Consumers to get $1B in health insurance rebates

12.8 million Americans set to receive $1B in health insurance rebates -- or an average of $151 per family -- from their health insurers as a result of health reform.

NEW YORK (CNNMoney) -- Health insurers will dole out a total of $1 billion in rebates to 12.8 million Americans this summer -- an average of $151 per family --as a result of the 2010 health care reform law, the government said Thursday.

The rebates announced by the Department of Health and Human Services come from a provision of the law that punishes insurers who spend too much of policyholders' premiums for boosting company profits instead of paying for their medical care.

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Health insurance rebates by state

However, it's unclear if insurers will have to issue rebates at all if the Supreme Court strikes down all of the health care law.

The court, which is reviewing the constitutionality of the Affordable Care Act, is expected to issue its ruling later this month. The court could uphold the law, overturn it partially or completely strike it down.

HHS spokesman Keith Maley said the agency was confident that the law is constitutional.

"We are focused on ensuring the benefits of the law are applied to Americans across the country, including ensuring consumers get value for their premium dollar," he said.

The rule mandated that, beginning in 2011, insurance companies would have to spend 80% to 85% of the premiums they collect on medical care instead of toward their own profits and overhead costs.

"The rule helps ensure consumers get fair value for their health care dollar," HHS Secretary Kathleen Sebelius, said in a statement.

Insurers that didn't increase that allotment to the new federal standard would have to give customers a rebate for the difference beginning in 2012.

HHS said insurance companies that failed to meet the required "medical loss ratio" must provide a rebate for the difference to their customers no later than Aug. 1.

For families who buy their health insurance out of pocket, the average rebate is expected to be $152. In the small group insurance market, where many small businesses buy insurance for their workers, the average rebate per family is expected to be $174, the agency said.

Large companies that insure employees themselves will have to pay out an average rebate of $135 per family if they fail to meet the rule, HHS said.

HHS said consumers owed a rebate could get it as a check in the mail, a lump-sum reimbursement to the same account that they used to pay the premium if by credit card or debit card, or as a reduction in their future premiums.

For affected policyholders who are insured through their employers, their companies could provide them with the check or reimbursement, or employers could apply the rebate in another manner that benefits their employees, the agency said.