Employers who sponsor a fully-insured group health plan may soon be receiving a Medical Loss Ratio (MLR) rebate from their insurers. For general information on the usage of this rebate, you may contact the U.S. Department of Labor (DOL) at (866) 444-3272 or review their guidance on this issue provided online here. Rebates are scheduled to begin being paid during 2012. If your group health plan is subject to the Federal Employee Retirement Income Security Act of 1974 (ERISA), your employer may have fiduciary responsibilities regarding use of the MLR rebates. The Department of Labor (DOL) has not issued guidance that specifically addresses how employers should handle any COVID-19-related premium credits under ERISA. Like with MLR rebates, there can be COBRA concerns, tax factors, and other compliance items of which to be aware. While many employers are likely following the same MLR rebate guidance for their premium credit rebates, employers would be wise to seek legal counsel before moving forward with an action plan. Because Blue Shield missed the 80% target by 1.0%, it will refund 1.0% of the total health plan premiums paid by the employer and employees in those plans. Medical Loss Ratio (MLR) rebates are determined on a state-by-state basis and based on all the premiums and claims for a group of policies issued by an insurance company in a state during the previous calendar year. However, rebates can be used to reduce future premiums or enhance benefits. The DOL guidance suggests that cash distribution of a Rebate that is a plan asset is the preferred method, and that such amounts should be distributed to those who generated the Rebate. For general information about your rights regarding the rebate, you may contact the Department of Labor’s Employee Benefits Security Administration at 1-866-444- EBSA (3272) or review the Department’s technical guidance on this issue on its web site at DOL guidance states: If [an employer] finds that the cost of distributing shares of a rebate to former participants approximates the amount of the proceeds, the fiduciary may properly decide to allocate the proceeds to current participants [only]… As a result, time is of the essence for many employers in considering how they will use MLR rebates received from insurers. Medical Loss Ratio Rebates Under the Affordable Care Act The U.S. Department of Health and Human Services (“HHS”) has provided guidance on the Affordable Care Act’s (“ACA’s”) medical loss ratio (“MLR”) rule, which requires health insurers to spend a certain percentage of premium dollars on claims or activities that improve health care quality or provide a rebate to policyholders. How Should Employers Disburse Rebates from Insurance Carriers?Revisiting Medical Loss Ratio RebatesCMS Issues Guidance on Medical Loss Ratio RequirementHHS Issues Final … In any case, under the DOL's guidance, employers are generally prohibited from retaining a rebate amount greater than the total amount of premiums and other plan expenses paid by the employer. The portion of the MLR rebate that constitutes “plan assets” technically should be held in a trust; however, Technical Release 2011-04 provides that the trust requirement will not be enforced if the MLR rebate is applied within three months. DOL guidance provides that ERISA’s general standards of fiduciary conduct apply but also provides that the plan fiduciary may allocate the MLR rebate only to current participants—and not to former participants—if the fiduciary finds that the cost of distributing amounts to former participants approximates the amount of the proceeds. At the same time, the U.S. Department of Labor (DOL) issued guidance in Technical the rebate will be used. Some of or the entire rebate may be an asset of the plan, which must be used for the benefit of the employees covered by the policy. Identify the portion of the rebate that is an ERISA plan asset; if any. 47K small group plan holders (DMHC regulated). For employers who need a refresher on exactly how to handle the rebates, we’ve provided some background on the MLR rebate and have also answered several common questions. In deciding on how to apply the rebates, the DOL guidance notes that a plan "may properly weigh the costs to the plan and the ultimate plan benefit as well as the competing interests of participants or classes of participants provided such method is reasonable, fair and objective." If the plan or its trust is the policyholder, then the policy and the rebate are definitely plan assets. receive a rebate should carefully review the guidance issued by the DOL (Technical Release 2011-04) and IRS (MLR FAQs), both of which have remained unchanged since the inception of the MLR requirements, as well as review options with qualified tax and/or legal advisors. However, the DOL has addressed how ERISA’s fiduciary rules apply to MLR rebates that employers receive from their carriers. As an Employer, where can I find guidance to help with and learn more about MLR rebates I received? The DOL's rule for MLR rebates provides guidance on determining whether the credit (or any portion of the credit) is a plan asset. DOL Guidance on When MLR Rebates Are Plan Assets Under