The Patient Protection and Affordable Care Act requires insurance providers to provide data on their medical loss ratios, the percentage of collected premiums they use for medical care and quality improvement expenses.
The law also mandates that insurers must have an MLR of at least 80 or 85 percent, depending on the number of employees being covered by a client's insurance plan. Those who fail to meet the limits will be required to pay rebates to policyholders as compensation.
These provisions could have unforeseen consequences for employees, CFO magazine suggests, since the necessity of meeting these regulations could encourage insurers to increase premium costs for employee benefit services.
This could allow them to offset the effect of rebates on their business, or adjust their MLR while limiting the absolute amount derived from premiums that can be spent on other aspects of business.
Companies may wish to use the skills of employee benefit consultants to help them determine the best plan models for the new regulatory environment, and to administer insurance coverage and compensation properly, maintaining compliance.
