MEDICAL LOSS RATIO

There are often words and phrases tossed about when we hear talk of benefits and other things that matter to us we don’t completely understand.  Medical Loss Ratio is one of those items very important in understanding overall our Federal Employees Health Benefits (FEHB) Plan.  According to the Centers for Medicare and Medicaid Services (CMS), many insurance companies spend a large portion of premium fees paid by consumers on administrative concerns such as executive salaries, perks, overhead and marketing.

The Affordable Care Act (ACA) is requiring more accountability and transparency from insurance companies.  The Act requires that insurance companies meet a minimum spending standard on medical care or provide rebates to their enrollees when they fail to meet the standard.

The largest portion of the premium paid mandates that spending is for clinical services and quality improvement where 80 percent at a minimum or 85 percent of the premium is spent on medical care.  Again, failing to meet that standard will compel  insurance companies to make rebates to consumers.  The provision rebate became effective in 2012.  Insurance companies  also due to the Act are held to stricter regulations when it comes to premium increases passed on to consumers.

P. S.  Always Remember to Share What You Know.

Dianna Tafazoli