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Are there rules about how insurers spend premium dollars?

One goal of the new healthcare reform laws is to limit how much of your premium can be spent on things other than providing healthcare and improving its quality. Individuals and group plan participants could receive an annual rebate if their insurance company doesn’t spend enough of its premium dollars on medical care and quality improvements. This component of health insurance reform is already in place.

Termed the Medical Loss Ratio, or MLR, rule, it requires that insurers spend a certain percentage of premium received — 85 percent for large employers, and 80 percent for small employers and individual policies — on claims and quality improvements. If the insurer’s other operating expenses — which include administration, marketing, and profit — eat up more than the allowed 15 to 20 percent of premium received, its members receive a rebate.

The MLR rule is enforced by the federal Department of Health and Human Services. By June 1 each year, all insurers must submit annual reports demonstrating how health plan premium was spent during the prior year. Any rebates owed must be issued to policyholders by August 1 each year. Insurers may issue the rebates either as a cash payment, or as a credit toward future premium owed if the health policy is still in place.

Learn More: Will I be required to have Health Insurance?

Oregon Information for Oregon Residents:

Healthcare Reform: The Basics

Exchange Marketplace: A New Shopping Option

New Standards for Benefits and Plan Designs

Financial Assistance for Health Insurance


Not an Oregon resident?
Click here.

Are you eligible for subsidized coverage?

Use this subsidy calculator from UC Berkeley Labor Center to get an estimate.

Are you a Medicare member?

HealthcareLawGuide.com doesn't address Medicare changes, but you can find information about Medicare and the ACA at Medicare.gov.


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