Employer pays all the premium: who gets the rebate?
When the employer pays the entire premium, the participant share of a medical loss ratio rebate may be small or zero. The plan documents and the policy still decide, so confirm before you treat the check as the company’s.
What the letters and the guidance say.
What the Guidance Says
The Department of Labor states that employer paid premiums are not attributable to participants, while participant paid premiums make the attributable portion of a rebate a plan asset.
Documents Still Control
The Department of Labor states ownership depends on the plan documents, the policy terms and the parties’ understanding. If the plan or its trust is the policyholder, the entire rebate is generally a plan asset unless the documents say otherwise.
The Employer Limit
The Department of Labor states that an employer cannot receive a rebate greater than the premiums and plan expenses it paid. Any excess must be held in trust for participants and beneficiaries.
Three steps for the employer.
Confirm Nobody Contributed
Check payroll records for the rebate year for any employee deduction, including dependent coverage. Carrier letters note that the rebate counts premium from COBRA and state continuation participants too, so check those payments as well.
Check Who Is the Policyholder
Look at the policy and plan documents to see whether the employer or the plan itself is named as the policyholder. The answer changes how the Department of Labor guidance applies.
Write Down the Conclusion
Record what you reviewed, what you found and why you reached your conclusion. Keep it with the carrier letter so the reasoning is easy to show later.
Three questions to settle first.
Did Any Employee Pay Toward Premium?
Ask payroll to confirm for every month of the rebate year, including dependents and continuation coverage.
Who Is Named as Policyholder?
Ask your carrier or broker to confirm the policyholder named on the policy that generated the rebate.
Has an Adviser Reviewed Our Documents?
Ask an employee benefits attorney to confirm the plan documents leave the full rebate with the employer.
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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