MLR and Rebates for Sales

What determines if an employer is part of a group of companies under common control that is treated as a single employer?

According to the Internal Revenue Code, for example, companies under common control generally exist where: 1) One business owns a controlling interest in another business; 2) Five or fewer individuals have an ownership interest in two or more other businesses; or 3) Two or more entities, with an element of control, regularly provide services to the same third parties. Most companies are not under common control. Examples: Does the employer group have a "parent/subsidiary (child)" relationship? If yes then mark yes on the questionnaire for #1. If no, then mark no on the questionnaire for #1. Does the employer group have a "brother/sister" relationship? If yes then mark yes on the questionnaire for #1. If no then mark no on the questionnaire for #1 An employer group that is uncertain of its status must consult a tax professional before attempting to complete the questionnaire. Again, most companies are not under common control. The above is not an exhaustive list of what creates common ownership or control.

What is the deadline for reporting "average number of employees" to Florida Blue?

All submissions must be received by Florida Blue no later than Feb. 28 of each year.

Who qualifies as an "employee?"

An employee is any individual who received a W-2 from the employer. This includes full-time, part-time, and seasonal employees.

I have a health plan that I bought myself (Individual consumer). Will I receive a rebate?

Based on the ACA guidelines, individual policyholders will not receive a rebate in 2014.

How do you ensure that the rebate calculation is correct?

Calculating the rebate amount is very complicated. In addition to the rebate percentage and employer group's premium contribution amount, adjustments must be made for taxes, fees, quality improvements, and the percentage of premium each employer group contributed toward the entire segment. Florida Blue has followed the available rebate guidance issued by the Federal government and reported our aggregate rebate calculations to the U.S. Department of Health and Human Services (HHS), the authority overseeing MLR (www.hhs.gov). HHS may from time to time audit insurers in order to ensure compliance.

How is the average number of employees calculated?

Count the full-time, part-time, and seasonal W-2 employees, regardless of whether they were eligible to participate in insurance coverage. Add together the total employees for all 12 months. Divide by 12 to get an average.

How are part-time, seasonal, and contract workers counted?

Each part-time or seasonal worker who received a W-2 for the year is counted as one employee in the months that they worked, and the monthly counts, which include full-time, part-time and seasonal workers, are averaged to determine the annual number. Contract workers who receive a 1099 are not counted as employees.

What if the average number of employees over the 12-month period is less than 1?

Enter zero as the average.

Whom does Florida Blue send the rebate to?

Federal law requires that insurers pay rebates directly to employers. Employers are responsible for determining how to best use the rebate in accordance with Federal law. Employees will be directed to contact their employer with any questions.

How often will employers need to provide their "average number of employees?"

Federal law requires the average number of employees to be certified annually.

What options do groups have for distributing rebates to subscribers?

Florida Blue cannot advise groups on how to comply with the Federal law. Employers must consult their accountant, tax advisor, or legal counsel to determine what their obligations are under the law. Generally speaking, groups may choose from the following options: • Employer groups subject to ERISA are required to treat the rebate as a plan asset and uses of the rebate may include, but are not limited to: o Reducing future premiums or premium increases, or o Rebating a portion back to the subscribers. • Employer groups not subject to ERISA are required to use rebates for the benefit of the subscribers in one of the following ways: o To reduce subscribers' portion of the annual premium for the subsequent policy year for all subscribers covered under any group health policy offered by the plan; o To reduce subscribers' portion of the annual premium for the subsequent policy year for only those subscribers covered by the group health policy on which the rebate was based; or o To provide a cash refund only to the subscribers who were covered by the group health policy on which the rebate is based.

What is the difference between the State and Federal definitions of eligibility?

Florida law requires employers to count only those employees who were eligible to participate in insurance coverage. Federal law requires employers to count the average number of employees based on the calendar year and includes all W-2 employees, regardless of whether they were eligible to participate in insurance coverage.

When are rebates paid?

For the 2013 calendar year, health plans must issue rebates, if any, by Aug. 1, 2014. For calendar years 2014 and beyond, health plans must issue any rebates by Sept. 30 of the next calendar year.

What are the tax implications due to receiving a rebate?

Generally, a rebate to an employer is non-taxable because Federal law categorizes them as a return of assets to the policyholder. However, exceptions may apply, so employers must consult their tax advisor or counsel for advice.

When will Florida Blue determine who is getting a rebate?

Health plans must submit their MLR report to U.S. Department of Health and Human Services by June 1 of each year.

Where can I find more detailed information on how to calculate the average?

Helpful instructions and examples can be found in questionnaire that was mailed to the employer group.

Who does Florida Blue send the rebate to?

