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AG: North country college students may be due health plan refund

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North country college students could be in line for a refund from a health insurance provider who the state attorney general claims overcharged them on their health plan.

Attorney General Eric T. Schneiderman and state Department of Financial Services Superintendent Benjamin M. Lawsky announced Tuesday that a settlement has been reached with Markel Insurance Co. in which the provider will refund a total of $2.75 million to more than 22,000 students attending 34 colleges

statewide.

According to a statement by Mr. Schneiderman, a joint investigation between his office and Financial Services revealed that Markel’s student health insurance plans, college accident insurance plans and sports accident plans failed to meet legal requirements for minimum “loss ratios,” leading to nearly $3 million in overcharges to students, including 2,540 attending schools in Jefferson and St. Lawrence counties.

In St. Lawrence County, 1,150 students at St. Lawrence University, Canton, will receive refunds, along with 750 students at Clarkson University, Potsdam, and 600 students at SUNY Potsdam. Forty students at Jefferson Community College will get money back. The average refund will be $107, according to Mr. Schneiderman’s office.

Mr. Schneiderman said the investigation also revealed that Markel paid improper broker bonuses, which created an incentive for the broker to keep loss ratios below the legal minimum. To prevent overcharges to consumers, state insurance regulations require that health insurance plans maintain a minimum loss ratio of 65 percent. A loss ratio is the ratio of the amount paid out in claims under a plan compared with the premium charged under that plan and requires plans to pay at least 65 cents on medical care for every dollar of premium. For policy years 2007-08 and 2009-10, and again in 2011, Markel’s student health plans paid out far less than the required 65 percent, Mr. Schneiderman said.

Also, the investigation revealed that Markel entered into broker compensation agreements with at least one broker that provided that Markel would pay the broker a bonus only if the plan’s loss ratio was kept below 60 percent. Such agreements create conflicts of interest for the broker and financial incentives for brokers to break state law, Mr. Schneiderman said.

Markel has stopped offering student health plans, accident insurance plans and sports accident insurance plans in the state. The company will also pay a nearly $1 million penalty, to be split evenly between the attorney general’s office and the Department of Financial Services.

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