Using the rebate to reduce future premiums.
Applying the rebate to future participant premiums is a recognized option in the Department of Labor guidance, and carrier letters list reducing premium for the upcoming year as a way to distribute it.
What the letters and the guidance say.
A Recognized Option
The Department of Labor states that a plan may apply a rebate toward future participant premiums instead of paying cash. Carrier letters list reducing premium for the upcoming year as a distribution method.
The Population May Differ
Future participants may not be the same people who paid premium in the rebate year. Your adviser can help you decide whether that is a fair match for your plan.
Required for Some Plans
Carrier letters state that a governmental plan must distribute the rebate by reducing premium for the upcoming year or providing a cash rebate.
Three steps for the employer.
Set the Size of the Reduction
Decide how much each covered employee’s premium will drop and for how long, so the full rebate is used and none is left over.
Update Payroll Deductions
Coordinate with payroll so the reduction appears on the right pay periods and matches what you told employees.
Tell Employees
Explain that the premium reduction comes from the carrier rebate and is not a change to the plan.
Three questions to settle first.
Does the Reduction Reach the Right People?
Ask whether the people covered next year match the people who paid premium in the rebate year.
How Long Will the Rebate Last?
Ask payroll to model the reduction so the full amount is used.
Can the Carrier Apply It Directly?
Ask whether the carrier can apply the rebate to premium due so the funds do not pass through your account.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
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