Health insurers in Massachusetts will return $75.6 million in premiums to individuals and small employers after failing to meet the state’s medical loss ratio (MLR) requirements, according to the Division of Insurance.
The rebates, which will be distributed by five health insurers, are expected to reach plans covering approximately 350,000 policyholders.
The Division of Insurance stated that payments will be issued either as checks or as credits against future premium payments. The amount each policyholder receives will depend on the insurer and the premiums paid. This year’s total rebate is $24 million higher than the previous year, reflecting a larger gap between premiums collected and care costs incurred by insurers.
Under Massachusetts law, health insurers must spend at least 88% of collected premiums on care services. If a carrier’s average MLR falls below this threshold over a three-year period, the insurer is required to return a portion of premiums to policyholders in the individual and small employer markets.
“These rebates are more than just numbers – they're dollars back in the pockets of families and small business owners across the commonwealth,” said Michael Caljouw, commissioner of the Division of Insurance.
Blue Cross Blue Shield of Massachusetts, the state’s largest health insurer, reported a $400.4 million operating loss in 2024, the largest in its history. Despite generating $9.7 billion in revenue, BCBSMA’s net loss for 2024 was 2.3%, and its operating loss reached 4.3%.
These results contrast with the previous year’s positive margins and highlight the financial strain facing insurers as medical and pharmacy costs continue to rise.
The financial challenges in Massachusetts also reflect broader national trends. State regulators in Delaware and New Mexico have approved individual market health insurance rate increases of 25% to 35% for 2025, citing rising medical costs and changes in federal policy.
These increases add pressure for both consumers and insurers, and are part of a nationwide pattern of higher health insurance costs.
As a result, AM Best revised its outlook for the US health insurance sector from stable to negative this month, pointing to increased utilization, rising medical costs, and ongoing regulatory challenges as factors straining margins across all segments.
The report noted that higher use of specialty drugs, more physician visits, and greater utilization of medical services have contributed to the financial pressures faced by insurers nationwide.
Lora Pellegrini (pictured above), president and CEO of the Massachusetts Association of Health Plans, noted that Massachusetts’ MLR requirement, which is close to 90%, is among the strictest in the country.
“Health plans filed premiums rates for approval months in advance, before actual medical spending is known. In the cases where the health plans did not meet the MLR standard, they exceeded administrative spending due to critical investments in information technology systems, cybersecurity and other system upgrades necessary to protect consumers and strengthen care delivery,” Pellegrini said.
The rebates are calculated from the difference between what health insurers collect in premiums and what they spend on medical care. The Division of Insurance said the payments are intended to ensure that policyholders receive value for their premiums and that insurers comply with state regulations.
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