MLR Rebates: A Guide for Employers
MLR rebates, mandated by the Affordable Care Act, require insurers to issue refunds to if the portion of premium revenue spent on patient care and healthcare quality improvements falls below specific thresholds. Employers receiving these rebates have obligations, specifically regarding their distribution to eligible plan participants within a specific timeframe.
Although MLR rebates do not apply to self-insured plans like those insured through Excess Reinsurance, many of our partners deal with this complicated issue. This guide examines the rules for handling rebates, distributing them fairly, and key information to assist with understanding the tax implications.
The guide also breaks down the process for employers: determining if the rebate is a plan asset, allocating it between employee and employer contributions, identifying eligible participants, and deciding how to distribute the rebate among them.
Towards the end of the document, you’ll find a detailed appendix discussing ERISA plan assets concerning rebates, outlining scenarios where rebates may or may not be considered plan assets based on policyholder details, contributions, and policy language.