Affordable Care Act Fact of the Day – Bringing Down Health Care Premiums

To ensure premium dollars are spent primarily on health care, the Affordable Care Act generally requires that at lest 85% of all premium dollars collected by insurance companies for larger employer plans are spent on health care services and health care quality improvement. For plans sold to individuals and small employers, at least 80% of the premium must be spent on benefits and quality improvement.

If insurance companies do not meet these goals, because their administrative costs or profits are too high, they must provide rebates to consumers. Effective January 1, 2011.

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