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What is the "Medical Loss Ratio" (MLR) requirement?


The ACA's "medical loss ratio" (MLR) requirement is that health insurers must spend at least a certain percentage of consumers' premium dollars on direct medical care and health care quality improvement. That limits the amount of premium dollars spent on administrative expenses, such as overhead, marketing, salaries, and profit.

The ACA requires that health insurance companies providing coverage in the large employer market (usually 50 or more employees) must spend at least 85% of premiums on direct medical care and quality improvement activities. Health insurers who provide coverage in the small employer market(usually fewer than 50 employees) and individual market must spend at least 80% of premiums on direct medical care and quality improvement activities.

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