Understanding Medical Loss Ratio

Under the health care reform law, health insurance companies have to spend at least 80 percent (for individual and small group) or 85 percent (for large group) of their policy premiums in a given state on claims. If their medical loss ratio (claims over premiums) is less than the required percentage, the difference has to be paid to enrollees and group policyholders. The payment is in proportion to their contribution to the cost of coverage.

For the 2011 reporting year, plans covering expatriates have a different formula for calculating the medical loss ratio. This is due to their higher administrative costs.

To learn more, watch our webinar about changes to medical loss ratio or see our timeline.

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