Friday, 03 February 2023

State Insurance commissioner takes action to ease financial burden for health insurance consumers and businesses during pandemic

California Insurance Commissioner Ricardo Lara on Wednesday issued a notice to California health insurance and specialized health insurance companies, urging that they issue refunds back to their policy and certificate holders because consumers largely refrained from seeking medical care in response to the COVID-19 pandemic and the resulting “stay-at-home” orders by state and local public health officers.

Savings from the months’ long deferral of medical care and treatment 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.

“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 Commissioner 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.”

He added, “I am doing all within my authority to strike that delicate balance but, right now, the scales are not balanced for consumers and businesses with health insurance. 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.”

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, as dental practices were essentially closed for a quarter of calendar year 2020, the 2021 maximum benefit would be increased by at least 25 percent.

The department has already worked with two health insurance companies who proactively sought to provide premium credits to their policy and certificate holders in the individual and group markets, returning between 5 percent and 15 percent of policyholders’ July 2020 premium.

Two other health insurance companies are currently working with the department in considering such credits as well.

This notice is the latest in a long list of consumer protection actions that Commissioner Lara has taken since the beginning of the COVID-19 pandemic, including previous orders similarly directing insurance companies to provide premium relief for automobile insurance and commercial liability policies to reflect the lower risk that policyholders are experiencing in the current COVID-19 landscape, which has thus far resulted in more than $1.2 billion in premium relief and reduced future premiums for California consumers and businesses.

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