The Affordable Care Act requires health insurers in the individual and small group markets (2 to 50 employees) to spend at least 80 percent of the premiums they receive on health care services and activities to improve health care quality (in the large group market (51+ employees), this amount is 85 percent). This is referred to as the Medical Loss Ratio (MLR) rule or the 80/20 rule. If a health insurer does not spend at least 80 percent of the premiums it receives on health care services and activities to improve health care quality, the insurer must rebate the difference.
In Virginia here are the carriers giving rebates: Aetna - Small and Large group, Anthem - Individual and Small group PPO plans (No HMO rebates), CareFirst - Small and Large group, Guardian - Small and Large group, Optima - Individual only, Southern Health - Small group only, United Healthcare MidAtlantic - Small and Large group.
Carriers will send the required notification and rebate check (if applicable) as required by law. Enrollees in the employer health plans will also receive a notification. Under ACA, employers must use any rebate they receive to benefit those subscribers covered during the MLR reporting year on which the rebate is based. Generally, employers can use rebates to reduce future premiums or issue a payment to their employees. Employer groups that decide to pay rebates directly to their employees (subscribers) should base their payment on the percentage of total premium that was paid by the employee, prorated for the period of time the employee was covered under the plan. For example, a full-time employee covered throughout 2011 who contributes 20% of the premium for her coverage would receive 20% of the rebate due on her portion of the total premium (and rebate) paid.
You should consult with your tax adviser as to whether there are any tax implications in receiving a rebate. The IRS has recently issued an article with scenarios http://www.irs.gov/newsroom/article/0,,id=256167,00.html.
For more information on the MLR please visit www.HealthCare.gov.
