One of the reforms enacted by the Affordable Care Act was a medical loss ratio (MLR) standard that requires insurance companies to spend a certain percentage of their premium income on providing health care and quality improvement. If an insurer does not meet the MLR standards, it is required to pay a rebate to its policy holders, with the first round due by August 1 of this year.

Employers who have an insured group health plan may receive an MLR rebate within the next few weeks. Employers will have questions regarding how the rebate money can be used, and whether it is taxable. The Department of Labor and the Internal Revenue Service have each issued guidance addressing the fiduciary and tax issues, which we will discuss in detail in the August edition of the Compensation and Benefits Insights.