What is the MLR – Medical Loss Ratio Rule
80% to claims – 20% Administrative & Profit

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,


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

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Steve's Explanation of MLR Medical Loss Ratio


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2024 Metal Levels Co Pays  Deductibles

#Rebates Return of Excess Premium

 2019 Rebates



Insurers will owe massive MLR rebates next year, even if 2020 is normal Modern Health Care *

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.
  • Merced Property & Casualty Co out of biz due to Paradise Camp Fire LA Times 12.3.2018 *

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What is #actuarial value and how does it affect premiums?


The actuarial value of a health insurance policy is the percentage of the total covered expenses that the plan covers, on average for a typical population. [Age & Zip Code] For example, a plan with a 70% Silver actuarial value means that consumers would on average pay 30% of the cost of health care expenses through features like deductibles and coinsurance. The amount that each enrollee pays will vary substantially by the amount of services they use.

The health reform law specifies a benchmark level of coverage for the purposes of premium subsidies using actuarial values. Premium subsidies will be tied to Silver plans, which have an actuarial value of 70%. Additional subsidies for people making between 100 and 250% of the poverty level limit cost sharing and raise the actuarial value of Silver plans. Our  calculator also illustrates premiums and subsidies for Bronze plans, which have an actuarial value of 60%. Bronze plans represent the minimum level of coverage most people are required to maintain under health reform, and these plans will have higher cost sharing on average. Regardless of the level of actuarial value, insurers will have to cover a defined set of health care services and cap the total amount of cost sharing required of consumers at defined levels, but can generally otherwise vary the structure and degree of cost sharing so long as minimum actuarial value thresholds are met.

The #Agents Role – Part in the Medical Loss Ratio Calculation

MLR (Medical Loss Ratio)   define their commissions as part of the medical expense and failed.  The argument by insurance agents was a senseless argument.  healthcare exchanges under the new law.

These exchanges are not yet up and running but it is easy to picture them to be akin to Amazon.com (AMZN) by necessity and by law, insurance companies will have to display their products in easy to understand and easy to compare formats.  In some ways, the migration will be similar to the migration of retail from the likes of Best Buy (BBY), Barnes & Noble (BKS), and Borders to Amazon.com.  At least in retail there are numerous good reasons for the masses to go to the brick and mortar stores. With regard to health insurance the argument for procurement through agents is very weak. Forbes

The hope of the insurance agents had risen because of the recent backing  by the National Association of Insurance Commissioners.

In a recent ruling, the Department of Health and Human Services dashed all hopes.

Now the only hope left is H.R.1206, the Professional Health Insurance Advisors Act, a pending bill in Congress that would exclude compensation paid to independent insurance producers for the purposes of MLR.forbes.com


Congress should expeditiously consider legislation amending the MLR provisions of the PPACA in order to preserve consumer access to agents and brokers, and;

The Department of Health and Human Services should take whatever immediate actions are available to the Department to mitigate the adverse effects the MLR rule is having on the ability of insurance producers to serve the demands and needs of consumers and to more appropriately classify producer compensation in the final PPACA MLR rule. naic.org

The insurer has no incentive to operate more efficiently or to reduce premiums. Companies would pay brokers as much or as little as they want because any amount would be paid from increased premiums, and the 7.2 points of “excess” MLR could be shaved to please investors by further raising premiums.

The impact of the broker payment exclusion cannot be considered in a vacuum.

If broker commissions are not subject to those limits, insurance companies have every incentive to shift as much administrative burden to brokers as they can, because broker commissions would be subject to no limits. naic.org/

Loss of Agent Services under Health Care Reform? Forbes 6.29.2012


How Much Do Health Insurance Agents Get Paid?


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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


Consumer Resources

#Code of Federal Regulations (CFR) 



Proposed Rules CMS 9930 P 10.27.2017


§158.101   Basis and scope.
§158.102   Applicability.
§158.103   Definitions.

Subpart B—Calculating and Providing the Rebate

§158.210   Minimum medical loss ratio.
§158.211   Requirement in States with a higher medical loss ratio.
§158.220   Aggregation of data in calculating an issuer’s medical loss ratio.
§158.221   Formula for calculating an issuer’s medical loss ratio.
§158.230   Credibility adjustment.
§158.231   Life-years used to determine credible experience.
§158.232   Calculating the credibility adjustment.
§158.240   Rebating premium if the applicable medical loss ratio standard is not met.
§158.241   Form of rebate.
§158.242   Recipients of rebates.
§158.243   De minimis rebates.
§158.244   Unclaimed rebates.
§158.250   Notice of rebates.
§158.251   Notice of MLR information.
§158.260   Reporting of rebates.
§158.270   Effect of rebate payments on solvency.



