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Explaining the Medical Loss Ratio

Explaining the Medical Loss Ratio

This March 2012 fact sheet from the Kaiser Family Foundation explains how the ACA’s MRL provision will affect health insurers and consumers. The provision requires most insurance companies that cover individuals and small businesses to spend at least 80% of their premium dollars on health care (that is, paying medical claims) and quality improvement. No more than 20% can be used for administration, marketing, and profit. Large group plans must spend at least 85 percent of premium dollars on health care. The fact sheet details how the Medical Loss Ratio is calculated under the ACA, which states have obtained permission to use adjusted Medical Loss Ratio requirements during a transition period, and how the consumer rebate process will work.