Insight IBR Features Article On Health Insurance Rebates: What Should Employers Do With The Money?

Many Idaho employers recently received a refund check from their group health insurance policy. The Affordable Care Act (commonly known as Obamacare) requires health insurers to spend a stated amount of the premium they collect on paying medical claims or on activities that improve health care quality.

For small employer groups, insurers must spend 80 percent of the premium they collect on claims or quality improvement. For larger employer groups, insurers must spend 85 percent of the premium they collect on claims or quality improvements. Insurers who fail to meet these thresholds, which are called “medical loss ratios” or “MLRs,” must rebate a portion of the premium to policyholders.

Employers who receive these rebates are responsible for determining what to do with the money. In most cases, the employer cannot simply keep the money. Employer group health plans are governed by the federal Employee Retirement Income Security Act (ERISA), which imposes fiduciary duties on plan sponsors—in this case, employers—when handling plan assets.

If you would like more information about this topic or other legal issues, please contact a member of our Health Law Group or call 208.344.6000.

Click HERE to read the article on the Idaho Business Review website!