The Affordable Care Act’s medical loss ratio rule continues to force health insurers to pay refunds to consumers enrolled in individual and employer-sponsored health care coverage.

Last year, consumers received $332 million in refunds from insurance companies, according to data released by the Department of Health and Human Services, which amounts to an average refund of $80 per family.

The medical loss ratio rule, sometimes called the 80/20 rule, requires health insurance companies in the individual and small group markets to spend at least 80% of premium dollars they collect on medical care or activities to improve health care quality. In the large group market, health insurers are required to allocate 85% of their collected premiums to these healthy initiatives.

Clare Krusing, a spokeswoman for America’s Health Insurance Plans, a national trade association that represents the health insurance industry, tells EBN that the MLR “does nothing to address the main drivers of health care costs.”

“[The rule] puts an arbitrary cap on what health plans spend on a variety of programs and services that improve the quality and safety of patient care,” she says.

Also See: The ACA shared responsibility excise tax's missing link: employer rights

The ACA stipulates that health insurers must provide 2013 refunds by Aug. 1. These reimbursements can be paid in three ways:

  • Check in the mail sent directly to the consumer.
  • Direct reductions of future premiums.
  • Reimbursement to the account that paid the premium.

Should the individual obtain coverage through their employer, the plan sponsor can pursue one of these three options or “apply the refund in a manner that benefits its employees, such as more generous benefits,” according to the HHS.
HHS, meanwhile, says the 80/20 rule, along with other standards such as the required review of proposed premium increases, is one of many ACA reforms “helping to slow premium growth and moderate premium rates.”

“We are pleased that the Affordable Care Act continues to provide Americans better value for their premium dollars,” said HHS Secretary Sylvia Burwell in a statement. “We are continuing our work on building a sustainable long-term system, and provisions such as the 80/20 rule are providing Americans with immediate savings and helping to bring transparency and accountability to the insurance market over the long term.”

For more information on 2013 MLRs and refunds by state and by market, visit

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