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Insurers Gave $1.5 Billion in Rebates Under ACA MLR Provision

A new report from the Commonwealth Fund reveals that insurance companies returned more than $1.5 billion in rebates to consumers between 2011 and 2012 under the Affordable Care Act’s medical loss ratio provision...
May 28, 2014

A new report from the Commonwealth Fund reveals that insurance companies returned more than $1.5 billion in rebates to consumers between 2011 and 2012 under the Affordable Care Act’s (ACA’s) medical loss ratio (MLR) provision. Companies are required to devote 80 percent to 85 percent of premiums to treatment and medical costs, and those that do not meet that ratio are required to pay rebates. The report indicates that more insurers are complying with the provision, given that rebates fell to $513 million in 2012 from $1 billion in 2011.

The way the MLR is calculated is a major point of contention for independent insurance agents. Currently, agent commissions are considered an administrative expense under the MLR. As a result, agents are already seeing their compensation cut by as much as 55%. PIA took action and worked to have legislation introduced that would solve this problem.

PIA supports the Access to Professional Health Insurance Advisors Act (H.R. 2328) introduced by Rep. Mike Rogers (R-MI), and the similar bill (S. 2068) introduced by Senator Mary Landrieu (D-LA), to reform the law’s MLR requirements. The legislation provides that certain compensation for agents and brokers is exempt from the calculation of the allowable MLR under the healthcare law.

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