PPACA provision could mean higher employee benefit costs for some

Employers may need to prepare for the impact of a particular provision of The Patient Protection and Affordable Care Act, which will require insurance providers to pay rebates if the medical loss ratio (MLR) of a particular plan is too low.

The ratio, which denotes how much of a plan's premiums are used to pay healthcare costs rather than for profits and other expenses, must be at least 85 percent to remain in compliance, or 80 percent for smaller employers. Some insurers have indicated the mandatory percentages are too high and will interfere with providing benefits and related services.

Those in charge of business insurance policy decisions concerning employee benefits may find that premium costs increase to cover the expense of the rebates, CFO magazine states, as insurers attempt to adjust to the new regulatory and compliance requirements and the effects on their businesses.

Insurers will be required to provide data by June for each state in which they operate, and rebates will be due August 1. According to the source, most businesses are unlikely to receive rebates because insurers are generally in compliance with the new rule already.