| Employer groups should soon be receiving checks from insurance carriers representing the medical loss ratio (MLR) rebate. Most will receive the check by September 30, 2022. Specific MLR rules were implemented as part of health care reform that were designed to ensure that insurance carriers spend no more than 15% or 20% of premiums collected on overhead-type expenses. Carriers must issue a rebate check in cases when these percentages are exceeded. Employers who receive MLR rebates have a fiduciary duty to manage those funds in accordance with certain guidelines. The following guidelines might assist the employer in distributing the rebates. The rebate should be considered a plan asset subject to the exclusive benefit rule, which means that the assets be used exclusively for the benefit of participants and their beneficiaries. There are different allocation options available to employers. They include:
The rebate can go to current plan participants. Groups do not need to locate former employees or COBRA participants to distribute the funds (although they can if they want to). Employers have 90 days to distribute rebates to employees. |