SAN FRANCISCO -- Blue Shield of California, which this month started returning $167 million in excess profit to its customers, said Thursday that it would return an additional $283 million by the end of the year.

The giveback is part of Blue Shield's promise to cap its profit at 2 percent and return anything above that amount to its policyholders and health care providers. The money being returned in October comes from excess 2010 profit, while Thursday's announcement reflects estimated profit for 2011.

For customers, this means they will not only see credits in their October bills but also in December.

December reductions will range from $40 to $270 for individuals and from $220 to $700 for a family of four. For many, that could more than cut their bills in half for the month.

Blue Shield's profit margin in 2010 was 3.1 percent, and its profit margin for this year is estimated to reach 4 percent. Insurance officials attributed the increase to lower use of services, fewer hospitalizations and better care management that has reduced repeat admissions.

While skeptics have dismissed the San Francisco health insurer's move as little more than a publicity stunt, customers undoubtedly will welcome the relief.

"It's a real demonstration of our commitment to affordability," said Paul Markovich, Blue Shield's chief operating officer. "We want to keep what we think we need to keep to keep the company financially strong. But anything above that, we shouldn't hang on it."

Markovich said the company's goal is not to dole out large credits at years' end but, instead, to price plans appropriately all year.

Blue Shield's action comes at a time when the federal government, as part of the federal health law, will start requiring health insurers to spend at least 80 percent of their individual policy premiums on medical care. For group plans, insurers must devote 85 percent to care. If insurers don't meet that threshold, the money will have to be refunded to consumers beginning in 2012.

Employers will also benefit from Blue Shield's new policy. As part of Thursday's announcement, the insurer said it will give credits in December to small employers with two to 50 employees. Those credits will average $220 per worker or $605 for a family of four. For those with 51 or more employees, the average credit will be $195 to $230 per employee.

Self-funded groups, many of which are large companies, are not eligible for the credit.

E-mail Victoria Colliver at vcolliver@sfchronicle.com.

This article appeared on page D - 2 of the San Francisco Chronicle