By Pension and Benefits Editorial Staff
Insurers will be issuing a total of at least $2.7 billion across all markets under the medical loss ratio (MLR) provision of the Patient Protection and Affordable Care Act (ACA), the Kaiser Family Foundation (KFF) has estimated in a recent data note. The amount has nearly doubled from $1.3 billion in 2019, according to KFF.
The MLR provision requires insurance companies covering individuals and small businesses to spend at least 80 percent 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 2020 rebates are calculated based on the insurers’ 2017, 2018, and 2019 financial data.
KFF noted that the amount varies by market, with insurers reporting about $2 billion in the individual market, $348 million in the small group market, and $341 million in the large group market. These amounts are preliminary estimates, and final rebate data will be available later this year, according to the data note.
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