The loss ratio provisions in the Health Care Reform law make it mandatory for Health insurers to either: (1) maintain a minimum medical loss ratio (MLR) or (2) to refund premium to the insured. The first refunds are supposed to be issued in August of 2012. Here is a story from the Wall Street Journal on some new guidance which HHS put out on Friday.
A couple of key items:
- HHS declined to exclude broker commissions from MLR calculations, a blow to health insurance agents.
- HHS will make it more difficult for “mini-med” plans to operate between 2012 and 2014.
- HHS estimates that 9 million refunds will be due averaging somewhere between $67 to $155/check. It seems to me that the cost to calculate and administer payment for these checks will exceed the actual amount of the check, however HHS believes the initiative might have improved pricing patterns on rate increases for health insurance due to the existence of the MLR requirements and refunds.
- The rebate checks will not be considered taxable income.