FEATURE STORY
Healthcare Reform W
Medical Loss Ratio Rebates and What They Mean for You
ith the Supreme Court’s recent
ruling on the
Healthcare Law, there have been a lot of ques-
tions from companies like, “Are we sup- posed to be doing anything right now?” or “What do we need to be preparing for in the future?”
The short answer is we need to address the medical loss ratio (MLR) part of the Affordable Care Act and the majority of the rest of the bill does not kick in until the summer of 2014. The long answer cannot be explained in this article but we do have a timeline that we can send you. Also, several webinars and seminars will be held over the next year. The bottom line is that there is still a lot of uncertainty about the law and a lot is predicated on the outcome of the November elections.
The Affordable Care Act requires health insurers to spend a minimum percentage of premium dollars received on claims and quality improvement. If they do not hit certain ratios, then they are required to
issue rebates to the individual companies. The large group (50 + employees) market ratio is 85% and the small group (under 50 employees) market ratio is 80%. The first of these rebates have already gone out so you need to decide what you will do with the rebate in case you receive one.
This is an oversimplification of the Act but there are two ways to go if you receive a rebate. You can either reimburse the em- ployees directly, or the company can keep the money but with certain requirements.
If employers choose to reimburse employ- ees, they could be setting themselves up for legal issues if they don’t reimburse all enrolled employees who were on the plan at that time specific to each employee’s out-of-pocket portion. This would mean cutting checks to current employees but could also mean chasing down terminated employees that were covered during the plan year. This would obviously be an administrative nightmare and not the option most employers are choosing.
The more popular option is to declare the rebate a company asset. We have been told by two prominent attorneys in Washington that rebates can be consid- ered plan assets and it is at the discretion of the plan administrator as to how it should be used. However, if the rebate is kept by the company, it must be used for the benefit of the plan and its employees. Benefits of the plan can mean offsetting administration costs, reducing future premium increases, etc.
In closing, healthcare reform can be con- fusing to follow and difficult to navigate through the different requirements set forth by the government. One thing is for certain and that is this law will continue to change and you need a good source to help keep you up to date on your responsibilities. Stay tuned for upcoming seminars and a webinar to cover this topic as well as the rest of the law.
Article by Brian Stevenson, president, The Stevenson Group. Find out more at
www.thestevensongroup.com.
Focusing on what’s really best for builders. Better coverage, better rates, and flexible coverage options from the strongest insurance companies serving the industry. Hotchkiss Insurance Agency has proudly insured Texas builders and contractors for over 35 years. Continually focused on offering only the best, our program now offers enhanced coverage and more options than ever before aimed at helping protect your business and your bottom line.
Call 713-292-5723 or request a quote online at
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www.hiallc.com GREATER HOUSTON BUILDERS ASSOCIATION – BUILDING A BETTER FUTURE | HOUSTON BUILDER | SEPTEMBER 2012 15
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