QUESTION: We recently received a medical loss ratio (MLR) rebate from our insurer for our ERISA group health plan. Under our plan, the employer contributes 50% toward premiums and plan participants pay the remaining 50%. What are we permitted to do with the rebate?
ANSWER: How the MLR rebate can be used depends in part on whether the rebate belongs to the employer or the plan. In general, the portion of the rebate that belongs to the employer can essentially be used for any purpose. But the portion that is a plan asset must be handled in accordance with ERISA’s fiduciary responsibility rules and DOL guidance regarding permissible uses for MLR rebates.
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