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Request for 2016 Group-Size Information for Medical Loss Ratio

August 23, 2017

Applies to: Fully insured groups with 35 to 75 enrollees

In 2017, Horizon Blue Cross Blue Shield of New Jersey is resuming its survey efforts to collect group-size information for 2016 from fully insured groups with between 35 and 75 enrollees. The group-size information is used to classify groups appropriately under the medical loss ratio (MLR) rules established by the federal Affordable Care Act (ACA).

Under the MLR rules, if a health insurer does not meet certain MLR requirements, customers in fully insured individual and small and large group markets may be entitled to a health insurance rebate.

Any potential federal rebate due to your clients based on Horizon BCBSNJ’s MLR in 2017 will be paid in 2018. To determine your clients’ market classifications for MLR purposes for 2017, Horizon BCBSNJ must know the average number of people employed by each of your clients, including any of their affiliated companies, in 2016.

The enrollment information we have on file may not be sufficient to accurately determine a company’s size and any potential rebates due. Each year, we need group customers to tell us if their company is a small or large group under federal law.

According to the ACA:

  • A small group averages 50 or fewer employees during a calendar year.
  • A large group averages 51 or more employees during a calendar year.
  • An employee is any person to whom a company issues a W-2, including full-time, part-time and seasonal employees, regardless of whether he/she has medical coverage through that company.

Additionally, if the only employees enrolled in the health plan are the owner and/or the owner’s dependents (including spouse), the health plan is considered an individual health plan, not a small group plan.

For your reference, we have attached a sample of the survey notice letter that we will mail to approximately 839 group administrators.

In 2018 and subsequent years, we will continue to collect average employee information and we will advise you if Horizon BCBSNJ must pay federal MLR rebates. If rebates are due, we will provide you with a list of your group clients that are due a rebate and the amount of their rebate before mailing the rebates to our customers.

If you have questions about the upcoming survey effort or the federal MLR rules, please contact your Horizon BCBSNJ account manager or sales representative.

Please read the following questions and answers to learn more about MLRs and how the rules affect our customers.

Q1. What is an MLR?
A1. An MLR is the percentage of each health care premium dollar used to pay for clinical services and activities that improve the health care quality provided to enrollees (your clients’ employees and their dependents). For example, an MLR of 80 percent means that an insurer spends 80 cents of every premium dollar to pay for clinical services and activities that improve the health care quality for enrollees.
Q2. How is the group-size information used?
A2. The group-size information is used to classify groups appropriately under the MLR rules established by the federal ACA. The MLR percentage thresholds vary, so it is very important that affected customers are reported correctly. Failure to submit this information could result in misreporting to the U.S. Department of Health and Human Services (HHS) and could affect any potential MLR rebates for your clients and their employees.
Q3. Who is considered an employee?
A3. The federal definition of an employee is any person for which an employer issues a W-2 form (including full-time, part-time or seasonal employees), regardless of whether or not the employee has medical coverage through the employer.

Note: The federal definition of an employee is different from the New Jersey state definition. New Jersey defines employees for MLR purposes as the number of employees eligible for health coverage from the employer. New Jersey’s definition excludes part-time employees, seasonal employees and any other employees not eligible for health coverage under the group’s rules.
Q4. How do groups report their group-size information?
A4. Group administrators should report their group-size using our online survey tool, available at HorizonBlue.com/mlr.
Q5. Will groups be required to provide this information every year?
A5. Yes. Every year, Horizon BCBSNJ will contact groups to ask for their group size as defined by federal law.

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Published on: August 29, 2017, 06:27 a.m. ET
Last updated on: August 30, 2017, 11:57 a.m. ET