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Iowa insurance companies have been given more time to comply with a new federal rule designed to curb insurers' profits.

The regulation that went into effect this year calls for insurance companies to spend at least 80 percent of premiums on medical care and quality assurance. For employer plans covering more than 50 people, the requirement is 85 cents. Insurers that fall short of the mark are required to issue their customers a rebate.

The U.S. Department of Health and Human Services told the state on Friday that Iowa insurers will be given have to reach the 80 percent mark by 2013, but will be required to meet interim goals until then, the Des Moines Register reported.

The Iowa Insurance Division had requested extra time to comply with the law, citing fears that insurers would leave the state in droves. Six pulled out of Iowa after the law was passed.

Steve Larsen, director of HHS' Center for Consumer Information and Oversight, said in a letter to the state that implementing the law in Iowa in 2011 could cause turmoil in the insurance market. So, he laid out a timetable for compliance that calls for Iowa insurers to spend 67 percent of premiums on medical care this year, 75 percent in 2012 and 80 percent in 2013.

Iowa insurance commissioner Susan Voss said she wasn't displeased by the decision. The state had sought even more time for companies to comply, but, "I don't think we'll see companies exit as a result of this," Voss said.

Of those particularly hard-hit by the law are insurers who sell individual policies because those premiums are more volatile. Employers or large groups can negotiate for better premiums, and the risk in those plans are spread among the group.

There are 56 insurance companies in Iowa that offer individual policies. Seven of those account for 95 percent of the market, with Wellmark holding onto almost 84 percent. Wellmark spent 92 percent of premiums on care but none of the state's other top insurers met the 80 percent standard in 2010.

Federal regulators said that had the law gone into effect this year, Iowa consumers would have received $6.5 million in rebates over three years.



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