If a rebate is due to Individual consumers who purchase health plans on their own, it is mailed directly to the policyholder. For members with employer-provided coverage, Federal law requires that insurers pay rebates directly to their employer. The employer is responsible for determining how to best use the rebate in accordance with Federal law. Please contact your employer or Benefit Administrator for more details.

How is the rebate paid?

If a rebate is due, eligible customers (Individual policyholders or Employers) will receive a single payment via check.

How is a rebate paid?

If an employer rebate is due, Florida Blue or Florida Blue HMO will issue a single payment via check.

What if the employer group was not in business during all twelve months of 2013?

If the employer group was not in business each month of the 2013 calendar year (January to December) the "average number of employees" must be based on 2014 projections.

What if the employer is no longer in business?

If the employer is no longer in business, please let Florida Blue know by calling 1-866-728-7034.

What if the average number of employees over the 12-month period is not a whole number?

If the number is greater than 1 but is less than the next whole number, the number must be rounded up to the next whole number (e.g., 1.2 is counted as 2).

How will I know if I am entitled to a rebate?

If you are entitled to a rebate, Florida Blue will contact you and your employer, if applicable. You do not need to take any action to receive the rebate.

How will my company know if Florida Blue has received my "average number of employees" questionnaire?

If you would like to confirm receipt, you can call Florida Blue at 1-866-728-7034.

How much of a rebate did my employer receive?

If your employer receives a rebate, you will receive a notice that your employer did. Please contact your employer or Benefit Administrator for more details if you would like to know more about your portion, if any, of such a rebate.

What is Medical Loss Ratio (MLR)?

MLR is a basic financial measurement used in the Affordable Care Act (ACA) to encourage health plans to provide value to enrollees. If an insurer or HMO uses 80 cents out of every premium dollar to pay is customers medical claims and activities that improve the quality of health care, the company has a MLR of 80%. This indicates that the insurer is using the remaining 20 cents of each premium dollar to pay overhead expenses. The ACA sets a minimum MLR for different market segments, including; 80% for individual consumers, 80% for small employers and 85% for fully insured large employers.

Why did Florida Blue pay more/less in rebates than another health insurance company?

No two health insurance companies are the same. The rebates issued by Florida Blue are directly related to the revenue and medical costs we received. These factors can vary greatly between health insurance companies, resulting in different amounts paid towards rebates.

Will the fact that rebates are paid impact agent commissions?

No, Florida Blue made a decision to not impact agent commissions.

Can Florida Blue reduce my premiums instead of sending a rebate?

No, MLR rebates must follow Federal reimbursement guidelines. Our premiums are based on the amount of expected claims in a given year. Because health insurance claims can vary greatly, we don't know what the exact cost of providing your coverage will be until after the end of the year. If we have not met the MLR threshold, we will pay a rebate.

Does a rebate mean that Florida Blue has been overcharging me?

No, our premiums are based on the amount of expected claims in a given year. Because health insurance claims can vary greatly, we don't know what the exact cost of providing your coverage will be until after the end of the year. If we have not met the MLR threshold, we will pay a rebate.

Are rebates paid every year?

No, rebates are based on MLR calculations that can vary greatly from year to year.

Who can the employer group or agent contact if they need help?

Please call Florida Blue at 1-866-728-7034 for assistance.

Where is the access code for the online questionnaire?

Please refer to the instructions and questionnaire (upper left corner) that were mailed to the employer group. If an agent is assisting an employer, the agent will need to obtain the access code from the employer.

What if the employer chooses to not accept the rebate?

Rebates are considered a plan asset and Florida Blue recommends that policyholders who do not wish to accept their rebate consult their accountant, tax advisor, or legal counsel to determine what their obligations are under the law. Additionally, Florida Blue cannot keep unclaimed rebates. Under Florida law, we are required to send all unclaimed funds to the state, this is known as "escheatment." After a period of time, the state can use the unclaimed funds at their discretion.

Someone I know received a rebate from Florida Blue, so why didn't I receive one?

Rebates are distributed based on the MLR requirements for the health benefits in which you are enrolled and the market you are in (small group, large group, or individual). Therefore, it is possible that one set of benefits might meet the MLR threshold (and not require that a rebate be issued) and that another set of benefits might not meet the MLR threshold (and require a rebate).

What if I was not in business during all twelve months of the year?

The "average number of employees" must be based on the following year's projections. (Helpful instructions and examples are included in the questionnaire that was mailed to the employer group.)

Why does Florida Blue need to know my company's "average number of employees?"

The "average number of employees" will be used to determine a group's employer size. Health care reform provisions, from benefit mandates to market reforms, apply to groups based on their employer size, not their group size. Group size information is still applicable for other purposes, especially in terms of state law and eligibility for our group products, so it's important to note that our collection of average number of employees will not replace our need to also collect information on a group's total eligible employees, which is what we currently capture on the enrollment summary.

How is MLR calculated?

