Under the ACA, what is the minimum percentage of premium dollars that insurers are required to spend on medical care?

Under the Affordable Care Act (ACA), insurers are mandated to spend a certain percentage of premium dollars on medical care and health services, which is commonly referred to as the Medical Loss Ratio (MLR). For individual and small group plans, this percentage must be at least 80%, meaning that insurers have to allocate 80 cents of every premium dollar toward medical care and health services, rather than administrative costs or profit.

This requirement aims to ensure that consumers receive value for their premiums, providing a safeguard against excessive administrative expenses or profit-taking by insurance companies. If insurers do not meet this threshold, they are required to issue rebates to policyholders, further aligning their financial incentives with providing medical care rather than profiting excessively.

In summary, the ACA's stipulation of requiring insurers to spend at least 80% of premium dollars on medical care ensures a greater consumer protection focus in the insurance industry and promotes transparency, accountability, and value in health insurance coverage.