Q.- We received a rebate from our insurance carrier in September. They said it was a medical loss ratio rebate. We haven’t used the money yet because we don’t know what should be done with it. What do we do with a MLR rebate?
A.- When a health plan uses more for expenses than for benefits, the health insurance carrier has until the end of September of the following year to pay required rebates. Employers must use the rebate within 90 days of receipt. There are three options for distributing rebates:
- Reduce annual premiums for the next plan year for all employees covered under the plan.
- Reduce annual premiums for only those who were covered under the plan for which the rebate was issued.
- Provide a cash refund to employees who were covered under the plan for which the rebate was issued.
Employers are not generally required to find former employees to distribute rebates, but COBRA participants must be included in a rebate.