The MLR is a comparison of total claims by market segment divided by total revenue by market segment, expressed as a percentage. If the percentage meets or exceeds the required level by market segment, then no rebate is due. Rebates are due when the thresholds are not met. The formula for calculating MLR is as follows:

Why are values less than 1 moved down to 0 and values over 1 moved up to the next whole number?

The U.S. Department of Health and Human Services (HHS) has determined that this is the best method for calculating the average number of employees.

Why did someone I know receive a larger/smaller rebate than I did?

The amount of a rebate is determined by the MLR calculation for the health benefits in which you are enrolled. If your rebate amount differs from someone else's, it is likely that he or she is enrolled in different benefits and received a different MLR calculation.

How is the average number of employees calculated for a controlled group?

The average number of employees must include employees of controlled or affiliated companies, which are treated as a single employer under subsection (b), (c), (m), or (o) of section 414 of the Internal Revenue Code of 1986. Example: Company A has an average of 25 W-2 employees. Company B has an average of 50 W-2 employees. Both A & B are members of a group of companies under common control by Company C. Company C has an average of 100 W-2 employees (including those employed by A & B). All three companies (A, B & C) will answer the questionnaire as follows: YES 100

How is this information different from the group size information already provided on the enrollment summary?

The group size information provided on the enrollment summary is a "snap-shot" of a given point in time. It includes former employees on continuation coverage (e.g., COBRA), and excludes seasonal employees. In contrast, the average number of employees is based on the calendar year and includes all W-2 employees, regardless of whether they were eligible to participate in insurance coverage.

What is the difference between group and employer size?

The table below illustrates the differences between the state and Federal definitions of group and employer size: State law Federal law Customer Measured by Group Size Employer Size Who is counted Benefit-eligible employees All employees Small 1-50 Large 51+ Note: Under Federal law, the "Individual Market" refers to all others that are not receiving group/employer coverage. Therefore, self-employed individuals without qualifying employees are generally counted as individual policyholders.

I have employer-provided health coverage. Will I receive a rebate?

This depends on several factors such as: rebate eligibility, employer group size, health benefits and how your employer chooses to use/distribute rebates, if any, based on Federal law. Please contact your employer or Benefit Administrator for more details.

Where can I learn more about MLR?

To learn more about MLR and other health care reform provisions, please visit the U.S. Department of Health & Human Services at hhs.gov or the Florida Office of Insurance Regulation at floir.com.

Why is MLR important?

Under the ACA, insurance companies and HMOs must report their MLR to ensure that they are providing value to their members. If an insurer or HMO fails to meet a particular threshold, it must pay a rebate to individual consumers or employer group members. The rebate is the difference between the actual MLR and the threshold MLR.

What is Florida Blue's position on MLR?

We are committed to complying with all Federal laws regarding MLR.

Are employers required to provide their "average number of employees?"

Yes, Federal law requires that all employers providing health insurance coverage report the average number of employees they employed over a calendar year.

Will a company's employees covered by the health plan be notified about rebates?

Yes, Federal law requires that insurers notify plan members if their employer is due a rebate. Employers are responsible for determining how to best use the rebate in accordance with Federal law. Employees will be directed to contact their employer with any questions.

Is Florida Blue in compliance with the law?

Yes, Florida Blue's administration of rebate payments is in compliance with the law and regulations interpreting the law issued by the Department of Health and Human Services, the authority overseeing MLR (hhs.gov).

Should former employees be counted in the calculation?

Yes, former employees are considered as "employees" for the months in which they were actually employed. Do not include retirees or former employees on continuation coverage (e.g., COBRA) in the calculation.

Could an employee be eligible for more than one rebate if he or she changed jobs or was enrolled in more than one health plan during the calendar year?

Yes, if the employee was a subscriber in more than one health plan during the last calendar year, he or she may be eligible to receive a rebate from one or both health plans.

Could I be eligible for more than one rebate if I changed jobs or was enrolled in more than one health plan during the calendar year?

Yes, if you were a policyholder enrolled in more than one health plan during the last calendar year, you may be eligible to receive a rebate from one or both health plans.

Can my company update or make changes after the questionnaire has been submitted?

Yes, the changes can be made by calling Florida Blue at 1-866-728-7034. Please note that all updates or changes must be received by Florida Blue by Dec. 1 of each year.

If a large employer offers health plans with multiple insurers, can one plan receive a rebate while the others do not?

Yes. If an employer offers health plans with multiple insurers, it is possible that one insurer met the MLR threshold (no rebate required) while the other insurer did not (a rebate is required). Example: A company offers health plans A and B. Health Plan A, with Insurer 1, does not meet MLR threshold and is eligible for a rebate. Health plan B, with Insurer 2, meets the MLR threshold and is not eligible for a rebate.