Now that the U.S. Supreme Court has upheld the Patient Protection and Affordable Care Act (PPACA), employers must pay close attention to insurance “rebates” that may be issued to health plan participants beginning next month.
Under PPACA, insurance carriers are required to spend at least 80% of their premium income on health care claims and quality improvement efforts, only permitting a reserve of 20% or less for administrative expenses. The Medical Loss Ratio (MLR) threshold for large group plans with generally more than 50 participants require insurance carriers to spend 85% of their premium income, with only 15% permitted for administrative expenses. The rules do not apply to self-insured health plans.
