The Affordable Care Act (ACA) established medical loss ratio (MLR) rules to help control health care coverage costs and ensure that enrollees receive value for their premium dollars. The MLR rules require health insurance issuers to spend 80-85% of premium dollars on medical care and health care quality improvement activities, rather than administrative costs.

Health insurance issuers must report to the Department of Health and Human Services (HHS) on how they spent their premium dollars for the year by July 31 of the following year. Issuers that do not meet the applicable MLR standard must provide rebates to consumers. Rebates must be provided by Sept. 30 following the end of the MLR reporting year.

Employers that receive MLR rebates should review the rebate rules and decide how they will administer the rebates. Any rebate amount that qualifies as a “plan asset” under ERISA must be used for the exclusive benefit of the plan’s participants and beneficiaries. Also, employers should use this portion of the rebate within three months of its receipt to avoid ERISA’s trust requirements.


The ACA requires health insurers to spend a minimum percentage of their premium dollars on medical care and health care quality improvement. This percentage is:

  • 85% for issuers in the large group market; and
  • 80% for issuers in the small and individual group markets.

States may set higher MLR standards than the federal 80-85% thresholds.


  • Issuers must report their MLR data to HHS by July 31 following the end of an MLR reporting year.
  • Rebates must be provided by Sept. 30 following the end of the MLR reporting year.
  • In general, any rebate amount that qualifies as a plan asset under ERISA must be used within three months of receiving it.


  • HHS issued interim final rules implementing the MLR requirements in December 2010.
  • The Department of Labor (DOL) issued Technical Release 2011-4 (TR 2011-4) to explain how ERISA’s fiduciary duty and plan asset rules apply to MLR rebates.

Click to download the full Compliance Bulletin.