  • December 17, 2010 OCIIO Technical Guidance: Process for a State to Submit a Request for Adjustment to the Medical Loss Ratio Standard of PHS Act Section 2718 (PDF – 35 KB)
  • April 26, 2011 CCIIO Technical Guidance: Submission of 2011 Quarterly Reports of MLR Data by Issuers of “Mini-med” and Expatriate Plans (PDF – 26 KB)
  • May 13, 2011 CCIIO Technical Guidance: Questions and Answers Regarding the Medical Loss Ratio Interim Final Rule (PDF – 75 KB)
  • May 19, 2011 CCIIO Technical Guidance: Deadline for Submission of 2011 First Quarter MLR Data by Issuers of “Mini-med” and Expatriate Plans (PDF – 26 KB)
  • July 18, 2011 CCIIO Technical Guidance: Questions and Answers Regarding the Medical Loss Ratio Interim Final Rule (PDF – 66 KB)
  • February 10, 2012 CCIIO Technical Guidance: Questions and Answers Regarding the Medical Loss Ratio Interim Final Rule (PDF – 94 KB)
  • March 30, 2012 Memo to Insurance Companies: Medical Loss Ratio Annual Reporting Procedures (PDF – 96 KB)
  • April 20, 2012 CCIIO Technical Guidance: Questions and Answers Regarding the Medical Loss Ratio Regulation (PDF – 101 KB)
  • May 15, 2012 Memo to Insurance Companies: Guidance for Medical Loss Ratio Annual Reporting Form (PDF – 66 KB) Memo to Insurance Companies: Guidance for Medical Loss Ratio Notices of Rebates (PDF – 67 KB)
  • May 24, 2012 CCIIO Technical Guidance: Questions and Answers Regarding the Medical Loss Ratio Reporting Form (PDF – 91 KB)
  • May 30, 2012 CCIIO Technical Guidance: Questions and Answers Regarding the Medical Loss Ratio Reporting Requirements (PDF – 83 KB)
  • July 17, 2012 CCIIO Technical Guidance: Questions and Answers Regarding the Medical Loss Ratio Reporting and Rebate Requirements (PDF – 69 KB)
  • March 29, 2013 Memo to Insurance Companies: Guidance for 2012 Medical Loss Ratio Annual Reporting Form (PDF –119 KB) Memo to Insurance Companies: Announcement Regarding Training for 2012 Medical Loss Ratio Reporting Period (PDF – 125 KB)
  • April 5, 2013 CCIIO Technical Guidance: Questions and Answers Regarding the MLR Reporting and Rebate Requirements (PDF – 139 KB)
  • May 30, 2013 CCIIO Technical Guidance: Question and Answer Regarding the Requirement that Issuers of Certain Health Insurance Coverage Sold as Fixed Indemnity Insurance Submit an Annual Medical Loss Ratio (MLR) Report to the Secretary (PDF – 89 KB)
  • July 2, 2013 CCIIO Technical Guidance Questions and Answers Regarding the Medical Loss Ratio Reporting and Rebate Requirements [PDF, 109KB]
  • December 30, 2013 CCIIO Technical Guidance (CCIIO 2013—0004): Question and Answer Regarding the Medical Loss Ratio Reporting and Rebate Requirements [PDF, 120KB]
UnitedHealth to rebate $3.5 million to California small businesses

Nearly 4,400 small businesses in California will share in $3.5 million in rebates from insurance giant UnitedHealth Group

about $98 each for nearly 36,000 small-business employees and dependents

Other companies are expected to disclose the size of their customer rebates later this week and send out money by Aug. 1.

Under the federal and state laws, insurers must spend at least 80% of premiums collected on medical care for individual and small-group policies, which cover businesses with 50 or fewer workers

it’s up to employers to decide how they share those savings under the federal law. Some employers may split the rebate money based on the percentage workers contribute to their annual premiums or they could reduce next year’s premium by a similar amount.

but the rules don’t address the larger issue of rising medical costs.

“Rebates are one way to adjust the price of insurance,” Johnston said, “but the bigger issues are containing cost and extending coverage.”latimes.com

2 comments on “80% Medical Loss Ratio (MLR) – Actuarial Value Minimum Payout

    • 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

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