Last summer many Arizona businesses received rebate checks from insurance carriers. This is connected to new requirements for insurance companies. Under the new 80/20 requirement of the Affordable Care Act (also known as Obamacare) insurance companies must maintain a medical loss ratio (MLR) of 80 to 20. If the insurer does not meet this minimum ratio they must provide a rebate of the difference to the insurance policyholder.

The checks were supposed to be mailed in August 2012 to group plan holders. In most cases these plan holders were businesses that administer plans for their employees. After receiving the money an employer then has a duty to determine how to distribute the plan rebate to plan participants, employees.

All employers should have received a notice informing them whether or not they were eligible for the rebate. However, self insured businesses are not covered under the new MLR requirement, which accounts for nearly 60% of persons in group plans.

Businesses have not received information in how to distribute the plan to their employees. A spokesperson for the US Department of Labor Employee Benefits Security Administration stated that the amount of the rebate must be commiserate with the amount that the workers contribute to the premium. This means that if a company pays 80% of its employee’s premiums, the company will keep 80% of the return and must allocate the remainder of the money to its employees.

In Arizona alone over $29.6 million in rebate checks have been sent to businesses throughout the state. Although the average rebate was less than $2,000.