Medical Loss Ratio (MLR)

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A medical loss ratio (MLR) is the proportion of premium dollars that an insurer spends on health care services and certain recognized plan administration costs relative to health insurance premium paid by subscribers. The Affordable Care Act requires health insurers offering health insurance coverage in either the group or individual (non-group) market to submit an annual report to the Secretary of Health and Human Services on their MLR and to provide rebates in circumstances in which losses exceed permissible levels (80% in the individual market and 85% in the group market) The MLR and rebate requirements apply to both new and grandfathered insurance plans.

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