health reform

Beginning in 2011, the medical loss ratio (MLR) requirements of the Affordable Care Act require health insurers to spend at least 85% of premiums for large group policies on medical expenses and activities to improve health care quality.  If an insurer does not meet this requirement, it must rebate to the employer a portion of the collected premiums.  The employer, in turn, is responsible for determining whether and how to pass along the rebate to plan participants.  By August 1, 2012, insurers in the large group market were expected to return $386 million in rebates to employers.

Employers must consider both the implications under ERISA and the Internal Revenue Code in determining how to use the rebates.  Although employers are responsible for determining how to use the rebate, insurers are responsible for notifying employees (and their dependents) who participate in the plan that the employer has received the rebate.  Accordingly, employers should expect questions from both current and former employees regarding their use of the rebate.
Continue Reading How Employers Can Use Medical Loss Ratio Rebates