By PARIJA KAVILANZ
NEW YORK (CNNMoney) -- Health insurers will dole out a total of $1 billion in rebates to 12.8 million Americans this summer -- an average of $151 per family --as a result of the 2010 health care reform law, the government said Thursday.
The rebates announced by the Department of Health and Human Services come from a provision of the law that punishes insurers who spend too much of policyholders' premiums for boosting company profits instead of paying for their medical care.
The rule mandated that, beginning in 2011, insurance companies would have to spend 80% to 85% of the premiums they collect on medical care instead of toward their own profits and overhead costs.
Insurers that didn't increase that allotment to the new federal standard would have to give customers a rebate for the difference beginning in 2012.
HHS said insurance companies that failed to meet the required "medical loss ratio" must provide a rebate for the difference to their customers no later than Aug. 1.
"The rule helps ensure consumers get fair value for their health care dollar," HHS Secretary Kathleen Sebelius, said in a statement.
HHS said consumers owed a rebate could get it as a check in the mail, a lump-sum reimbursement to the same account that they used to pay the premium if by credit card or debit card, or as a reduction in their future premiums.
For affected policyholders who are insured through their employers, their companies could provide them with the check or reimbursement, or employers could apply the rebate in another manner that benefits their employees, the agency said.
More from CNNMoney:
3.1 Million Young Adults Gained Health Coverage Since Law Took Effect
For 20-Somethings, Health Care Hangs in the Balance
A Ferrari for the Whole Family
Take the first steps to building your portfolio.View Course »