What Is Medical Loss Ratio In Health Insurance?

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   Christopher Lawrence

   Insurance Broker | Financial Consultant, Lawrence Insurance Consulting, Southern New Jersey

   The medical loss ration is a figure that measures how efficently health insurance premiums are being used to actually pay for plan members coverage. basically healthcare reform has dictated that heath insurers medical loss ration can not be under 80%:20%, this means that the premiums paid by policy holders must be used by the insurance company so that at least 80% of those premiums go toward paying for members medical costs and no more then 20% goes toward the companies profit/overhead costs. If a health insurer has a smaller medical loss ration <80% then it must issue rebates to their policy holders in the form of the difference divided by the total number of policy holders.

   Answered on October 1, 2013

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