News & Updates
October 12, 2016
The Medical Loss Ratio (MLR) rules under Health Care Reform require an issuer to provide rebates if its medical loss ratio (the amount of health insurance premiums spent on health care and activities to improve health care quality) falls short of the applicable standard during a reporting year. Each year's rebates must be provided to policyholders (typically the employer that sponsors the plan) by September 30 of the following year.
In order to reduce the burden on issuers and minimize the tax impacts on participants in and sponsors of group health plans, the MLR rules provide that issuers must pay any rebates owed to persons covered under a group health plan to the policyholder, who is then responsible for distributing the rebate to eligible plan enrollees.
In general, there are several ways rebates may be distributed to plan enrollees, including:
To the extent that premium rebates are considered to be plan assets, they become subject to the Employee Retirement Income Security Act (ERISA). As a result, decisions on how to apply or expend the plan's portion of a rebate are subject to ERISA's general standards of fiduciary conduct. For additional details, click here.
Visit Medical Loss Ratio (MLR) Rebates & Employer Responsibilities to learn more.
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