FAQ's for Employers - I received a rebate

Overview


3.0 Q: If my plan has terminated, why am I receiving a rebate check?

A. The rebates are based on your previous year coverage. Eligible policyholders with active coverage in the previous year will receive rebates if the insurance company didn’t meet the minimum Medical Loss Ratio (MLR) for that year.


3.1 Q: What is the Affordable Care Act?

A. The Affordable Care Act is a shortened name for the Patient Protection and Affordable Care Act (PPACA), a federal statute signed into law in March 2010 and commonly referred to as “health care reform.”

3.2 Q. What does “Medical Loss Ratio” mean?

A. The Medical Loss Ratio, or MLR, is the percentage of the total premium dollars received by a health insurance plan that is spent on health benefits (including claims and health improvement programs) for the plan’s customers in a particular state. For example, if an insurance company sold a plan called an “Individual Medical Red Plan,” and received $1,000,000 in premium payments from all customers with that plan in the previous year in that state, and paid out $800,000 in claims and other health benefits for that plan in the previous year in that state, the MLR would be 80% ($800,000 ÷ $1,000,000). The MLR consists of dollars spent on health benefits. Other costs incurred by the insurance company – administration, employee salaries, marketing, etc. – do not count toward the MLR.

General


3.3 Q. Who is getting a rebate?

A. Eligible policyholders (individuals and group employers) with active coverage in the previous year, by insurance plans subject to the Affordable Care Act, will receive health care reform rebates if the insurance company didn’t meet the minimum Medical Loss Ratio (MLR) for that year. In general, the minimum MLR threshold is 80% for individual and small group customers.

3.4 Q. What types of health insurance does the MLR rule apply to?

A. The MLR rule applies to major medical insurance plans for individuals, families, large groups and small groups, as dictated by health care reform.

3.5 Q. What types of health insurance are not affected by the MLR rebate?

A. The MLR does not apply to short-term (temporary) medical plans, self-funded group plans, supplemental coverage plans or fixed-benefit plans such as Assurant Health AccessSM.

3.6 Q. Do other health insurance companies have to send rebates?

A. All health insurers in the United States that sell plans subject to the Affordable Care Act have to send rebates by September 30 each year if those plans didn’t meet MLR requirements for the previous year.


3.7 Q. Where can I find more information about the MLR?

A. The federal government has set up a website: https://www.healthcare.gov/health-care-law-protections/rate-review/ Diagonal Arrow

3.8 Q. Will I receive a rebate next year?

A. At this time, we aren’t able to determine if you will receive a rebate next year or not. Future rebates are based on claims paid and premium received for each year in a particular state and won’t be known until July of the following year.

3.9 Q. How do I know if our plan is an ERISA plan?

A. Our assumption is that you are an ERISA group and we are following the ERISA guidelines. The only exception is if you are part of a church group.

3.10 Q. I received someone else’s check. What should I do?

A. Please contact us at 800.392.1880.

3.11 Q. My check was lost, stolen or thrown away. How can I get a replacement?

A. Please contact us at 800.392.1880.

Calculation


3.12 Q. How can I find out exactly how my rebate was calculated?

A. Your rebate was calculated based on your medical premiums paid to Assurant Health for health insurance applicable to the period of coverage from January 1 through December 31 of the previous year.

  • Any premiums due for non-medical benefits, like Life, Dental or Accident coverage, were not included in this calculation.
  • The calculation from Health and Human Services adjusts your medical premium to subtract any Federal or State taxes, assessments, and licensing or regulatory fees we were required to pay.
  • This amount is multiplied by the percentage indicated in the letter that accompanied your rebate check.
  • An additional adjustment is required for the overall state rebate amount.
  • These calculations comply with Federal guidelines and were submitted to Health and Human Services for review.

3.13 Q. How does an individual's claims activity affect individual rebates?

A. Rebates are not based on the personal claims activity of any individual. Rebates are based on overall health care claims activity that occurred in the previous year

 and if applicable in additional previous years for everybody in the state with the type of insurance policy to which the rebate applies.


3.14 Q. Why did my state apply for a lower ratio? This impacts my rebate.

A. Some states were concerned that meeting the 80% Medical Loss Ratio standard would destabilize the individual health insurance market and provide fewer choices for their residents. More information can be found here: https://www.healthcare.gov/health-care-law-protections/rate-review/ Diagonal Arrow

3.15 Q. Does the government calculate Assurant Health’s MLR, or is it calculated by Assurant Health?

A. Assurant Health calculates the rebate based on claims paid and premium received. We report this information to the U.S. Department of Health and Human Services (HHS) based on the guidelines they provide.

3.16 Q. Whether or not I receive a rebate, and how much that rebate is, is dependent on the group of policies that my policy is a part of. How is that group determined?

A. Parameters include:
  • Whether your policy is individual medical, small group or large group coverage
  • The state in which the policy is issued
  • The legal entity that underwrites and issues the policy — Assurant Health is the brand name for insurance underwritten and issued by Time Insurance Company, John Alden Life Insurance Company and Union Security Insurance Company

3.17 Q. Don’t you owe me interest on this?

A. The U.S. Department of Health and Human Services (HHS) does not require that insurers pay interest on rebates.

Rebate Distribution


3.18 Q. What should I do with this rebate?

A. For most group plans, the portion of the rebate that is proportionate to the amount of premium that was paid by the employee must be distributed in one of two ways: either by applying it to the premiums for the upcoming year, or by distributing cash rebates to employees enrolled at the time the rebate is received.

