Medical Loss Ratio (MLR) is the percent of premium an insurer spends on claims and expenses that improve health care quality.

Under the Health Care Reform law, insurers and HMOs have to pay rebates to policyholders if they don’t meet an MLR standard of at least 80 percent (for individuals and small groups) or 85 percent (for large groups).

Rebates are based on the previous calendar year’s claims experience and are due by August 1 each year. Rebates apply only to insured plans. They are not based on a single policy’s claims, but are based on the experience for groups of policies in each state.

In almost all situations, rebates for employers or group policyholders are paid to the policyholder, not to the employees enrolled in the plan.

Effective July 16, 2014, MLR rebates no longer apply to insured plans issued in the U.S. territories (Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa and the Northern Mariana Islands).

To learn more, visit our Frequently Asked Questions about MLR Rebates.

Also review our Frequently Asked Questions about Distributing MLR Rebates.