• Employers with Insured Plans Should Take Note of New Medical Loss Ratio Rebates
  • January 21, 2011 | Author: Maureen M. Maly
  • Law Firm: Faegre & Benson LLP - Minneapolis Office
  • Insurers who do not meet the new medical loss ratio requirements under health reform will begin issuing rebates in August, 2012. Last month, HHS issued regulations regarding these medical loss ratio rebates. For current enrollees, rebates can take the form of a premium credit or lump-sum check. Former enrollees must receive a check.

    For employer-provided (group)  insurance policies, insurance issuers may issue rebates directly to individuals covered by group policies, or may enter into agreements with employers to distribute the rebates on behalf of the insurance company. Even if the insurance company delegates the issuance, the insurance company remains liable. The insurance company must obtain and retain records and documentation regarding the distribution of rebates, including:

    1.The amount of the premium paid by each subscriber;
    2.The amount of premium paid by the group policyholder;
    3.The amount of the rebate provided to each subscriber;
    4.The amount of the rebate retained by the group policyholder; and
    5.The amount of any unclaimed rebate and how and when it was distributed.

    Employers with insured plans need to be aware of this provision. Undoubtedly, insurance companies will be attempting to delegate distribution of rebates to employers and employers will want to carefully negotiate their contractual responsibilities with respect to such distributions and the associated recordkeeping required.