Medical Loss Ratio (MLR) Carrier Update

The Affordable Care Act (ACA) requires health insurance issuers to provide information on the proportion of premium revenues spent on clinical services and quality improvement, also known as the Medical Loss Ratio (MLR).

If a health insurance carrier uses 80 cents out of every premium dollar to pay for members’ medical claims and activities that improve the quality of care, the insurance carrier has an MLR of 80%. (The remaining 20 cents of each premium dollar goes to overhead expenses, such as marketing, salaries, administrative costs, agent commissions, and profits.)

According to the National Association of Insurance Commissioners (NAIC), for IFP and Small Group coverage, the minimum annual MLR is 80%; Large Group plans are required to have an 85% MLR.

If an insurer spends less than 80% or 85% of premium revenue on member services, it is required to provide a rebate to customers.

The ACA’s MLR does not apply to self-funded plans, where the employer is responsible for the payment of covered claims.

MLR rebates must be paid annually, and may take the form of a check in the mail, a lump-sum reimbursement (if the premium is paid by credit or debit card), or a direct reduction in future premiums. For individuals with employer-sponsored insurance, the employer may provide one of these methods or otherwise apply the rebate in a manner that benefits employees.

MLR information for 2021, as provided by W&B carrier partners

Other useful information is contained in an MLR column from September 2021, authored by Paul Roberts, Word & Brown’s Director of Education and Market Development.

If you have any MLR questions, contact your WBCompliance team by telephone or email. You can call 866-375-2039, or send an email to


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