Oxford Health Insurance Inc. will refund $50 million to about 37,000 small businesses in metropolitan New York, including Westchester County, for overcharging on health insurance policies in 2006, state officials recently announced.
The health insurer agreed to refund excess premiums charged policyholders after reporting to the New York state Insurance Department that its loss ratio for small group policies in 2006 ”“ that is, paid benefits calculated in proportion to premiums charged ”“ was below the 75 percent minimum required by the state. Oxford that year paid benefits equal to 70.58 percent of its overall premiums.
State insurance officials said the settlement applies to policyholders with a total of approximately 300,000 employees and family members. The refund will amount to an average of $1,360 per business, or about 5.5 percent of the total average annual premium in 2006.
The settlement only affects policyholders of Oxford”™s small-group Freedom Plan Direct, Freedom Plan Metro and Freedom Plan EPO products.
State officials said the massive refund points to the need to reinstate the state Insurance Department”™s authority to approve health insurance rate increases before they go into effect. Since 1996, when that authority was eliminated, most health insurers have raised rates without prior approval from the state.
“We must make New York a good place to do business by keeping costs competitive,” Gov. David A. Paterson said. “We know that small businesses are the engine of growth in this state and the rising cost of health insurance is one of their major complaints. If it can help protect business and keep premium rates down for New Yorkers, we should update the laws to give the Insurance Department more oversight.”
The New York Health Plan Association, a promotional and lobbying group in Albany for managed-health-care companies, opposes the proposed legislation.
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