The Medical Loss Ratio (MLR) standard of the Affordable Care Act ensures that only 15% of the premiums an insurance provider collects can be spent on administrative costs. The rest must be spent on medical care and programs that can help improve the quality of health care.
If an insurer does not meet these MLR standards, it will pay rebates to its customers. Given the inherently unpredictable nature of health care costs and utilization, it is not surprising that health plans may pay rebates to some customers in certain markets.
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