Wednesday, April 11, 2012

MLR: More Loony Reg's

First, the good news:

"A House panel plans to act on and report out ... legislation that would exempt agent commissions from the Medical Loss Ratio (MLR) provision of [ObamneyCare©]."

It's never made much sense to me that they would have been included in the first place. but there you go. This is far from a "done deal," but it bodes well for those who actually sell and service this product.

The bad news is pretty significant, and it comes back to something we discussed last month:

"Foremost among these is the April 1 filing of a Supplemental Health Care Exhibit (SHCE) ... to assist state regulators in identifying and defining elements that make up MLR."

The issue here is the rebates themselves. By definition, a carrier must wait until all the previous year's claims have been settled before calculating its Medical Loss Ratio (MLR). This isn't really a problem with claims from, say January or February of the benefit year, but what about someone who has emergency surgery on New Year's Eve? It may well be April or May of the following year before all the dust has settled, and the refunds calculated and mailed out.

Here's the rub: taxes are due by mid-April, and you might not (heck, probably won't) get your MLR refund until late April or May (or even June!).

So what, Henry? It's not like they're taxable, right?


Good question. As FoIB Patrick P points out:

"It would appear that one would either have to re-file or amend a return. Think about the ramifications for employers and their tax implications. Why would any business continue offering insurance if they were going to have to dissect this mess?

The Commonwealth Fund just released an issue brief estimating the MLR impact on a State-by-State basis. It says in Ohio the average rebates would be: $268 individual market, $78 small group, and $48 in large group. It’s going to cost more to deal with the hassle than the rebate is worth."

And thus ends the most recent episode of the bill we had to pass to learn what's in it.
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