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Rebates and Medical Loss Ratio

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Rebates and Medical Loss Ratio
In summer 2013, some members will get a notice from us about a rebate. Some will get a rebate, others will not. We want to provide you with information that will help you understand why you may or may not get a rebate. First and foremost, this isn’t the kind of rebate you get at a supermarket or discount store. It’s a result of the medical loss ratio (MLR), which is part of the Affordable Care Act. 
What is MLR? The health care reform law sets guidelines for how insurers spend the premiums we collect from our members. We must use a certain percentage of premium dollars for medical claims and programs that improve the quality of health care, and not for administrative expenses. This is known as the medical loss ratio. When the MLR is below target, we must issue rebates to our policyholders. 
Where to Learn More  
We’ve created this short conversation to help walk you through some of the details. For more information on the Affordable Care Act, visit “The Health Care Law & You”. You’ll find key features of the law, information for your state and a timeline that shows you what’s changing and when.  
FAQ - Members with Individual coverage 
Q. Can I sign up for a rebate?  
A. No. A rebate isn’t an offer or an incentive. It’s the money we and other insurers reimburse to policyholders when actual expenditures are lower than projected. MLR and rebates are based on a number of factors that can change from year to year, including the kind of health plan you have, or the state the policy was issued in.  
Q. When will I know if I’m getting a rebate? 
A. As required by law, we have filed a report for 2012 to the Department of Health and Human Services (HHS). If rebates are due, you should get your check by August 1, 2013.  
Q: Why did I get a rebate for an amount less than $5? 
A: We are required by HHS to send one of two notices to you – either you were not eligible for a rebate or one with your rebate. Since you were eligible for a rebate, although a low amount, we were required to send you that rebate with the notice.  
Q. I got a check made out to my child who is under 18. Why wasn’t the check made out to me (parent / legal guardian)? Can you reissue the check and make it out to me? 
A. The check is issued to the policyholder. If you have coverage only for the child, the policy is in the child’s name and, therefore, the check is addressed to him/her. Most banks allow the parent/legal guardian to sign the check on the child’s behalf and deposit it. 
Q. Can you reissue the check and make it out to me? 
A. Depending on state requirements we may or may not be able to stop payment and reissue the check. If we can, we’ll have to issue a stop payment on the current check and reissue the MLR Rebate check, which may take up to12 weeks. 
Q. Will I get a rebate again? 
A. MLR and rebates are based on a number of factors that can change from year to year, including the type of coverage you have and where you live. Rebate eligibility will be determined on an annual basis and could change year to year. It is possible that you will not be eligible for another rebate. 
Q. Why didn’t I get a rebate? 
A. Your health plan met the MLR target for your state in 2012. 
Q. What is the MLR threshold for my state? 
A. The MLR threshold per the Affordable Care Act for the individual market is 80%. However, some states were granted waivers to have a lower threshold for the Individual market. Click here for information on states that requested and/or were granted an MLR adjustment for the 2012 calendar year.  
Q. Are rebate amounts a matter of public record? 
A. The total amount we must pay in rebates becomes public information after we file an MLR report with HHS. The rebate amounts paid to each individual are not made public. 
Q. Will I have to pay taxes on the rebate amount? 
A. Please consult your tax advisor, as situations vary. 
Q. Does getting a rebate mean you’ll lower my premiums? 
A. No. There are many factors that contribute to premiums, such as consumer demand for services, the rising medical and prescription drug costs, and advances in medical technology. We are committed to finding ways to control these rising costs of health care. 
Q. I got a rebate for 2012, so why did my premium rate increase in 2013? 
A. Your premium rate is not affected by the rebate. It’s based on certain services, medical and drug prices, federal and state taxes, and other factors. In general, health care costs are rising faster than inflation, which causes your premium to increase. We are committed to finding ways to control these rising costs. 
Q. Can you cancel the rebate check and apply the amount to next month’s premium?  
A. No. Unfortunately, we cannot cancel the check. However, you can deposit the check and pay toward your next premium bill if that is how you would like to use the rebate.  
Q. If you are sending out rebates, does that mean you’ve been overcharging me? 
A. No. The rebates are a very small percentage of what we collect in premiums. We set our rates by looking at how much it will cost to administer the plan and to pay our members’ claims. But it’s hard to predict the future.  
Sometimes those costs are higher than expected, and sometimes they’re lower. Setting our rates is a balancing act. We want our premiums to be low so that health care coverage is affordable. We also need to make sure that the amount of premiums we collect is sufficient to pay members’ claims and provide our members the information and other services their plans offer. 
Q. Someone else I know has your insurance through work. Why did they get a rebate and I didn’t? 
A. Rebates are calculated separately for Individual and group plans. So a health insurer may be issuing rebates in a state for their group plans but not for their Individual business, or vice versa. 
Q. What are administrative costs? 
A. These are expenses that indirectly support the delivery of health care services. They include, but are not limited to: 
Staffing customer service lines
Updating computer systems needed to process claims and house medical claims data
Negotiating contracts with doctors and hospitals in order to reduce medical costs
Processing claims
Implementing and administering regulatory requirements
 