If you need assistance in managing the rebate, there is a document issued by the Department of Labor that can be found at www.dol.gov/ebsa/newsroom/tr11-04.html Diagonal Arrow. This is a direct link to the document that provides additional guidance (see page 3 of document). In addition, if you have questions you may also call the Department of Labor's Employee Benefits Security Administration at 866.444.3272.

3.19 Q. How should I distribute the rebate to my employees?

The portion of the rebate that is proportionate to the amount of premium paid by employees must be distributed to your employees in one of two ways.
  • One way is to apply it to the premiums for the upcoming year.
  • Another way is to distribute cash rebates to the employees enrolled at the time the rebate is received.

As your insurance carrier, we are unable to provide specific instructions on how to handle or calculate the distributions. However, there is a document issued by the Department of Labor that can be found at www.dol.gov/ebsa/newsroom/tr11-04.html Diagonal Arrow. This is a direct link to the document that provides additional guidance (see page 3 of document). In addition, if you have questions you may also call the Department of Labor's Employee Benefits Security Administration at 866-444-3272.

3.20 Q. I am no longer in business. What should I do with the rebate?

A. You should contact the Department of Labor's Employee Benefits Security Administration at 866.444.3272 or review the technical guidance on this issue on the Department of Labor website at www.dol.gov/ebsa/newsroom/tr11-04.html Diagonal Arrow.

3.21 Q. Do I have to give the rebate to my terminated employees?

A. You should contact the Department of Labor's Employee Benefits Security Administration at 866.444.3272 or review the technical guidance on this issue on the Department of Labor website at www.dol.gov/ebsa/newsroom/tr11-04.html Diagonal Arrow.

3.22 Q. I had two policies with you last year. Why did I only receive one rebate?

A. Whether or not a rebate is sent for a given policy is dependent on several parameters, including:
  • Whether your policy is individual medical, small group or large group coverage
  • The state in which the policy is issued
  • The legal entity that underwrites and issues the policy — Assurant Health is the brand name for insurance underwritten and issued by Time Insurance Company, John Alden Life Insurance Company and Union Security Insurance Company

Another possibility is the policy for which you did not receive a rebate satisfied the MLR requirements.

3.23 Q. Why did I receive multiple checks?

A. You received multiple checks if you had multiple active policies subject to the MLR active in the previous year, and the minimum MLR threshold was not satisfied with respect to more than one of those policies.

3.24 Q. My rebate was very small. Why did you send rebates for small dollar amounts?

A. Per health care reform, any rebates of $5 or more for individuals and $20 or more for employers are being sent to the customers.

3.25 Q. I am no longer insured by your company. Why did you send me this rebate?

A. The rebates are based on the previous year's coverage. Anyone who had coverage any time during the previous year may qualify for a rebate, regardless of current customer status.


Rebate Distribution - Church Employees Only


3.26 Q. Why did you send the check to my employees?

A. For church groups, rebates may only be paid to the employer if the employer provided written assurance that the rebates would be used to benefit employees. We sent all church groups a letter seeking this written assurance and if it was not returned, the rebates were equally distributed to plan members who had medical coverage in the previous year.

Premium Impact


3.27 Q. Why didn't you just credit this to my premium?

A. We surveyed our customers and found that most would prefer a refund instead of a credit toward their premium. In addition, this is your money and we wanted to put this in your hands and give you the option of using it as you choose.

3.28 Q. How did the premium that I paid impact the rebate amount?

A. The premium is only one piece of the rebate calculation; there are many other factors. This rebate amount is based on premium for coverage for the period of January 1 through December 31 the previous year.


MLR Premium includes premiums due for the following:
  • Medical Coverage
  • Drug Coverage
  • Any fees, such as Administration Fees.
  • Refunds for premium corrections for medical coverage in the previous year paid or credited prior to March 31 of the current year.

Does not include federal MLR rebates or state rebates received in the previous year or premium due for:
  • Life Coverage
  • Supplemental Coverage such as Dental, Accident, Critical Illness, etc.
  • Short Term Medical
  • Group Self-Funded
  • Fixed Benefit Health Plans

Once Assurant Health has calculated your premium due, we make a final deduction to account for State and Federal taxes. (Deductions vary by state.) The final amount is your MLR Premium. This calculation is performed in accordance with health care reform MLR requirements.

Taxes


3.29 Q. Do rebate recipients have to pay taxes on the rebate?

A. The IRS has a web page that may assist you answering this question: http://www.irs.gov/newsroom/article/0,,id=256167,00.html Diagonal Arrow. However, we recommend that you consult with your tax advisor for purposes of making this determination.

3.30 Q. I have a Premium Only Plan and do payroll deduction with my premium. How does this affect my rebate and taxes?

A. It depends on if you made pre-tax or after-tax premium payments. In general, if your premium contributions were made pre-tax, the rebate is considered taxable income. Contact your tax advisor for personal tax advice.

3.31 Q. How was my group size calculated?

A. Your specific group size was calculated based on the response from surveys we sent out in November of the previous year. If we did not receive a response, then we used information from applications, eligibility reviews, TEFRA (Tax Equity and Fiscal Responsibility Act of 1982) surveys, MLR surveys and/or full-time and part-time employee information previously provided. For any groups added in the previous year, we established a new requirement associated with your application and obtained the information directly from you at that time.


3.32 Q. If I think the information you have about my group size may be incorrect, can a new rebate by issued?

A. The size of the group is only important when distinguishing between small group and large group. We regret that we are unable to make any changes to the previous year's rebate. You can provide corrected information when we send out surveys later this year. Surveys are usually sent out in the 4th quarter.

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