The Department of Insurance said it has already worked with two health insurance companies that proactively sought to provide premium credits to their policy and certificate holders in the individual and group markets, returning between 5% and 15% of policyholders’ July 2020 premiums. Two other health insurance companies are working with the department in considering such credits as well.

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