This conclusion appears to be supported by Technical Release 2011-04 (issued by the DOL to help ERISA group health plans in handling MLR rebates), which does not mention payment of plan administrative expenses among the approved uses for a plan’s MLR rebate. For employers who need a refresher on exactly how to handle the rebates, we’ve provided some background on the MLR rebate and have also answered several common questions. Supports more input and output video formats. Because Blue Shield missed the 80% target by 1.0%, it will refund 1.0% of the total health plan premiums paid by the employer and employees in those plans. Rebates are scheduled to begin being paid during 2012. Self-insured medical benefit plans are not subject to these requirements. receive a rebate should carefully review the guidance issued by the DOL (Technical Release 2011-04) and IRS (MLR FAQs), both of which have remained unchanged since the inception of the MLR requirements, as well as review options with qualified tax and/or legal advisors. What are employer responsibilities around the MLR rebate? Review the ERISA plan document (if an ERISA plan) and the policy applicable to the benefit plan for which the rebate was received to understand how the plan may use and/or distribute the rebate. Like with MLR rebates, there can be COBRA concerns, tax factors, and other compliance items of which to be aware. Medical Loss Ratio Rebates Under the Affordable Care Act The U.S. Department of Health and Human Services (“HHS”) has provided guidance on the Affordable Care Act’s (“ACA’s”) medical loss ratio (“MLR”) rule, which requires health insurers to spend a certain percentage of premium dollars on claims or activities that improve health care quality or provide a rebate to policyholders. The MLR requirements don’t apply to self-funded group health plans. Identify the portion of the rebate that is an ERISA plan asset; if any. In fact, the majority of policyholders will not receive rebates. How does my employer distribute MLR rebates to employees? MLR standard rebates and advancement of rebates . Updates … The DOL's rule for MLR rebates provides guidance on determining whether the credit (or any portion of the credit) is a plan asset. DOL guidance states: If [an employer] finds that the cost of distributing shares of a rebate to former participants approximates the amount of the proceeds, the fiduciary may properly decide to allocate the proceeds to current participants [only]… In any case, under the DOL's guidance, employers are generally prohibited from retaining a rebate amount greater than the total amount of premiums and other plan expenses paid by the employer. Most employee benefit plans sponsored by private-sector employers are subject to ERISA. If your group health plan is subject to the Federal Employee Retirement Income Security Act of 1974 (ERISA), your employer may have fiduciary responsibilities regarding use of the MLR rebates. Any employee contributions must be used for proper plan purposes and cannot be retained by the employer for its own use. If the plan or its trust is the policyholder, then the policy and the rebate are definitely plan assets. 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