Employers with insured health plans may have received a medical loss ratio (MLR) rebate earlier this year. If an issuer did not meet the required MLR percentage for 2024, rebates issued either as a premium credit or lump-sum payment were provided by September 30, 2025.
If any part of an MLR rebate is considered a plan asset under ERISA, it must be used solely for the benefit of plan participants and beneficiaries. Employers can meet this requirement by equitably distributing the rebate among participants or, if direct payment is not practical, by applying the rebate toward future premium payments or enhancing plan benefits.
If the rebate qualifies as a plan asset under ERISA, it must generally be held in trust unless the employer uses the plan asset portion within three months of receiving the rebate. Employers should be aware of this deadline, as it may be approaching based on the timing of their MLR rebate.
Key Points
- The Affordable Care Act requires insurers to allocate a set portion of premiums directly to medical care and quality improvements.
- If an insurer does not meet these standards, they are required to issue rebates to consumers.
- Employers receiving MLR rebates should determine if any portion qualifies as a plan asset under ERISA.
- Plan assets are exclusively for the benefit of plan participants and their beneficiaries.
Deadlines
September 30, 2025 – Deadline for issuers to distribute 2024 MLR rebates.
Three Months After Receipt - Any ERISA plan asset rebate must be used within three months of receipt.
Action Steps
Employers receiving MLR rebates must follow ERISA rules when using rebate funds. Any portion considered a plan asset must be used solely for the benefit of plan participants and beneficiaries. Employers are prohibited from keeping or using this portion for their own purposes. To comply with ERISA, the plan asset portion must be used within three months of receipt—for example, if a rebate is received on September 30, 2025, it must be used by December 30, 2025. Download the bulletin for more details.
