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Action Required: Health Care Reform Medical Loss Ratio (MLR) Rebates.

Due to Health Care Reform health insurers must spend at least 80% of premium dollars on medical care or refund the difference to the employer. Check with your agent to find out if your insurer will be issuing refunds. For calendar year 2011 United Healthcare is rebating 2.1% and Blue Cross is rebating 2.7% of your 2011 annualized premium.  I have been told that Aetna’s MLR was over 80% so they won’t be required to issue any refunds. I have not been able to confirm what Humana, AvMed or Coventry are doing.


If you receive a refund; as the employer it is your obligation to refund to your employees the portion of this savings that was contributed by them. The simplest way to accomplish this is to add up the health insurance premiums paid by each employee thru payroll deductions for 2011 (calendar year) and cut each employee a check representing the percentage that your insurer is refunding. For example if you received a $1,000 check, and your employees contributed a total of $10,000 toward your health plan in 2011 then you would refund $210 (at 2.1%) to all your employees. Remember to cut checks to any employees that are no longer employed by you but had deductions in 2011.


Please don’t hesitate to call with any questions.