What Is Medical Loss Ratio?


Quick Answer

Medical loss ratio is a percentage of the insurance premium that an insurer spends on claims and expenses throughout the fiscal year, states Cigna. This ratio is the amount of money that insurers spend to improve health care quality of their customers.

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Full Answer

Medical loss ratio is a term that defines the percentage of a premium in which the insurer is completely responsible for in order to help improve the payer's health and wellness. After the Affordable Care Act passed, insurance companies are now lawfully bound to pay rebates to all of their policyholders who haven't met the medical loss ratio of at least 80 percent, according to Cigna.

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