Health Reform WK-EDGE Insurers see record year for medical loss ratio rebates issued
Tuesday, September 24, 2019

Insurers see record year for medical loss ratio rebates issued

By Patricia K. Ruiz, J.D.

The individual market drove record highs in Medical Loss Ratio rebates for 2019.

Insurers will be issuing a total of at least $1.3 billion across all markets under the Medical Loss Ratio (MLR) provision of the ACA, the Kaiser Family Foundation (KFF) estimated in a data note. This exceeds the previous record high of $1.1 billion in 2012, according to the KFF.

The MLR provision requires insurance companies covering individuals and small businesses to spend at least 80% of premium income on health care claims and quality improvement, with the rest spent on administration, marketing, and profit. The threshold is higher (at 85 percent) for large group plans. Insurers who fail to meet these standards are required to pay rebates to consumers. The rebates are based on a three-year average, such that 2019 rebates are calculated based on the insurers’ 2016, 2017, and 2018 financial data.

According to KFF, insurers will issue at least $1.3 billion across all markets, with insurers reporting at least $743 million in the individual market, $250 million in the small group market, and $284 million in the large group market. Insurers in the individual market are driving the record-high rebates, and rebates in the small and large group markets are more similar to past years. Rebates vary by state, with insurers in Virginia paying the highest total rebates at nearly $140 million, followed by Pennsylvania at $140 million and Florida at $107 million.

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