CMS-10418 MLR Notice 2 Group Markets - Rebate to Policyholder

2
Notice of Health Insurance Premium Rebate
[September 30, 20XX 1]
[Subscriber or Policyholder Name 2a
123 Main Street 2b
Anytown, USA 2c]
Re: Health Insurance Premium Rebate for Year [20XX 3]; [Policy #XXXXX 4]
Dear [Subscriber or Policyholder Name 5]:
This letter is to inform you that [Health Insurer 6] will be rebating a portion of your health
insurance premiums through your employer or group policy holder. This rebate is required by
the Affordable Care Act – the health reform law.
The Affordable Care Act requires [Health Insurer 7] to rebate part of the premiums it received if
it does not spend at least [80/85 8] percent of the premiums [Health Insurer 9] 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 [20/15 10] percent of premiums
may be spent on administrative costs such as salaries, sales, and advertising. This is referred to
as the “Medical Loss Ratio” standard or the [80/20 85/15 11] rule. The [80/20 85/15 12]
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 85/15 13] rule and other provisions of the
health reform law at: https://www.healthcare.gov/health-care-law-protections/rate-review/.
[The Affordable Care Act allows States to require health insurers to meet a higher ratio. [Your
State 14] sets a higher Medical Loss Ratio standard, so [Health Insurer 15] must meet a [XX%
16] Medical Loss Ratio, meaning that [XX% 17] of premiums must be spent on medical
services and activities to improve health care quality, and no more than [XX% 18] of premiums
can 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 19], [Health
Insurer 20] did not meet the [80/20 85/15 /target in your state 21] 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 85 percent
target / target in your State 26] by [X% 27] of premium it receives, [Health Insurer 28] must
rebate [X% 29] of the total health insurance premiums paid by the employer and employees in
your group health plan. We are required to send this rebate to your employer or group
policyholder by September 30, [20XX 30], or apply this rebate to the health insurance premium
that is due on or after September 30, [20XX 31]. Employers or group policyholders must
follow certain rules for distributing the rebate to you.

Ways in Which an Employer Can Distribute the Rebate
If your group health plan is a non-Federal governmental plan, the employer or group
policyholder must distribute the rebate in one of two ways:
•
•

Reducing premium for the upcoming year; or
Providing a cash rebate to employees or subscribers that were covered by the health
insurance on which the rebate is based.

If your group health plan is a church plan, the employer or group policyholder has agreed to
distribute the portion of the rebate that is based on the total amount all of the employees
contributed to the health insurance premium in one of the ways discussed in the prior paragraph.
If your group health plan is not a governmental plan or a church plan, it likely is subject to the
Federal Employee Retirement Income Security Act of 1974 (ERISA). Under ERISA, the
employer or the administrator of the group health plan may have fiduciary responsibilities
regarding use of the Medical Loss Ratio rebates. Some or all of the rebate may be an asset of the
plan, which must be used for the benefit of the employees covered by the policy. Employees or
subscribers should contact the employer or group policyholder directly for information on how
the rebate will be used. For general information about your rights regarding the rebate, you may
contact the Department of Labor’s Employee Benefits Security Administration at 1-866-444EBSA (3272) or review the Department’s technical guidance on this issue on its web site at
http://www.dol.gov/ebsa/newsroom/tr11-04.html.
Need more information?
If you have any questions about the Medical Loss Ratio and your health insurance coverage,
please contact [Health Insurer 32] toll-free at [1-XXX-XXX-XXX 33] or [website or email
address 34].
Contact your employer or Administrator directly for information on how the rebate will be
distributed. For general information about your rights regarding the rebate if your group health
plan is subject to ERISA, you may contact the Department of Labor’s Employee Benefits
Security Administration at 1-866-444-EBSA (3272) or review the Department’s technical
guidance on this issue on its web site at http://www.dol.gov/ebsa/newsroom/tr11-04.html.
Sincerely,

[John Doe, Authorized Executive 35]
[Health Insurer 36]