On Tuesday, Blue Shield of California announced that it will return $50 million to policyholders by the end of the year as part of its pledge to cap its annual profit at 2% of revenue, the Los Angeles Times reports (Terhune, Los Angeles Times, 10/31).
Background on Profit Cap Pledge
In June 2011, Blue Shield announced a plan to cap profits at 2% of revenue and allocate any excess funds as credits to policyholders, funding for health care providers and grants to not-for-profit health care organizations.
The announcement came as California health insurers faced criticism from lawmakers, consumer advocates and policyholders over rate increases (California Healthline, 10/14/11).
As a result of the profit cap pledge, the insurer already has returned to policyholders more than $470 million in premiums for 2010 and 2011 (Los Angeles Times, 10/31).
Details of the Latest Credits
The funds will be distributed to eligible policyholders as credits on their billing statements for payments due in December, according to Blue Shield (Rauber, San Francisco Business Times, 10/30).
The average amount of the credits will be about:
- $25 for individual policyholders;
- $35 to $40 for policyholders in the mid- and large-group market;
- $40 for an employee in the small group market;
- $75 for a family of four in an individual family plan; and
- $105 for an employee with three dependents in the small group market (Robertson, Sacramento Business Journal, 10/30).