What is the MLR – Medical Loss Ratio Rule

The MLR – Medical Loss Ratio Rule requires Insurance Companies to  at least spend 80 percent of premium dollars on medical services – claims, over all, not on each policyholder.  If they don’t, they have to give refunds – rebates. * CMS.Gov * NAIC (health care.gov)       Thus, a higher premium plan MUST pay more in claims, a lower premium plan, can cut claims… by decreasing benefits such as, deductibles, co-pays,  limiting the number of doctors you can see – narrow networks,  metal levels  and limited Rx  formularies.


Do your part to keep costs down by

watching your weight,

preventative care

Social Distancing

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and wellness programs.

General highlights of the regulations include:

  • Rate Increases must be certified by an Actuary CA SB 1163   New  Ballot Measure Prop 45  requires Deparment of Insurance Approval
  • MLR (Medical Loss Ratio)rebates will be sent to policy holders,which include employers or employee organizations as well as individual plan policyholders.
    • Insurers may distribute rebates to employers; in turn, employers would need to issue rebates to employees, based on employee contributions.
  • Policyholders are potentially eligible for a rebate determined on a “block” basis. The “block”is defined by:
    • Organization size (individual; small or large employer group)
    • Legal entity issuing coverage
    • State of issuance
    • Limited medical and expatriate international plans handled separately
  • Small group is defined as 2-50 employees unless a state defines it differently until at least 2016.
  • For the 2011 reporting year, issuers of limited medical (mini-med) and expatriate international plans are subject to separate calculation rules.
    • The plan’s numerator of the total claims incurred and expenditures for activities that improve health care quality would be multiplied by two.
    • Carriers will be required to complete additional quarterly reporting through 2011.
    • After reviewing this additional reporting, these adjustments will be revisited by the Secretary for 2012 and beyond.
  • Broker commissions will be included in the MLR calculation.
  • Non-U.S. insurance companies do not file MLR.

A preliminary analysis of the regulation and the data from this survey support four key points:

  • Initial compliance costs (especially accounting, auditing, and contracts with providers and employers) will likely exceed the estimates that accompanied the regulation by a substantial amount for many health plans.
  • Plans serving the individual and small-group markets are the most likely to be affected.
  • There is no guarantee that the federal MLR rule will lower health costs and premiums. In fact, the incentives under the rule may lead to higher administrative costs, higher-cost benefits, and higher premiums.
  • The rule could reduce the number of health plans competing in some markets. ahip hi wire.org   Like Aetna and PacifiCare leaving the CA Individual Market

The rate review  regulation process


Rebates Return of Excess Premium

Rebates August 2019?  

There might be rebates for 2018 

Kaiser Family Foundation, in a  report published this week, said 2018 was “the most favorable year in the ACA-compliant market’s history.”  The insurers were so profitable, in fact, that they’ll have to rebate a record $800 million in overcharges to consumers by Sept. 30.  The expectation, however, was that the market would eventually stabilize. That’s exactly what has happened.  Financial conditions in the individual market began to improve in 2016, when average premiums first began to outpace claims. By last year, when average monthly premiums per enrollee were $559, they outpaced average per capita claims by $167.  * Los Angeles Times 5.8.2019

Due to some better-than-expected claims results, along with cost-saving measures that have been implemented, Anthem’s Medical Loss Ratio (MLR) dropped below 80% over the 2015-2017 period.

What does this mean? It means that Anthem clients who were enrolled in the 2017 calendar year are getting some money back.

  • The annualized rebates will average approximately $142 per member over a 12-month period.
  • The rebate checks are distributed directly to the employer and should be sent by September 8th.
  • The employer has the option to distribute the rebate to employees or apply it toward future premiums.
  • Cal-COBRA members will receive a check directly from Anthem.
  • Anthem is required to inform employees that their employer is receiving a rebate. Employee letters are required to be mailed and will be sent by September 18th.

Anthem is committed to providing access to high-quality health care providers and services while working to drive down cost in the health care system. In addition, Anthem is striving to improve its customers’ experience, and efficiently managing their costs is part of that experience.

Blue Shield – Employer Rebates 11.1.2016  CA Health Line

Blue Shield accused of not giving high enough rebates for 2014 – LA Times 6.28.2016  – Lawsuit filed CA Health Line 7.18.2016  *  9.20.1206 Talking points for Small Biz Rebates for 2015

The LA Times reports on 8.5.2015 that Blue Shield (talking points) will pay out $83 million for 2014 an average of $136/policy holder and $21 million to 19,000 small employers, about $1,000.

Health Net 2014 results – no rebates

CA Companies appear to have fine tuned their premiums and claims to meet the MLR Rule and do not have to refund any money for 2013 (Word & Brown Survey)  Learn More in Blue Cross Presentation.


Rebates were expected to be 1.3 Billion in 2012!LATimes 4.27.2012 The Hill 5.2014   $332 Million in 2013 – as companies are fine tuning their rates to comply with the rule. Modern Health Care  United Health Care has announced a $3,500,000 refund to CA Small Biz. Blue Cross, Blue Shield & Kaiser $50 million LA Times 6.2.2012     Nor,  no one can say that Insurance is a Scam, it’s simply a mechanism to share the losses.  If you want to pay less premium and are willing to take more of the risk yourself, avoid the 20% “handling charge,” take the Bronze Plan, where you pay 40% of the essential covered benefits.   Click here for more info from United Health Care

Blue Shield is voluntarily limiting net income to 2% and giving refunds.

AHIP Graph of Medical Loss Ratio 80% Claims - 20% Operating Costs & Profit

AHIP Graph of Medical Loss Ratio 80% Claims – 20% Operating Costs & Profit

Steve's Explanation of MLR Medical Loss Ratio

Kaiser Health News - Medical Loss Ratio

Department of Managed Health Care on MLR in Affordable Care Act

Our Webpage on MLR 

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3 comments on “80% Medical Loss Ratio (MLR)

    • The DOL provides three options for distributing rebates:

      Reduce subscribers’ portions of the annual premium for the subsequent policy year for all subscribers covered under any group health policy offered by the plan.

      Reduce subscribers’ portions of the annual premium for the subsequent policy year for only those subscribers covered by the health policy on which the rebate is based.

      Provide a cash refund only to subscribers who were covered under the group health policy on which the rebate is based. Word & Brown

      Here’s a calculator for Broker use. If you appoint us as your broker, no extra charge, we get compensated by the Insurance Company at no extra charge to you!

      Rebate Calculator

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