Getting Value for Your Premium Dollars: Medical Loss Ratio (MLR)

The term "Medical Loss Ratio" (or MLR) refers to the amount of insurance premiums that an insurer spends on health care and activities that improve health care quality.

The MLR, also called the 80/20 rule, is one way the Affordable Care Act makes sure you get better value for your health care dollars. The law generally requires that 80% or 85% of the premiums collected by insurance companies be spent on health care services and health care quality improvement rather than on overhead, administrative costs, and profit.

Starting in 2012, an insurer that does not spend enough on health care and quality-improving activities must give a rebate to the insured individuals or to the policyholder, which may be the employer that purchased the insurance.

Insurers' medical loss ratios are reported in this section of HealthCare.gov. Learn more about MLR and the Affordable Care Act: MLR Questions and Answers