Medical Loss Ratio Rebates As part of the Affordable Care Act (ACA), insurers are required to meet minimum Medical Loss Ratios (MLRs) for insured health plans for groups and individuals. The MLR is the percentage of the premium that the health plan spends on medical costs and quality improvement. If you have an insured health plan, and the insurer did not meet the minimum MLR for 2011, you may receive a rebate for a portion of the paid premium.
|The MLR is calculated separately for different groups. The calculation is based on whether the health plan is for an individual or a group, the size of the group, and the situs state of the contract.|
|All insurers are required to send notices to policyholders and subscribers by August 1, 2012. You will receive a notice advising whether your insurer met, or did not meet, the minimum MLR requirements for your health plan for the prior year.|
|If the minimum MLR was not met, your insurer will issue rebates to impacted groups and individuals by August 1, 2012. |
Many states also have MLR regulations that may be the same or different from the ACA MLR requirements. The following link provides some information on the federal tax consequences of MLR rebates: http://www.irs.gov/newsroom/article/0,,id=256167,00.html.
Please consult your tax advisor for further details.