July 19 2012: One of the provisions of the Patient Protection and Affordable Care Act (PPACA) is a requirement that insurers spend 80 percent of premium income for individual and small group plans and 85 percent of premium income for large group plans on health care and improving health care quality. This is referred to as the Medical Loss Ratio Standard (MLR), which is intended to ensure consumers get value for their health care dollars. If a carrier/plan fails to meet the federal requirements, the plan must refund the difference to policyholders by August 1, 2012.
Who Will Receive Rebates?
Many groups offer their employees a choice of products, which could be offered through one or more legal entities. Because rebates are calculated separately for each legal entity, rebates to the policyholder (employer) under a group medical policy or plan will be based on what product the employees are enrolled in.
Rebate checks will be issued directly by the insurer to those with individual plans and to the policyholder (employer) for groups; employers are responsible for distributing appropriate rebates to eligible employees or using the funds to benefit current enrollees. Some employers may receive more than one MLR rebate. It can be challenging for busy business owners to determine how much rebate should go to eligible employees. To help you provide value-added service to your clients, Word & Brown has developed a MLR Rebate Calculator. Click on the link in the Feature Box for the MLR Rebate Calculator.
Source: John & Rusty Report via Word & Brown