Wednesday, July 18, 2012

Medical carriers set to issue MLR rebates to employers

The Affordable Care Act (ACA) requires health insurance issuers to spend a minimum percentage of their premium dollars on medical care and health care quality improvement. This percentage, or medical loss ratio (MLR), is 85 percent for issuers in the large group market and 80 percent for issuers in the small (< 100 employees) and individual group markets. Issuers that do not meet the applicable MLR standard must provide rebates to consumers.

The MLR requirements, which are enforced by the Department of Health and Human Services (HHS), became effective for issuers in 2011. Rebates must be paid by August 1 following the end of the MLR reporting year. Thus, issuers are required to pay rebates by Aug. 1, 2012, based on their 2011 MLRs.

UnitedHealthcare and Coventry Health Care of the Carolinas (formerly WellPath) are two medical carriers in North Carolina that will be issuing MLR rebates for 2011.  Both carriers have stated that employers will receive rebate checks prior to August 1. 
The DOL has provided guidance on whether the rebate is a plan asset and how the rebate should be used by employers.  This guidance is summarized in our legislative brief, How Employers Should Handle MLR Rebates.
For specific questions on your company's rebate, please contact your team at Senn Dunn.

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