MLR Rebate checks for small businesses are being paid by August 1st!

If the health insurance company that covers your employees is spending less than 80% on medical care and improvement on quality of care (85% for larger businesses¹), then a rebate check could already be on the way.  This 80/20 rule is another part of the new Patient Protection and Affordable Care Act and it was designed to make insurance companies more efficient and to keep premiums lower.  Rebates are calculated on a state-by-state basis and a business has a couple of options to consider if they are expecting a rebate check from their insurance provider:

1. Divide the rebate among covered employees
   Depending on the level of coverage an employee has (employee only, employee +1 or family) and what portion of the premium is paid by the employee (50%, 75% or 100%), a company may select from several options to distribute the rebate to the employee.
   
   
2. Reduce payroll deductions
   A partial premium holiday could be adopted wherein a portion of the next month’s premium is not deducted from the employee's gross pay.
    
3. Enhance Soft Benefits
   In the interest of administrative ease, an employer that receives a smaller rebate is not necessarily obligated to directly provide their personnel with a portion of such amount.  Instead, the employer may use the employees' rebate for the benefit of plan participants in some other manner, such as by means of improvement to a wellness program.
   
   Note: It is important to communicate to your employees how your company plans to use these funds, if received.  Also, an insurance company may not send a check and instead elect to reduce your future premiums for that plan year.

Human Resources, Inc. is here to help

When facing new legislation that affects your business, the knowledgeable and experienced consultants at Human Resources, Inc. can steer you in the right direction and answer questions that you may have. For example: Does a terminated employee receive an MLR rebate payment? Are MLR payments to current employees taxable? If a company pays 100% of the premium, are employee rebates required? There is a time limit for employers to decide how to proceed with these rebates. Contact one of our specialists today!

¹ Definitions of the small and large group market.   For the purposes of the MLR requirement, small group will be defined as 1 to 50 total average employees based on the preceding calendar year, if a state's current definition of small group includes an upper limit of 50, unless the state elects to use 1 to 100, until 2016. After Jan. 1, 2016, small group will be defined as 1 to 100 total average employees. Large group will be determined based on the upper limit established by the small group rules.