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Judi L. Woods Agency Blog

Medical Loss Ratio

Healthcare Reform Update - Will You be Receiving a Rebate?

Overview
The new Affordable Healthcare Act has set regulations for insurance companies when it comes to how they spend your money.  Insurers are held accountable by the Medical Loss Ratio which outlines the percentage of your premiums insurers must use on medical care costs and how much they can use towards administrative expenses. If the insurance company spends more than 20% of premiums on administrative expenses (15% for large groups) they must provide rebates to policyholders.
 
FAQ
Will I be receiving a rebate?
It depends on your policy’s “block”.  The “block” is determined by: the type of policy you have, which insurance company it is, and in which state you are located.  You may contact your insurance company directly to find out if you will be receiving a rebate.
 
If my policy qualifies for a rebate, when will I be receiving it?
All rebates are due by August 1, 2012.
 
What if I am on a group policy?
If your policy qualifies for a rebate, your employer will receive the rebate and distribute it in proportion to your employee contribution.  This can be done by either reducing your premium for the following year or by providing you with a cash rebate.  Your employer has the right to decide how these funds will be distributed.
 
Will I pay taxes on my rebate?
In accordance with the revised regulations that were issued on December 2, 2011, consumers will not pay taxes on any rebates they receive.
 
If I don’t receive a rebate, do I still have access to the insurance companies MLR information?
Insurers are required to provide individual policyholders and subscribers under group plans information about their MLR regardless of whether there is a rebate.
 
For further questions, you may contact our office at 239-275-5834 or email us at judiwoods@earthlink.net.
 
References Used:
Cigna Informed on Reform, HHS/CMS News Release & HHS/CMS Fact Sheet