The Affordable Care Act (ACA) requires health insurers to use a standard of 80 cents (85 cents on large groups) out of every premium dollar to pay for their enrollees’ health claims. This financial measurement, known as Medical Loss Ratio (MLR), encourages insurers to provide conclusive value to their customers, instead of using their premiums to fund extraneous expenses such as administrative or marketing costs. Insurers who fail to meet their respective MLR standard must refund excess premiums back to their policyholders.
How to Use a Rebate
Rebates should be used within three months of receiving the funds from the insurer. Employers may use their rebate at their discretion, pending their total contribution during the relevant period and necessary language in their insurance plan document. Without these factors, employees may be responsible to use all or some of their rebate towards plan participants. While the refund can be made in cash, it is not reccomended.
If you are an employer seeking additional guidance, refer to the DOL requirements, or contact BMPG. We would be happy to advise you on how to proceed.