Original article posted on https://broker.uhc.com/articleView-11448

The second year of reporting Medical Loss Ratio (MLR) is underway, as required by the Affordable Care Act.   All health insurance companies are required to spend a certain percentage of premium dollars on health care claims and programs to improve health care quality.

Individual and small group markets must achieve an MLR of 80%. There are limited exceptions where states have set a higher MLR threshold (Massachusetts and New York).  The large group market is required to reach an 85% MLR.

As happened in 2012 with the rebate calculation, fully insured policyholders are grouped in Aggregation Sets according to three criteria: group size, situs state and legal insurance entity.

Small group market size is generally up to 50 average total number of employees (ATNE), but 12 states have elected to follow the federal MLR standard of up to 100, with large group being those with an ATNE over 100.  In 2016, all small group markets will follow the federal standard of up to 100.

The process and timetable is very similar to last year’s first Rebate Reporting Year.  UnitedHealthcare has conducted its preliminary review and sent an April mailing to select customers seeking Written Assurance as to how they may use a potential premium rebate.

A critical date for brokers and customers is June 1, when the final MLR Rebate Report will be filed with the Department of Health and Human Services (HHS) detailing the states and Aggregation Sets eligible for premium rebate, along with the final total premium rebate payout.

After the June 1 filing with HHS, reports for sales and brokers listing the customers receiving rebates will be available in the mid-June time frame.  Rebate checks will be issued in staggered mailings beginning the first week of July, with August 1 the deadline for all rebates to be paid to policyholders.

Policyholders receiving premium rebates will receive their checks with the rebate notification.  Their subscribers also will receive a notification that their employer has received a premium rebate.

Rebates will be distributed in the following ways:

  • For ERISA plans, in most cases, the rebate will be paid to the group policyholder.  The exception to this are those groups for which coverage is terminated at the time of the rebate payment and cannot be located by the applicable issuer.  Each group policyholder receiving a rebate will generally have an obligation to use a portion of the rebate to benefit the subscribers of the relevant plan consistent with Department of Labor requirements.
  • For Federal government plans, the rebate will be paid directly to the group policyholder as well.
  • Non-federal governmental plans, the rebate will be paid to the group policyholder, with the policyholder having an obligation to use the portion of the rebate attributable to the premium paid by subscribers in one of the following three ways:Non- ERISA and non- government plans, the rebate will be paid to the group policyholder provided the issuer received a Written Assurance that the group policyholder will use the rebate according to standards applicable to non-federal government plans (details above).  Customers needing to provide Written Assurance were sent a form in April and have until the end of May to return it.
    • To reduce the subscribers’ portion of the annual premium for the following policy year for all subscribers covered under any group health policy offered by the plan;
    • To reduce the subscribers’ portion of the annual premium for the following plan year for only those subscribers covered by the policy on which the rebate was based;
    • Provide a cash rebate to subscribers covered by the policy on which the rebate was based.

Written Assurance forms are “evergreen,” meaning that customers with a Written Assurance on file from a previous rebate reporting year are not asked to complete another one.   If customers do not return a completed Written Assurance by the required deadline, we are required by the federal rules to divide any rebate equally among all applicable subscribers.

Unlike last year, there will be no notifications in 2013 to either the applicable policyholders or subscribers if the group was not included in an Aggregation Set that qualified for a rebate.

The insurer notice that will be sent when the rebate is paid to the employer is here: