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New York Orders $114.5 Million in Refunds, Citing MLRs

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Eleven insurance companies doing business in New York have been ordered by the governor there to refund $114.5 million to policyholders who were overcharged for health insurance premiums in 2010, with more than half of the refunds due coming from Empire, the New York Department of Financial Services (DFS) announced today.

Empire’s refund payment to consumers was tallied at a little over $61 million. The other big New York player, UnitedHealthcare, has an affiliate (Oxford) involved in the refund.

Empire BlueCross BlueShield is New York’s largest insurer.  In terms of overall membership, across business lines, the for-profit plan insures nearly 6 million New Yorkers. It is New York’s second largest insurer in the Small Group market, with about a 15% market share. 

Insurers pointed to medical loss ratio requirements changed retroactively, while the state touted it efforts for consumers.

“In this economic climate, every penny counts and in this case, insurance companies were overcharging New Yorkers to the tune of millions of dollars,” Gov. Andrew Cuomo stated. The governor’s office made the announcement, as a pro-consumer move.

 ”This should serve as a message to companies that we are watching, and we will not tolerate any action that wrongly hurts the finances of the people of New York.”

Under state law, insurers are required to spend 82 cents of every dollar collected in premiums on providing medical care. If the amount spent on care, known as a medical loss ratio (MLR) is less than the 82%, insurers are required to refund the difference to policyholders.  

“While it is a positive that consumers are getting these payments, retroactive refunds are simply not good enough. It is likely that some people dropped their insurance coverage because of premium increases,” stated Superintendent of Financial Services Benjamin Lawsky. The DFS chief has not let too much in the way of health insurer behavior he doesn’t like slip through his fingers. Recently, he won the battle with New York insurers to make rate filings public in the face of public outcry about premium hikes.  See:

Governor Cuomo and Superintendent Lawsky also today announced the completion of a successful effort to ensure that health insurer rate filings will be made public. All insurers have now withdrawn their objections to the public release of this information.

Through the prior approval law, the DFS is working to keep rates from “spiraling out of control” while also ensuring consumers get refunds when insurance companies don’t spend enough of premiums on medical care.

Aetna respnded by noting that “the overwhelming majority of our NY business met the MLR requirements.”

“The rebates are the result of NY changing its MLR requirements mid-year in June 2010, but then applying the changes retroactively to January 2010. If the law had not been applied retroactively, we would have had the opportunity to price our business appropriately,” stated Aetna spokeswoman Cynthia Michener.

New York State Conference of Blue Cross and Blue Shield Plans (NYSCOP), also explained it meant no ill will: “Since 1996, New York law has required insurers to pay refunds to customers when medical claims are lower than anticipated. The refunds announced today reflect 2010 payments where performance exceeded anticipated experience, ” stated NYSCOP spokeswoman Deborah Frasser.

Here is a breakdown provided by the DFS:

Most of the refunds –$44.7 million — are being made to policies covering 141,829 members in the large group market.

$27.2 million is being refunded to 16,773 people who purchased coverage as individuals

$25 million is being refunded to small groups covering 290,520 – ( companies with groups of 50 or fewer people.)

 $14.9 million is being refunded to 96,719 people with Medicare Supplemental and Medicare Complementary policies.

Policies covering 27,907 people with plans in HealthyNY, a state-sponsored health insurance program for individuals and small proprietors, are seeing $2.7 million in premium refunds.

Refunds have already been made to policyholders in the small group and individual, direct-pay market. DFS has instructed insurers to make refunds to affected policyholders in the large group market by Dec. 15.

These are the insurers required to make the refunds:





Total   Refunds


Aetna   Health Inc




CDPHP   Health Plan




ConnectiCare   of NY
















Health   Net of New York








HIP   Health Plan of Greater New York




MVP   Health Plan




Oxford  Health Insurance Co.








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