The medical loss ratio provision of the Affordable Care Act (ACA) encourages health plans to spend most of the premium dollars they collect on health care costs rather than overhead. It’s a ratio of insurance claims costs to insurance premiums, and is expressed as a percentage.
In the Fully Insured Small Group and Individual markets, the MLR provision requires plans to spend at least 80% of premium income on health care claims and quality improvement. In the Fully Insured Large Group market, it requires at least 85%. In markets where Anthem doesn't meet the minimum ratio, they're required to issue rebates to employer groups and Individual members. ASO plans and stop-loss insurance are excluded from the rebates.
Anthem groups and individuals in 8 states will receive rebates this year.
Rebate checks will be sent to employer groups and Individual members along with a federally mandated notice that explains MLR and how it is calculated. Anthem is also mandated to notify employees of the groups that receive rebate checks.
ACA rules require that employers either distribute the rebate among their employees covered by the rebated plan or use it to lower premiums in the next plan year. Rebate distributions must be made within three months of the policyholder's receipt of the rebate. Group plans that are subject to Employee Retirement Income Security Act (ERISA) laws may also use the rebate funds to pay current plan premiums.
View this FAQ for more details on the rebates.
If you have questions, please reach out to your Anthem representative.