As EPIC has documented in great detail, 2020 has been a very soft claims year for the employer-sponsored healthcare community. On average, claims were down 30% in Q2 and remain under downward pressure into Q3 due to the continued reduction in healthcare consumption across the United States. The psychological overhang of people avoiding hospitals and doctors, the dislocation of businesses and homeowners from their natural community, and the general economic uncertainty continue to drive lower healthcare claims spend. It’s anybody’s guess when things will fully return to normal.

Viewpoints from Adam Okun

This begs the question for employers – what, if anything, should be done with employee contributions?

In many instances, rates are not projected to increase in 2021, and given the current climate, many employers are opting not to increase employee contributions in the new year. However, some employers are going a step further… and giving employees money back!

The concept of rebates to members in the insured health marketplace began after the Affordable Care Act mandated minimum medical loss ratios. If insurers make too much money in any given year, the law mandates a refund for their clients across that product line. No similar mechanism exists in the self-insured market, and for a good reason. Self-insured employers are not in the business of “making money” on their medical plans. Employers simply set rates as close to actual as they expect and absorb the losses or achieve the gains. This year was a bit anomalous, however, given that the gains were quite broad for most employers, and in some cases quite dramatic.

So, some generous employers have decided that in the same way auto insurers have refunded a portion of the premiums to their customers this year, they should do the same for their employees.

And no better time of year than around the holidays to bring some additional cheer. Of course, this is a very employer-specific decision based on their unique expenses, economic environment, and governing philosophy. But no doubt, employees will appreciate a premium holiday this December, and improving employee morale in a year like this is a fantastic way of putting some of the savings to use.


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EPIC offers these opinions for general information only. EPIC does not intend this material to be, nor may any person receiving this information construe or rely on this material as, tax or legal advice. The matters addressed in this article and any related discussions or correspondence should be reviewed and discussed with legal counsel prior to acting or relying on these materials.


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Adam Okun

Northeast Region Employee Benefits Practice Leader – New York, NY