Medical Loss Ratio

Before you blame the insurance companies for being “greedy”, it’s important to note, there is a clause in the Affordable Care Act that is called the Medical Loss Ratio (MLR).

This Medical Loss Ratio states that insurance companies must pay a minimum of 80-85% of all the dollars they collect in premiums towards medical bills they receive (claims). In other words, if an insurance company collects $100 in a premium, $80 to $85 MUST pay a medical claim.

If at the end of the year they have collected too much from their members, they must send their members back a “rebate” check or give the members a credit for a future premium. So that leaves the insurance company the remaining 20% to pay all of their expenses (employees, buildings, marketing, broker costs etc). Within the 80-85% ratio’s, the insurance company can also spend money on things that improve healthcare quality. This medical loss ratio requires all insurance companies to send detailed reports to the Government about money being spent. The reports are a big responsibility and are very time consuming for the insurance companies to comply with.

When you hear someone talk about their Premiums Going up, have them read this definition and explanation.

Getting a Refund

We read an article a while back stating that the residents in Florida, almost 1 million customers, received a $65 refund because of this rule. The insurance company collected too much money in premiums and had to refund their customers the overage collected. Here in Nevada, we’ve had many customers receive a medical loss ratio refund too.​

Your Health Insurance Benefits

Health insurance is very expensive these days. Your ACA qualified health insurance plan must cover these 10 “essential health care benefits”.

• Outpatient Treatment “Ambulatory Services”
• Emergency Care
• Hospitalization
• Maternity and Newborn Care
• Mental Health and Substance Abuse
• Prescriptions
• Rehab services and devices
• Laboratory
• Preventive / Wellness
• Pediatric Services – dental and vision

All of these services alone are very expensive, but ACA Qualified health plans must cover all of them. Prescription coverage alone accounts for a huge percentage of your premium.

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