What is Medical Loss Ratio (MLR)?
MA and federal law (Affordable Care Act) require that health insurance companies spend a minimum percentage of premium dollars on medical claims. If a group had coverage in a market segment where your carrier did not meet the MLR requirement, then the carrier will issue rebate checks to eligible employer group clients.
What should you do if your group receives a rebate check?
Generally, “if the participants and the employer each paid a fixed percentage of the cost, a percentage of the rebate equal to the percentage of the cost paid by participants would be attributable to participant contributions”. For example, if the premium split is 80%/20% employer/employee, then employees would receive 20% of the rebate. An employer has 3 months to distribute the employee share, which most employers are doing via reduction in premiums for a month or two. If provided as a reduction in premium, the employer would provide it to current employees and COBRA participants.
Are employers responsible for tracking down previous employees that were on the plan but no longer work for them?
No, unless they’re providing cash instead of a premium contribution, in which case they should talk directly to counsel regarding former employees. There are certain exceptions that may apply depending on the amount of the rebate and the employer’s likely expense in tracking down former employees. If they’re providing the rebate in the form of a premium contribution, it should be extended to COBRA participants as well.
More information specific to each carrier is being provided on their respective website. Carriers are also making every effort to inform each group of their eligibility via mail. Premium rebate checks started being mailed out this week and payments are expected to be completed by the August 1st deadline.
Aisling Partners will continue to update our clients on pertinent MLR information as they are received. Additional information is available at the Department of Labor website.
More information at MLR Guidance