Form CMS-10418 Notice_#1_to_Subscribers_in_Individual_Market

1
Notice of Health Insurance Premium Rebate

[August 1, 20XX 1]
[Subscriber Name 2a
123 Main Street 2b
Anytown, USA 2c]
Re: Health Insurance Premium Rebate for Year [20XX 3]; [Policy #XXXXX 4]
Dear [Subscriber Name 5]:
This letter is to inform you that you will receive a rebate of a portion of your health insurance
premiums. This rebate is required by the Affordable Care Act – the health reform law.
The Affordable Care Act requires [Health Insurer 6] to issue a rebate to you if [Health Insurer
7] does not spend at least 80 percent of the premiums it receives on health care services, such as
doctors and hospital bills, and activities to improve health care quality, such as efforts to improve
patient safety. No more than 20 percent of premiums may be spent on administrative costs such
as salaries, sales, and advertising. This requirement is referred to as the “Medical Loss Ratio”
standard or the “80 / 20 rule”. The 80 / 20 rule in the Affordable Care Act is intended to ensure
that consumers get value for their health care dollars. You can learn more about the 80/20 rule
and other provisions of the health reform law at:
http://www.healthcare.gov/law/features/costs/value-for-premium/index.html.
[The Affordable Care Act allows States to apply for a lower ratio. In [20XX 8], [your State 9]
applied for and received a temporary adjustment to the 80/20 rule. For [20XX 10], [Health
Insurer 11] must meet a [XX% 12] Medical Loss Ratio, meaning that [XX% 13] of premiums
must be spent on medical services and activities to improve health care quality, and no more than
[XX% 14] of premiums can be spent on administrative costs. Additional information on State
requests for an adjustment to the 80/20 rule can be found at:
http://cciio.cms.gov/programs/marketreforms/mlr/index.html].
[The Affordable Care Act allows States to require health insurers to meet a higher ratio. [Your
State 15] sets a higher Medical Loss Ratio standard, so [Health Insurer 16] must meet a [XX%
17] Medical Loss Ratio, meaning that [XX% 18] of premiums must be spent on medical
services and activities to improve health care quality, and no more than [XX% 19] of premiums
may be spent on administrative costs].
What the Medical Loss Ratio Rule Means to You
The Medical Loss Ratio rule is calculated on a State by State basis. In [your State 20], [Health
Insurer 21] did not meet the Medical Loss Ratio standard. In [20XX 22], [Health Insurer 23]
spent only [XX% 24] of a total of [$YYY 25] in premium dollars on health care and activities
to improve health care quality. Since it missed the [80 percent target / target in your State 26]

by [X% 27] of premiums it received, [Health Insurer 28] must rebate [X% 29] of your health
insurance premiums. We are required to provide this rebate to you by August 1, [20XX 30], or
apply this rebate to your premium that is due on or after August 1, [20XX 31].

[We are enclosing a check/We are sending you a check separately from this letter/We are giving
you this rebate by reducing your next premium payment/We are issuing a credit to the credit or
debit card you used to pay your premium 32]. [OPTIONAL FOR ISSUERS: Your
rebate/credit is $XX 33].

Need more information?
If you have any questions about the Medical Loss Ratio and your health insurance coverage,
please contact [Health Insurer 34] toll-free at [1-XXX-XXX-XXX 35] or [website or email
address 36].
Sincerely,

[John Doe, Authorized Executive 37]
[Health Insurer 38]