Medical Loss Ratio
What Does Medical Loss Ratio Mean?
The medical loss ratio (MLR) is a financial metric established by the Affordable Care Act of 2010. It represents the percentage of premiums that health insurers allocate to claims and other expenses aimed at improving the quality of health care. The law mandates that insurers must pay rebates to policyholders if their MLR does not meet 80 percent for individuals and small groups or 85 percent for large groups. This requirement does not apply in U.S. territories.
Insuranceopedia Explains Medical Loss Ratio
The Affordable Care Act of 2010, commonly known as “Obamacare,” is a U.S. federal regulation signed into law by President Obama on March 23, 2010. It aims to enhance the affordability and quality of health insurance for American citizens by lowering healthcare costs for individuals and requiring insurance companies to adhere to the “guaranteed issue” policy under new minimum standards. This policy ensures that the same premium rates apply regardless of gender or pre-existing conditions.
