The Affordable Care Act helps keep costs down by limiting the proportion of premiums that a health insurance issuer can spend on things other than providing and improving the quality of the health care of their enrollees.
Medical Loss Ratio (MLR) is a basic financial measurement that shows how much of the premium dollars a health insurance issuer spends on health care expenses, as opposed to profits or administrative costs. As of 2012, a health insurance issuer that does not spend enough of its premium dollars on health care services must provide rebates to insured individuals or policyholders.
In general, if a health insurance issuer uses an average of 80 cents out of every premium dollar to pay customers’ medical claims and to conduct activities that improve the quality of care, the company has an MLR of 80%. MLR is not calculated at the individual policy level but at the state level for each issuer separately for the small group and individual markets.
An MLR of 80% indicates that the health insurance issuer is using the remaining 20 cents of each premium dollar for administrative costs and profits, including salaries and other expenses. As of 2012, a health insurance issuer is required to spend at least 80% of premium dollars on medical care.
The Affordable Care Act sets minimum MLRs for different markets, as do some state laws.
**When comparing plans make sure you have all your facts. Consult with a licensed Agent or Broker prior to making a decision.
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Agents and Brokers are required to be trained to assist consumers with the application and decision making process. Using an Agent to enroll in a ObamaCare Health Plan will be the primary choice of many americans. After all agents have the inside track on companies and their promptness to handle claims and pay benefits in atimely fashion.