BlueCross to Send Rebates to Individual Policyholders, Small Group Employers

Health plan medical loss ratio met for large groups


CHATTANOOGA, Tenn. —BlueCross BlueShield of Tennessee will mail more than $22 million in rebate checks by the end of September to individual policyholders and small employer groups who held medical coverage with the company during 2018.

The rebates come as BlueCross reached a five-year break-even point on its individual line of business in 2018.

BlueCross began offering Marketplace plans for 2014 as the only insurer to offer coverage in every county in the state – with some of the lowest rates in the country. As a not-for-profit with a mission to serve, BlueCross sets rates based on the expected costs for its members’ care and works hard to limit operating expenses. However, the medical needs for the new Marketplace members were greater than expected and rates turned out to be too low to cover claims costs and operating costs.

After losing more than $400 million in three years, BlueCross raised rates and limited coverage to certain areas of the state to preserve financial stability for the company’s 3.5 million members. BlueCross has since found a healthy balance between covering members’ medical claims and earning a sustainable margin. The company significantly lowered rates for 2019 after certain risks failed to materialize, leading to higher than expected margins in 2018.

“Our biggest priorities are keeping our members healthy and advocating for affordability — the vast majority of the premium dollars we collect pay for medical services or improvements in the quality of care our members receive,” said Kelly Paulk, vice president of product strategy and individual markets.

Beyond claims and quality improvement, premium dollars are used for operating costs like customer service, fraud prevention, and digital tools for members. After BlueCross pays local, state, and federal taxes, the company keeps a portion as net income, which goes into reserves. In 2018, across the entire business, only four cents of every premium dollar received was profit.

The Affordable Care Act requires medical plans covering individual and small group members to spend 80 percent of collected premiums on claims and activities to improve health care quality — a percentage known as the Medical Loss Ratio (MLR). The MLR is based on a three-year rolling average. BlueCross spent a smaller-than-expected percentage of premiums on these needs in 2018, missing the spending target for individual plan members by 2.1 percent and for small group employer plans by 0.2 percent. The company exceeded the minimum MLR of 85 percent for large group accounts, so it will not issue rebates to that business segment.

Type of Policy  BlueCross Actual 2018 MLR   Required MLR
Individual policy holders   77.9%   80%
Small groups (up to 50 employees)   79.8%   80%
Large groups (51+ employees)   87.7%   85%


Rebates will be based on adjusted premiums for 2018 medical coverage, not the amount of premium each policyholder paid. (This means the company subtracts state, federal and other taxes from the total.) The rebate does not cover premiums for other coverage such as dental or vision.

The rebate checks will be distributed to qualifying policyholders by Sept. 30. For more information, visit

About BlueCross®

BlueCross BlueShield of Tennessee’s mission is to provide peace of mind through better health. Founded in 1945, the Chattanooga-based company is focused on serving more than 3.5 million members in Tennessee and across the country. BlueCross BlueShield of Tennessee Inc. is an independent licensee of the BlueCross BlueShield Association. For more information, visit the company’s website at


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