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West Palm Beach Business Lawyer Explains Rebates Under the Affordable Care Act (“Medical Loss Ratio Rebates”)

August 7, 2014
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/Business Law
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Need help understanding the Affordable Care Act? Our West Palm Beach business lawyer explains the basics, focusing on available rebates.

The Affordable Care Act (“The ACA”), explains our business lawyers West Palm Beach, requires insurance carriers to send a rebate each year to policyholders when carriers fail to spend at least 80 percent of premium dollars on reimbursement for clinical service and activities to improve the quality of health care (“Medical Loss Ratio Rebates”).

The amount of these mandated rebates varies by state and by insurance company. The rebates do not necessarily have to be in the form of a check; however The ACA requires carriers send out a written notice to both individuals and employers explaining why and how the rebates will be provided. The rebates for 2013 should have been sent to policyholders by August 1, 2014.

Those who did not purchase a health insurance policy through their employer, but purchased their policy via the individual insurance marketplace should receive either physical checks or direct refunds to their credit or debit cards.

Those who receive health insurance through an employer (making the employer the policyholder) will not necessarily receive a rebate directly. The rebates will be paid to the employer if the employer pays 100 percent of the participant’s health insurance premium. The rebate will be repaid to the participant if the participant pays 100 of the health insurance premium. If the employer and participant each pay a portion of the health insurance premiums, the rebate will be reimbursed to each on a pro-rata basis to be distributed to the employee by the policyholder in a way determined by the policyholder. Because premiums for participants in group policies are paid for with pre-tax dollars, refunds to participants are subjected to tax if the money is returned to the individual participant. So, the government urges employers to use the rebates in “ways that are not taxable” such as reduction in future premiums or in the form of more generous benefits. Therefore, it is important for employers to confer with a tax professional to discuss the available options for distributing these rebates.

If you are looking for qualified, professional, business lawyers West Palm Beach – please don’t hesitate to reach out and contact us. We will get back with you as quickly as possible.

NOTE: The policyholder must distribute the rebates to employees within three (3) months of receipt by the policyholder; therefore time is of the essence. If you would like additional information, please contact our West Palm Beach business lawyer / West Palm Beach business attorneys.