Compliance News Week Ending August 30, 2024

In this Article:

Medical Loss Ratio (MLR) – That Time of Year

Determining Creditable Status of Prescription Drug Coverage

Medical Loss Ratio – That Time of Year Again

Employers who sponsor a fully insured group health plan may be receiving a Medical Loss Ratio (MLR) rebate from their insurers. Self-insured medical benefit plans are not subject to these requirements.

Medical Loss Ratio Requirements for the 2023 plan year:

IFP & Small Group: Carriers must spend no less than 80% of premium revenue on medical expenses.

Large Group: Carriers must spend no less than 85% of premium revenue on medical expenses.

For any carrier that did not meet MLR in a market segment, policyholders with members enrolled in affected plans will receive a refund by September 30, 2024. Policyholders would include individuals and employers/group health plans.

More information:

Determining Creditable Status of Prescription Drug Coverage

Employers are not required to offer creditable prescription drug coverage, but any size employers that offer prescription drug coverage are required to determine and communicate creditable (or non-creditable) status to eligible individuals as well as report the status annually to CMS.

Prescription drug coverage is creditable if the actuarial value of the coverage equals or exceeds the actuarial value of standard Medicare Part D prescription drug coverage.

Often an insurance carrier or third-party administrator (TPA) will determine creditable status, but if not, the plan sponsor (e.g., the employer) must make the determination, or hire an actuary to help with the determination. If a plan sponsor is not applying for the retiree drug subsidy available to sponsors of a qualified retiree prescription drug plan, the sponsor can use a “simplified method” for determining whether the prescription drug coverage is creditable. CMS has confirmed that the simplified method will continue to be available in 2025.

More information:

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