The Center for Consumer Information and Insurance Oversight has published a listing of health insurance issuers owing Medical Loss Ratio (MLR) rebates for the 2012 MLR reporting year. Health insurance issuers must pay these rebates to individual and group policy holders by August 1, 2013. The Department of Health and Human Services announced on June 20 that, on the whole, issuers will distribute just over $500 million to individual and group policy holders this year. The Patient Protection and Affordable Care Act’s MLR requirement provides that insurance issuers must spend at least 85% of each premium dollar in the large group market (80% in the small group and individual markets) on claims and healthcare quality improvement. If a health insurance issuer does not meet the applicable MLR standard, the issuer must rebate the difference to policy holders. The MLR requirements do not apply to self-funded group health plans.
In the group health plan setting, the employer is generally the policy holder. Once the employer receives the rebate from the insurance issuer, the employer must determine how to distribute those funds to the plan’s participants according to Department of Labor guidance. Employer policy holders have 90 days to distribute the rebates to participants. After 90 days, the employer must establish a trust to hold the rebate funds as they are considered ERISA plan assets. The IRS also has a stake in the MLR rebates. If participants paid premiums pre-tax through a Section 125 cafeteria plan, MLR rebate amounts are considered taxable wages. There are many other determinations surrounding MLR rebate distribution an employer must make as an ERISA fiduciary. It is recommended that an employer consult their benefits advisor or legal counsel prior to distributing MLR rebate amounts to plan participants.
Insurers in the North Carolina small and large group markets are issuing just over $7.5 million in rebates this year. Of the North Carolina carriers issuing rebates in the group markets, UnitedHealthcare Insurance Company will rebate the most – $2,442,898 in the NC small group market, and $3,849,214 in the NC large group market. The other carriers issuing MLR rebates in the NC group markets are Cigna HealthCare of North Carolina, Inc., Guardian Life Insurance Company of America, John Alden Life Insurance Company, and WellPath Select, Inc.
For more information on the rebate amounts being provided by these issuers and issuers in other states, see this List of Health Insurers Owing Rebates for 2012 and this list of MLR Rebates by State and Market for 2012.
