Employers with insured group health plans may have just received a rebate from their health insurance issuer, as issuers who did not meet the applicable medical loss ratio (MLR) percentage for 2023 had to rebate plan sponsors by Sept. 30, 2024. This rebate may be in the form of a premium credit or a lump sum payment.
Any rebate amount that qualifies as a plan asset under ERISA must be used exclusively to benefit the plan’s participants and beneficiaries.
Employers should use the rebate within three months of receipt to avoid ERISA’s trust requirement.
Employers receiving an MLR rebate should be prepared to answer employees’ questions about the rebate and its allocation.
MLR Rules
The MLR rules require health insurance issuers to spend a minimum percentage of their premium dollars on medical care and healthcare quality improvement. This percentage is 85% for issuers in the large group market and 80% for issuers in the small and individual group markets. States may set higher MLR standards than the federal 80%/85% thresholds.
Issuers must report to the federal government how they spent their premium dollars for each calendar year by July 31 of the following year. Issuers who do not meet the applicable MLR standard by the end of the reporting year must provide rebates by Sept. 30. Issuers who issue rebates must notify plan sponsors and participants about the rebate and how it was calculated.
Employer Takeaway
Most group health plans sponsored by employers in the private sector are subject to ERISA. Employers with ERISA plans should not assume they can retain an MLR rebate. In general, unless an employer pays the entire cost of health coverage without any employee contribution, a portion of the rebate, if not all, is a plan asset under ERISA. Any rebate amount that qualifies as a plan asset must be used exclusively to benefit the plan’s participants and beneficiaries.
Employers can satisfy ERISA’s exclusive benefit requirement by distributing the plan asset portion of the rebate to participants under a reasonable, fair and objective allocation method. If distributing payments to participants is not feasible, the employer may use this portion of the rebate for other permissible plan purposes, such as applying the rebate toward future participant premium payments or benefit enhancements. Also, to avoid the requirement to hold plan assets in trust, employers should use any plan asset portion of the rebate within three months of receipt. Please see our Employer Guide.
DOL Gag Clause Attestations Deadline Coming Up
As of 2020, the Consolidated Appropriations Act (CAA) prohibits health plans and issuers from entering into contracts with healthcare providers, third-party administrators (TPAs) or other service providers that contain gag clauses (i.e., clauses restricting the plan or issuer from providing, accessing or sharing certain information about provider price and quality and de-identified claims).
Plans and issuers must annually submit an attestation of compliance with the CAA’s gag clause prohibition to the Departments of Labor, Health and Human Services, and the Treasury (Departments). The first attestation was due by Dec. 31, 2023. Subsequent attestations are due by Dec. 31 of each following year.
The U.S. Department of Labor (DOL) has resources to assist health plans and health insurance issuers in submitting their annual attestation of compliance. These resources can be used to submit the next gag clause attestation, which is due by Dec. 31, 2024.
Instructions and a user manual for submitting prior attestations were previously made available by the Centers for Medicare & Medicaid Services.
Employer Takeaway
Employers should review their contracts with issuers, TPAs or other health plan service providers to confirm they do not contain prohibited gag clauses. Also, employers should review what action they may need to take to comply with the gag clause attestation requirement:
An employer does not need to provide an attestation for a fully insured health plan if the issuer for the plan provides the attestation (which most all do).
Self-insured employers can enter into written agreements with their TPAs to provide the attestation, but the legal responsibility remains with the health plan. While some TPAs are willing to submit attestations on behalf of their self-insured groups, other TPAs have indicated they are unwilling to do so.
Employers who need to submit attestations should review the latest instructions and user manual for submitting attestations.
Key Takeaways from the DOL’s Employee Benefits Report
The U.S. Department of Labor’s (DOL) Bureau of Labor Statistics (BLS) recently published a report examining employee benefits in the country. The estimates in the report are from the BLS’ National Compensation Survey, which measures costs and trends related to employer-provided benefits.
The survey represents more than 146 million civilian workers in private industry and state and local government. This article summarizes the main points of the DOL’s Employee Benefits in the United States release.
Medical Care Benefits for Civilian Workers
The survey provides estimates on the percentage of workers with access to and participating in employer-provided health care benefits as of March 2024, as well as estimates for medical care premiums. The statistics for private industry and state and local government were published separately and then combined to measure the civilian economy, as follows.
While 89% of full-time civilian workers had access to medical care benefits, just 26% of part-time workers did. The take-up rate was 66% for full-time and 46% for part-time workers. For private industry workers enrolled in medical plans with single coverage, the employer share of premiums was 80%, and the employee share was 20%. For family coverage, employers paid 68% of premiums for private industry workers, with employees covering 32% of premiums.
Participating state and local government workers with single coverage had 86% of premiums covered by employers and 14% by employees. Employers paid 71% of premiums for family coverage, with employees covering 29% of such plans.
Benefits for Private Industry Workers
Most civilian workers (more than 126 million) surveyed work in the private industry.
The following figures represent how many of those workers had access to certain employee benefits as of March 2024:
On average, small organizations (those with one to 99 employees) offered 10 annual paid vacation days for workers after one year of employment, 14 days after five years, 16 days after 10 years and 17 days after 20 years. Large organizations (those with 500 or more employees) offered, on average, 14 annual paid vacation days after one year of employment, 18 days after five years, 21 days after 10 years and 24 days after 20 years.
Benefits for State and Local Government Workers
Of the civilian workers surveyed, nearly 20 million worked in state and local government.
The following figures represent how many of those workers had access to certain employee benefits as of March 2024:
Employer Takeaway
While the best methods for implementing benefits vary by industry, workplace size and location, being aware of current benefits trends can guide organizations as they strategize and take action. Recognizing trends and take-up rates can help employers respond with meaningful benefits to help keep their workforces healthier and happier.
Employers should continue to monitor benefits trends, employee utilization and spending. Contact us for more resources.
