Employees may see only indirect benefits from MLR rebates


Your employees have heard about medical loss ratio (MLR) rebates. They are asking if a rebate is due from one of the insurance companies that issues your health insurance plans and when they’ll receive their checks. What do you tell them?


First, not everyone will be entitled to an MLR rebate. Insurers will only provide a rebate if they have not spent at least 80 percent (for individual or small group markets) or 85 percent (for large group markets) of the premium dollars they take in on health care costs and health care improvement activities. The first round of rebates for the 2011 calendar year is due in 2012. Employees who want to see if their insurance company has measured up to this standard can be directed to http://companyprofiles.healthcare.gov, where they can enter their state and insurance company information to check on that company’s MLR status.

Second, employees’ rebate checks are usually sent to their employers, although insurers have to notify the employees of that fact. Employers must use the rebates in a manner that benefits employees. One option is to send checks in the appropriate amount to participants within 90 days of receipt. Another option is to give employees reductions in their contributions for their insurance premiums, in the amount received from the insurance company. HHS regulations direct insurance issuers to provide rebates in ways, such as premium deductions, that are not taxable. In addition, if an employer does not provide written assurance to the insurance issuer that the proportion of the rebate attributable to employees’ contributions will be used for the benefit of insurance participants, the insurer must issue the rebates directly to the employees.

Source: HHS final regulations, 76 FR 76574, December 7, 2011 and 77 FR 28790, May 16, 2012.

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