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Medical Loss Ratio Information from HAP

June 25, 2013

Under the Federal Affordable Care Act (ACA) health insurance carriers must achieve a certain Medical Loss Ratio (MLR) thresholds/standards for certain segments of business. Federal government groups are excluded from this act.

The Affordable Care Act requires health insurers in the individual and small group markets to spend at least 80 percent of the premiums they receive on health care services and activities to improve health care quality (in the large group market, this amount is 85 percent). This is referred to as the Medical Loss Ratio (MLR) rule or the 80/20 rule. If a health insurer does not spend at least 80 percent of the premiums it receives on health care services and activities to improve health care quality, the insurer must rebate the difference.

A health insurer's Medical Loss Ratio is determined separately for each State's individual, small group and large group markets in which the health insurer offers health insurance. Regulatory guidance indicates the MLR requirement is applied plan-wide by segmented lines of business, not at an individual or group level.

Health Alliance Plan (HAP) and Alliance Health and Life (AHL) have successfully met the required Medical Loss Ratio for 2012. Because HAP and AHL met the required MLR threshold, no rebate is due.

HAP spends its members' premium dollars prudently; more than 80 cents of each premium dollar goes toward covering the cost of medical services and health care quality improvement.

For more information on Medical Loss Ratio and HAP and AHL Medical Loss Ratio, visit healthcare.gov Link Opens in a New Window.

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