Each year, insurers must meet certain spending requirements under the Affordable Care Act (ACA). If they don’t, they’re required to issue Medical Loss Ratio (MLR) rebates to employers and employees. With IBC and other carriers preparing to send out rebates this fall, now is the time to understand what they are, who gets them, and how to handle them correctly.

🔍 What Is an MLR Rebate?

Under the ACA, insurance companies must spend at least:

• 80% of premiums on health care claims and quality improvement for small group/individual plans.
• 85% of premiums for large group plans.

If an insurer spends less than those percentages, the difference is refunded as an MLR rebate.

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👥 Who Gets the Rebate?

The rebate amount depends on the plan, the group size, and how premiums were split between employer and employees.

Employers (plan sponsors) typically receive the rebate check.

Employees may receive a portion if they contributed to premiums.

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🏢 What Employers Should Do

If your business receives an MLR rebate:

1. Review Plan Documents – Check how your plan specifies handling rebates.
2. Allocate Fairly – If employees contributed premiums, they are generally entitled to a portion.
3. Decide Distribution – Rebates can be distributed as cash, premium reductions, or enhanced benefits.
4. Act Promptly – Employers usually have 90 days to distribute the employee portion.

📌 Tip: Work with your benefits advisor to ensure compliance and avoid tax or ERISA issues.

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👤 What It Means for Employees

For employees, an MLR rebate can look like:

• A direct payment,
• Reduced payroll deductions, or
• A benefit enhancement (e.g., premium holiday).

It’s not always a huge dollar amount per person, but it’s still a direct return of premium dollars.

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🧠 Why This Matters

• Employers: Handling rebates properly protects you from compliance issues.
• Employees: Rebates reinforce transparency and can ease health care costs, even if modestly.

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📞 Need Guidance on Rebates?

MLR rebates can be confusing, but you don’t have to figure it out alone. At Apex Benefit Group, we help employers manage compliance, distribute rebates fairly, and communicate clearly with employees.

👉 Reach out to our team today to make sure your rebate process is handled correctly.

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Sources

• U.S. Department of Health & Human Services (HHS) – Read More
• Centers for Medicare & Medicaid Services (CMS) – Read More
• U.S. Department of Labor (DOL) – Read More
• Internal Revenue Service (IRS) – Read More
• Kaiser Family Foundation (KFF) – Read More
• National Association of Insurance Commissioners (NAIC) – Read More
• Verywell Health – Read More

This article is intended to provide general information on health insurance, employee benefits, and Medical Loss Ratio (MLR) rebates and should not be construed as legal, tax, or insurance advice. The information shared here is not a substitute for personalized consultation regarding your organization’s specific needs. For guidance tailored to your situation, please consult a licensed attorney, tax advisor, or benefits professional. © 2025 Apex Benefit Group. All rights reserved.