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May 26, 2023

2023 Medical Loss Ratio Rebates Expected to Total $1.1 Billion

This year, private insurers expect to issue a total of $1.1 billion in Medical Loss Ratio (MLR) rebates across all commercial markets. This amount is similar to the total MLR rebates issued in 2022 ($1.0 billion), but is significantly less than rebates issued in 2021 ($2.0 billion) and 2020 ($2.5 billion). This year’s estimated rebate amounts will be finalized later in the year, and rebates or rebate notices will be mailed by the end of September.

The MLR, created by a provision of the Affordable Care Act, limits the income fully insured health plans can retain for administration, marketing, and profits. The MLR thresholds differ for large group insurers and individual and small group insurers. Large group insurers must spend at least 85% of premium income on health care claims and quality, whereas individual and small group insurers must spend at least 80% of premium income. If an insurer fails to meet its MLR threshold, it must rebate the excess profits or margins to enrollees for individual policies or to the group policy purchaser for group policies.

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