The Affordable Care Act
requires CareFirst to rebate part of the premiums it received if it does
not spend at least 80 percent of the premiums CareFirst receives
on health care services, such as doctors and hospital bills, and activities to
improve health care quality, such as efforts to improve patient safety. No more
than 20 percent of premiums may be spent on administrative costs such as
salaries, sales and advertising. This is referred to as the “Medical Loss
Ratio” standard or the 80/20 rule. The 80/20 rule in the
Affordable Care Act is intended to ensure that consumers get value for their
health care dollars. You can learn more about the
80 /20 rule and other
provisions of the health reform law at: http://www.healthcare.gov/law/features/costs/value-for-premium/index.html.
What the Medical Loss Ratio
Rule Means to You
The Medical Loss Ratio rule is
calculated on a State by State basis. In the District of Columbia, CareFirst
did not meet the 80/20 standard. In Virginia the Small and Large Group HMO plans did not meet the 80/20 Standard and in Maryland the Individual Consumer-Driven Only Market was affected. In 2011, CareFirst spent
only 79.2%of a total of $1,000,000 in premium dollars on health
care and activities to improve health care quality. Since it missed the 80
percent target by .8% of premium it receives, CareFirst must
rebate .8% of the total health insurance premiums paid by the employer
and employees in your group health plan. We are required to send this rebate by
August 1, 2012, or apply this rebate to the health insurance premium
that is due on or after August 1, 2012. Employers or group policyholders must
follow certain rules for distributing the rebate.
Ways in Which an Employer
Can Distribute the Rebate
If your group health plan is a
non-Federal governmental plan, the employer or group policyholder must
distribute the rebate in one of two ways: Directed to: Small Groups Platform: Facets
• Reducing premium for the
upcoming year; or
• Providing a cash rebate to
employees or subscribers that were covered by the health insurance on which the
rebate is based.
Beginning July 9, 2012, CareFirst will distribute rebate checks to 9,870 fully insured employer groups for the 2011 calendar year.
• Rebates differ by product and jurisdiction. The typical group will receive a rebate check between $561 and $10,785.
