It is again the time of year that the Affordable Care Act requires that Insurance Carriers must pay a rebate to their customers their Medical Loss Ratio (paid claims vs premiums paid) do not meet or exceed a specified limit. Your group may have received a return of premium or you may have already received notice that you will not be receiving one. The MLR for groups under 50 employees is 80% and for groups above 50 it is 85%.
For perspective, collectively last year Maryland domiciled health plans reported an 88.79% medical loss ratio; Virginia health plans reported an 88.01% medical loss ratio; District of Columbia health plans reported in at 87.23%. Please note that not all clients will be receiving rebates according to the terms and conditions of the specific carrier in their operating jurisdiction.
This rebate represents a reduction in your premium paid for the past year. The Affordable Care Act stipulates that employers must use the rebate funds to benefit the subscribers covered during the medical loss ratio reporting year of 2012.
If you do receive or have received a rebate, employers have the following two options to disseminate the rebate amounts owed to their subscribers:
1. Reduce premium for the upcoming year
2. Provide a cash rebate to subscribers that were covered by the health insurance on which the rebate was based
All rebate checks from the carrier should be mailed no later than August 1st 2013. Employer groups will have 90 days to resolve how the funds will be allocated most effectively.
We, at EC&S, are here to help you navigate the evolving changes of Health Care Reform. Please contact Patrick Duke if you would like to ask any questions.
written by Patrick Duke, VP Employee Benefits