ERISA . The MLR requirements don’t apply to self-funded group health plans. In the absence of plan or policy provisions, follow the guidance in DOL Technical Release 2011-4. Updates … group health plan was not subject to ERISA. The MLR for small groups insured by Blue Shield was 79.0%. The DOL guidance makes clear that, if such a plan receives an MLR rebate that is considered a plan asset, the rebate must be used within three months of receipt in order for the plan to continue to rely on the exemption. This conclusion appears to be supported by Technical Release 2011-04 (issued by the DOL to help ERISA group health plans in handling MLR rebates), which does not mention payment of plan administrative expenses among the approved uses for a plan’s MLR rebate. enhance benefits or issue rebate checks to health plan participants. Employers who receive a rebate should have the funds allocated among plan participants within three months of receiving an issuer’s rebate. The Department of Labor (DOL) provides guidance to employers who receive MLR rebates. How does my employer distribute MLR rebates to employees? Any employee contributions must be used for proper plan purposes and cannot be retained by the employer for its own use. Otherwise, the employer may become … The Impact of CCIIO’s Risk Corridor/MLR Guidance: Rebates and Premium Tax Credits Minimal, if any MLR Rebates for Policyholders. Contact your employer if you have questions about how your rebate will be used. It is unclear if DOL will allow plans to apply an MLR rebate toward calendar year 2014 premiums, since the first such premium payment generally would not be due until January 2014 – which is more than 3 months after the rebate was received. If thresholds aren’t met, the insurance carrier must issue rebates no later than September 30. Self-insured medical benefit plans are not subject to these requirements. guideline-heart-failure-2008.pdf Giving a bit of control to MS does not fit into that model and I can understand that. In TR 2011-04, the DOL provides that prior relief under TR 92-01 applies to MLR rebates that are plan assets, and the DOL will not assert a violation of ERISA’s trust requirement against plans receiving MLR rebates that do not otherwise maintain a trust so long as such rebates are used within three months of receipt by the policyholder to provide refunds or pay premiums. Review the ERISA plan document (if an ERISA plan) and the policy applicable to the benefit plan for which the rebate was received to understand how the plan may use and/or distribute the rebate. In that guidance, the DOL provides three options for using the plan assets in a manner consistent with the employer/plan administrator’s fiduciary duties, as described below. Employers/administrators of the group health plan may have fiduciary responsibilities regarding use of this MLR rebate. In fact, the majority of policyholders will not receive rebates. On December 7, 2011, the Department of Health and Human Services (HHS) issued final rules on the calculation and payment of medical loss ratio (MLR) rebates to health insurance policyholders. ERISA-covered Plans. However, the DOL has addressed how ERISA’s fiduciary rules apply to medical loss ratio (MLR) rebates that employers receive from their carriers under the Affordable Care Act’s MLR rules. The DOL has interpreted the application of the exclusive benefit rule to medical loss ratio (MLR) rebates in Technical Release 2011-04. The Department of Labor has Guidance on Rebates for MLR standard rebates and advancement of rebates . How Should the Rebate Be Used? The program did not fund all payments … In December 2011, HHS issued final rules on MLR requirements that explained how rebates were to be distributed when a . Given large insurer profits and widespread MLR rebates in recent years, the lion’s share of any additional insurer revenue in 2020 or 2021 would normally be returned to policyholders through MLR rebates. Employers who have previously dealt with insurance company demutualizations will find that the DOL guidance on MLR Rebates is similar to the prior DOL guidance on demutualizations. Not all plans will receive an MLR rebate. The decision on whether an MLR Rebate is plan assets must be made promptly, because the portion of an MLR Rebate that is considered plan assets must be used within 90 days. The DOL has not issued guidance that specifically addresses how employers should handle any COVID-19-related premium credits under ERISA. MLR Rebate Checklist. Approximately $300 Million in MLR Rebates New CMS Guidance on Risk Corridors Recovery Payments: On September 30, 2020, CMS released new guidance on the treatment of risk corridors (RC) recovery payments.1 The RC program was one of three premium stabilization programs that were part of the Affordable Care (ACA) and operated from 2014 to 2016. The DOL's Technical Release provides guidance regarding the duties of employers, plan sponsors, and other fiduciaries' responsibilities for decisions related to the MLR rebates they receive from insurance companies. Rebates are not based solely on the claims for your own group. 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