$1 Billion in Health Insurance Rebates: Taxable or Tax-free?

Many Americans are about to get money back. We sort through how much they can keep.

American health insurance companies are about to shower over $1 billion in rebates on policyholders -- refunding premiums paid in 2011 that fail to meet the so-called 80/20 rule imposed by the health care reform law. If you're among the lucky recipients, will the rebate be a double-edged sword? Will it be considered taxable income?

We'll get to that. But first a quick review of what's going on.

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Kevin McCormally
Chief Content Officer, Kiplinger Washington Editors
McCormally retired in 2018 after more than 40 years at Kiplinger. He joined Kiplinger in 1977 as a reporter specializing in taxes, retirement, credit and other personal finance issues. He is the author and editor of many books, helped develop and improve popular tax-preparation software programs, and has written and appeared in several educational videos. In 2005, he was named Editorial Director of The Kiplinger Washington Editors, responsible for overseeing all of our publications and Web site. At the time, Editor in Chief Knight Kiplinger called McCormally "the watchdog of editorial quality, integrity and fairness in all that we do." In 2015, Kevin was named Chief Content Officer and Senior Vice President.