Priority Health plans to give large employers a rebate early next year on their employee health coverage, a result of lower medical claims from the COVID-19 pandemic.
The rebate will appear on February invoices for employers with 51 or more employees and range from 5 to 35 percent of one month’s premium for more than 1,000 fully funded large group employers that collectively employ about 260,000 people. Priority Health will base rebates on the medical claims trend for each employer over a 12-month period through Sept. 30.
“We’re really trying to help employer groups stay ahead of the game,” said Megan Schmidt, Priority Health’s vice president of sales and client services. “This is such a challenging time for everyone.”
The reduced medical claims trends are the result of a period last spring when hospitals for several weeks were unable to perform non-essential surgeries and procedures because of state orders issued to control spread of the coronavirus. Physician offices were closed as well for non-urgent care and consumers deferred medical care during the period.
The premium rebates for large group employers follow a similar move by Priority Health in the spring and summer for smaller employers and individuals. The Grand Rapids-based health plan applied 15 percent reductions to June and July invoices for small businesses with two to 50 employees and for individual policyholders.
Other health plans in the state, Blue Cross Blue Shield of Michigan and Health Alliance Plan among them, offered similar premium rebates.
The lower claims trends in the pandemic lifted Priority Health’s earnings through three quarters.
The health plan recorded net operating income of $201.9 million through Sept. 30 on $3.76 billion in total revenue, according to a quarterly financial statement posted online by parent corporation Spectrum Health. The net operating income for the period increased by $77.1 million from the first three quarters of 2019 and was the result of a “favorable medical yield as a result of reduced utilization due to COVID-19” that was offset by premium credits issued earlier to individuals and groups, Spectrum Health CFO Matthew Cox wrote in the quarterly financial report.
Across all product lines, Priority Health had more than 1 million people enrolled in health policies as of Sept. 30.