Several months after Blue Cross Blue Shield of Michigan announced that we are reducing insurance rates for many of our small employer customers in Michigan, another dose of good news is on the way. Because of lower-than-expected medical costs in 2014, Blue Cross Blue Shield of Michigan and Blue Care Network are able to refund many of our small employers (with fewer than 50 employees) a small percentage of their 2014 premiums. A letter (with a check enclosed) will be mailed to more than 24,000 small employers by September 30 to notify them of a rebate of just under 2 percent of their 2014 premiums paid for BCN and one-tenth of 1 percent of premiums paid for Blue Cross.
Why are Blue Cross and Blue Care Network providing rebates?
Plainly and simply, it’s the law. Months in advance, our actuaries predict the expected use and cost of medical and pharmacy services. Benefit costs are very volatile and should benefit expenses not account for at least 80 percent of the total premium to cover our members’ health costs, we must pay the employer back a percentage under the federal Affordable Care Act law. Under the ACA, 80 percent of a premium must go to health care claims for small group and individual coverage, and 85 percent for large group employer premiums. By this calculation, many of our small group customers qualified for a rebate this year.
What can employers do with the money?
Employers are responsible for using the rebates according to federal law. This may involve applying them to lower future premiums or providing covered employees a portion of the rebate amount.
What factors led to these rebates?
Many factors affect the use and cost of medical services. For example, our unique and comprehensive partnerships with doctors and hospitals – including our Patient-Centered Medical Home and Value Partnerships quality improvement programs – are helping to manage medical trends downward by eliminating unnecessary costs and promoting better health for our members. Innovative products and programs that encourage living healthier also play a role. Our priority is always to provide high-quality coverage that encourages better health with products and programs that will help control health care costs.
We are reducing small employer premiums starting now
There’s more good news for small employers. Blue Cross and Blue Care Network have factored the trend showing lower medical costs trend into premium rates for groups that are renewing their coverage. It’s good news when lower than expected costs allow us to pass along, on average, a 3.3 percent lower premium for Blue Cross small group customers and a less than 1 percent premium increase for BCN small groups that are renewing their coverage in third and fourth quarter 2015. Those average numbers remain favorable for small groups renewing in early 2016. Photo Credit: Scott Lewis