Understanding Medical Loss Ratio
Medical Loss Ratio and Rebates
Medical Loss Ratio (MLR) is the percent of premium an insurer spends on claims and expenses that improve health care quality.
Under the Health Care Reform law, insurers and HMOs have to pay rebates to policyholders if they don’t meet an MLR standard of at least 80 percent (for individuals and small groups) or 85 percent (for large groups).
Rebates are based on the previous calendar year’s claims experience and are due by September 30 each year. Rebates apply only to insured plans. They are not based on a single policy’s claims, but are based on the experience for groups of policies in each state.
In almost all situations, rebates for employers or group policyholders are paid to the policyholder, not to the employees enrolled in the plan.
Beginning in 2015, the required timing for rebate notices and checks has been moved two months later in the year. The 2015 rebates, which are based on MLR for the 2014 calendar year, will be due by September 30 rather than July 31 as they were in the past.
Effective July 16, 2014, MLR rebates no longer apply to insured plans issued in the U.S. territories (Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa and the Northern Mariana Islands).
To learn more, visit our Frequently Asked Questions about MLR Rebates.
Also review our Frequently Asked Questions about Distributing MLR Rebates.
More on Reform
EMPLOYER MANDATE IN REFORM
Businesses must offer affordable medical insurance that provides “minimum value” to employees and their dependents.
Public Marketplaces/ Exchanges
Marketplaces are the government run online shopping hubs for health insurance, available in every state.
INDIVIDUAL MANDATE IN REFORM
Under the health care reform law, all people must have minimum essential coverage beginning January 1, 2014.