Q. What are programs that improve quality of care? 
A. These are programs that improve the quality of health care that members get. For example: 
Programs that help our members with chronic (long-term) diseases such as asthma, diabetes and heart disease
Wellness programs that help members make positive health changes, like losing weight and quitting smoking
Programs that help our members avoid potentially dangerous drug interactions
 
Q. Who is eligible for a rebate? 
A. Any subscriber who had an active health insurance policy during the 2012 calendar year is eligible for a rebate, including subscribers who ended their coverage mid-year or started coverage mid-year 2012, assuming rebates are required per the rules in the Affordable Care Act. 
Q. Who do I contact if I have further questions? 
A. If you have additional questions, please call the Customer Service number on your ID card.  
FAQ - Members with group coverage 
Q. How will you send the rebate to me? 
A. If a rebate is required, we will send the rebate to your employer, who can use the rebate to lower future premium rates or give each enrollee a portion of the rebate amount. 
Q. When will I know if my employer got a rebate? 
A. As required by law, we filed an MLR report for 2012 with the Department of Health and Human Services (HHS). If your employer decides to give enrollees a portion of the rebate amount, you will get a check by August 1, 2013. 
Q. When will I get a check? 
A. If your employer decides to refund the rebate to enrollees; you should get a check by August 1, 2013.  
Q. If my employer decides to give me a portion of the rebate amount, will I have to pay taxes on it? 
A. Please consult your tax advisor or contact the IRS.  
Q. Why didn’t I get a rebate? 
A. It means one of two things: Either your health plan met the MLR target for your state in 2012 and doesn’t have to send rebates, or your employer got a rebate and chose to use it to offset premium costs next year.  
Q. Who is eligible for a rebate? 
A. Any subscriber who had an active health insurance policy during the 2012 calendar year is eligible for a rebate, including subscribers who ended their coverage mid-year or started coverage mid-year 2012, assuming rebates are required per the rules in the Affordable Care Act. 
Q. Are rebate amounts a matter of public record? 
A. The total amount we must pay in rebates becomes public information after we file an MLR report with the HHS. Because we have already filed a report for 2012, that information is now public. Please note that the rebate amounts paid to each employer or individual are not made public. 
Q. Does getting a rebate mean you’ll lower my premiums? 
A. No. There are many factors that contribute to premiums, such as consumer demand for services, the rising medical and prescription drug costs, and advances in medical technology. We are committed to finding ways to control these rising costs of health care. 
Q. If you are sending out rebates, does that mean you’ve been overcharging me? 
A. No. The rebates are a very small percentage of what we collect in premiums. We set our rates by looking at how much it will cost to administer the plan and to pay our members’ claims. But it’s hard to predict the future.  
Sometimes those costs are higher than expected, and sometimes they’re lower. Setting our rates is a balancing act. We want our premiums to be low so that health care coverage is affordable. We also need to make sure that we have enough money on hand to pay members’ claims that are submitted and to give our members the information and other services their plans offer. 
Q. What are administrative costs? 
A. These are expenses that indirectly support the delivery of health care services. They include, but are not limited to: 
Staffing customer service lines
Updating computer systems used to process claims and house medical claims data
Negotiating contracts with doctors and hospitals in order to reduce medical costs
Processing claims
Implementing and administering regulatory requirements
 
Q. What are programs that improve quality of care? 
A. These are programs that improve the quality of health care that members get. For example: 
Programs that help our members with chronic (long-term) diseases such as asthma, diabetes and heart disease
Wellness programs that help members make positive health changes, like losing weight and quitting smoking
Programs that help our members avoid potentially dangerous drug interactions
 
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