The 80/20 rule, or the Medical Loss Ratio (MLR) rule states that insurance companies can spend no less that 80% of premiums on medical care and quality, and no more than 20% on administration costs. Since passing the Affordable Care Act, insurance companies are required to inform their consumers of how their premium dollars are being spent. Should they not meet the 80/20 rule, they must rebate premium dollars that exceed the limit.
123, 171 consumers in Minnesota will be receiving a total rebate of $8,956,885, an average of $160 per family.
Rebates must be paid by August 1st of each year by way of rebate check, credit or debit lump-sum reimbursement, direct reduction on future premiums, or the employer participating in these listed actions, or actions that will benefit their employees.
Under the Affordable Care Act, insurance companies are also required to send a letter to each of their enrollees explaining the 80/20 rule. They must inform their enrollees if their company failed to meet the 80/20 rule and provide breakdown of how they exceeded the standard.
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