HHS finalizes regulations on insurers' spending

Insurance plans will soon have to give consumers more information about how their premium dollars are spent, even if the spending meets new federal requirements.

The disclosure requirements were included in final regulations on the healthcare reform law’s medical loss ratio (MLR) provision. The Health and Human Services Department finalized its MLR rules Friday.

The healthcare law requires insurers to meet an 80 or 85 percent MLR, meaning they must spend 80 or 85 percent of customers’ premiums on medical costs. Only the remaining 15 or 20 percent can go toward profit and administrative expenses. Plans that miss the mark will have to send rebates to their customers.

Under the final rule, plans must send their customers a notice about the MLR even if they meet the requirements and don’t have to offer rebates. The notice will explain how the policy works, what the plan’s loss ratio was, and how it has changed because of the healthcare law.

The final rule also makes any rebates tax-free.

Particularly bare-bones policies, often called “mini-meds,” received special treatment in an earlier version of the rule while HHS figured out how the MLR should apply. The final rule gradually tightens those standards. By 2014, mini-meds will have to meet almost the same requirements as comprehensive policies.

The MLR requirements will take effect next year for most plans, but states can request a more gradual process if they believe the MLR would hurt consumers. HHS has approved adjustments to the MLR levels in six states and denied requests from four states. Seven more are still pending.