The Assurant Health Insurance Company has agreed to refund nearly $1.7 million to Montanans to resolve a complaint that the company charged two different prices for the same health insurance policies: a lower price for healthier customers and a higher price for sicker Montanans. Jennifer McKee with the Montana Office of Securities and Insurance said that's not how health insurance works in Montana.

"Assurant was offering what are called 'healthy discounts' to its insurance customers and it resulted in people who are sicker who use their insurance and are paying a higher price, then those who don't use their insurance as much," McKee said. "Our office alleged that violated the law. We came to an agreement with Assurant where they pay a $25,000 and agreed to refund to Montanans who paid more for their health insurance."

McKee said all of this is in violation of state law—particularly because of the following:

"Increases in premiums, certificate or contract charges for individual policies, certificates or contracts previously issued by that insurer, based on factors other than attained age, must be distributed proportionately across the block of business. That's what Montana law requires," McKee said. "Because if you look at it from one angle, it might look like you're offering a discount. But if you look at it from the other angle, you're charging people more for using the product that you sell. That's in violation of state law."

McKee said Montanans should be seeing checks in the mail starting early in 2016.

More From KMMS-KPRK 1450 AM