July 2, 2012

Notifying Policyholders About MLR Requirements and Rebates

The federal Affordable Care Act's Medical Loss Ratio (MLR) provision requires health insurers to spend most of the premiums they receive on medical care and activities that improve the quality of care. If the insurer's costs are lower than the minimum required to be spent on these services, the insurer will issue policyholders a rebate. This rebate will be based in part on whether the recipient is classified as a small or large group (as defined by the federal government) or as an individual (including sole proprietors). In addition, the MLR rebate issued depends upon the policyholder's specific plan.

We will be mailing letters to all EmblemHealth individual and group policyholders on or before August 1, 2012 letting them know whether or not they will be receiving a rebate from their plan. Below are answers to questions you or your clients may have about the MLR requirements and eligibility for a rebate:

Q:  Who is affected by the MLR requirements?
 All policyholders are affected and will receive a letter. However, only GHI HMO
     large groups, GHI Direct Pay
subscribers and GHI sole proprietors
     will receive a rebate.

Q:  Is a group that no longer has coverage still eligible for the rebate?
 Yes. If a group paid premiums during the 2011 MLR reporting year and
     EmblemHealth did not spend the required minimum threshold on health care
     services, the group may qualify for a rebate

Q:  What factors determine whether a policyholder is eligible for a rebate?
 For small groups and individuals in New York State the health insurer must spend
     at least 82 percent of the premiums it receives on health care services, including
     doctor bills, hospital bills, activities to improve health care quality and patient safety;
     only 18 percent can be spent on administrative costs. For large groups the health
     insurer must spend at least 85 percent of the premiums received on health care
     services; only 15 percent can be spent on administrative costs. For more information
     on MLR requirement, please visit:

Q:  Is a group required to have a specific number of employees to be eligible
     for the rebate?
Yes. The rebate calculation takes into consideration premiums spent on health care
     and the group's classification as small (2-50) or large (51+).

Q:  Are self-funded plans subject to MLR reporting and rebate requirements?
 No. A self-funded plan, also known as a self-insured plan, is not a health insurance
     issuer. As a result, it is not subject to the MLR requirements.

At EmblemHealth, our goal has always been to offer a range of coverage choices for groups and individuals — including flexible pharmacy and benefits designs, and cost-sharing options for all budget levels. We are pleased that the number of rebates is minimal and our competitive pricing appropriately reflects medical costs in the region.

If you have any questions, please contact your EmblemHealth representative.