One of the insurance reforms enacted by the Patient Protection and Affordable Care Act is a Medical Loss Ratio (MLR) reimbursement standard that requires insurance companies to spend a certain percentage on health care. Large group insurers must spend at least 85 percent of premium dollars on claims and activities to improve health care quality. Individual and small group insurers must spend at least 80 percent of premium dollars on claims and activities to improve health care quality. If the insurer does not meet the MLR standards, it is required to issue a rebate to its policyholders. Based on preliminary estimates from insurers, rebates will total $1.3 billion this year alone.

Some employers will receive a MLR Rebate in the form of a direct rebate from the insurer and some will receive a check from the insurance company. In the event that you receive a MLR Rebate check from your Medical Plan insurer, there are certain procedures established by the federal Department of Labor and the IRS that must be followed in order to ensure that the proceeds from the check are handled properly. If you did not receive a MLR Rebate from your Medical Plan insurer, you may want to check with the insurer to make sure that you are not entitled to one.

If you have any questions regarding a MLR Rebate and the appropriate procedures to follow in order to handle the proceeds properly, or need other employee benefits assistance, please contact Christine Gottesman or the Nukk-Freeman & Cerra attorney with whom you normally work.

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