HHS issues rules on health insurance premium rebates
One bright spot in the new health care reform law for employers is that you and your employees eventually may qualify for rebates on 2011 insurance premiums. The Department of Health and Human Services (HHS) recently issued guidance on the new requirement for insurers to inform HHS how they spend health insurance premium dollars (75 Fed Reg 74863, Dec. 1, 2010). The law requires insurers to spend at least 80 cents of every premium dollar (85 cents, in the large group market) on clinical services and health care quality improvement. This standard is called a medical loss ratio or MLR. If they fail to meet this MLR standard, they must issue a rebate to the employer and plan participants. Rebates may take the form of either a premium credit or a lump sum payment, and plan enrollees who receive rebates must be given notice explaining the rebate and how it was calculated. HHS will develop a model notice. Specific rules apply to employers who receive these rebates, including standards on how they should distribute the rebates to current and former participants. The first round of rebates, based on insurers’ 2011 MLR, must be made by August 2012. Vigilant will report on further guidance as it develops.