Employers with insured group health plans may receive a 2025 medical loss ratio (MLR) rebate by September 30, 2026, if their insurer did not meet the applicable MLR threshold. Rebates may be issued as a premium credit or lump-sum payment. Any portion considered a plan asset must be used exclusively for participants and beneficiaries, generally within three months to avoid ERISA’s trust requirement. Employers should also be prepared to explain how the rebate is allocated.
MLR Rules
MLR rules require insurers to spend at least 85% of premiums on medical care and quality improvement in the large-group market and 80% in the small-group and individual markets, although states may set higher standards. Insurers must report their spending by July 31 of the following year; those that miss the applicable threshold must issue rebates by September 30 and notify plan sponsors and participants how the rebate was calculated.
Using MLR Rebates
Most private-sector employer health plans are subject to ERISA, so employers generally cannot retain an MLR rebate outright. Unless the employer pays the full cost of coverage, at least part of the rebate may be a plan asset and must benefit participants and beneficiaries. Employers can distribute it using a reasonable, fair, and objective method or apply it to future premiums or benefit enhancements; the plan-asset portion should be used within three months to avoid ERISA’s trust requirement. Download the bulletin for more details.
