NEW YORK (Reuters) - U.S. health insurer UnitedHealth Group Inc (UNH.N) said on Thursday it plans to spend $1.5 billion on its customers in part by issuing credits against some commercial health insurance premiums in June due to the new coronavirus pandemic.
Insurers have gained financially as Americans have cut back on medical appointments under stay-at-home orders designed to help slow the spread of the virus and allow hospitals and doctors to focus on COVID-19 patients.
UnitedHealth said it would issue credits ranging from 5% to 20% of June monthly premiums to commercial fully-insured employer-based and individual insurance customers.
As part of its plan, UnitedHealth will also waive cost-sharing for specialist and primary physician visits in Medicare Advantage, the government healthcare program for people 65 and older or with disabilities that is managed by private insurers. UnitedHealth will stabilize premiums in its supplementary Medicare plans and expand Medicaid coverage. It has nearly 16 million members in these government plans.
UnitedHealth has 8.2 million members in at-risk insurance plans offered through employers and in individual plans created by the Affordable Care Act (ACA), also known as Obamacare. The rebates do not apply to its largest business in which it manages health benefits for large employers for a fee and the employer covers the medical costs.
Under the 2010 health law, fully insured health plans are required to spend no less than 80% of the premiums they collect on medical care or must send rebates to customers. But the process to determine rebates takes place over several years, Chief Executive Officer David Wichmann told reporters.
“As you know, people are hurting right now,” Wichmann said.
He said only a portion of the credits are related to the ACA requirement.
Wichmann said the company expected that deferred medical care would continue in the second quarter before returning in the second half of the year, an outlook he gave last month when announcing UnitedHealth’s first-quarter profit.
“Some of it obviously is permanently deferred,” he said, adding that was part of the reason for UnitedHealth’s $1.5 billion spending plan.
Reporting by Caroline Humer; Editing by Leslie Adler