The U.S. Department of Health and Human Services recently issued new rules regarding medical loss ratio requirements for health insurance issuers, in accordance with the Patient Protection and Affordable Care Act.
The new rules, effective January 1, mandate that at least 80 percent of consumer health insurance premiums be spent on medical care, rather than marketing and overhead. Insurers that do not meet this mandate must provide a rebate to consumers. This requirement includes those insured through employee benefits, the Society for Human Resource Management reports, so employers and workers may see significant changes in reaction to the new rules.
Self-insured health plans are not included. The new rules primarily govern the way the medical loss ratio is calculated and the distribution of the required rebates. Among other requirements, for example, the rebates are to be available tax-free, rather than as checks or otherwise taxable.
Industry stakeholders note the rules do not affect the classification of agent and broker fees as administrative costs, placing them outside the mandated 80 percent to be spent on medical care. There is some concern this will interfere with their compensation.
