Medical Loss Ratio Model Regulation

What this document is

Medical Loss Ratio Model Regulation (ACA Section 2718) is a naic model law published by National Association of Insurance Commissioners (NAIC). It is one of the documents that insurance license exam questions are written from, including life & health practice questions. This page summarizes it and points to the official version, which is the text to rely on.

Sections cited in practice questions

Each practice answer shows the exact passage it comes from. These are sections of this document that questions cite, with a short excerpt from the source text.

• NAIC Medical Loss Ratio Model Regulation § 4, Applicability and Scope

  “The provisions of this Regulation concerning the calculation and payment of medical loss ratio rebates shall apply to any health insurance issuer offering group or individual health insurance coverage (including a grandfathered health plan) as provided for in Section 2718 of the PHSA for plan years 2011, 2012 and 2013.”

• NAIC Medical Loss Ratio Model Regulation, Section 3A(3) (definition of earned premium)

  ““Earned premium” means the statutory accounting definition for premium for health insurance coverage on a direct basis as contained in the then current NAIC Accounting Practices and Procedures Manual, plus or minus any portions of premium associated with group conversion privileges the issuer...”

• NAIC Medical Loss Ratio Model Regulation § 8A, non-credible aggregations

  “A rebate is not payable for any aggregation that is non-credible based on plan year 2011 life years.”

• NAIC Medical Loss Ratio Model Regulation, Appendix C, Part 3, Quality Improvement expenses general definition

  “Quality Improvement (QI) expenses are expenses, other than those billed or allocated by a provider for care delivery (i.e., clinical or claims costs), for all plan activities that are designed to improve health care quality and increase the likelihood of desired health outcomes in ways that are...”

• NAIC Medical Loss Ratio Model Regulation, Appendix C, Part 3, Improving Health Care Quality Expenses general definition

  “They should not be designed primarily to control or contain cost, although they may have cost reducing or cost neutral benefits as long as the primary focus is to improve quality.”

• NAIC Medical Loss Ratio Model Regulation § 6D, timing of rebate payments

  “Rebates shall be paid annually by June 30 of the year following the plan year.”

• NAIC Medical Loss Ratio Model Regulation § 8C, medical loss ratio numerator

  “The numerator used to determine the medical loss ratio for the plan year is calculated as incurred claims plus any expenses to improve health care quality.”

• NAIC Medical Loss Ratio Model Regulation Appendix C, Expenses to Improve Health Care Quality (definition incorporated by § 3A(4))

  “NOTE: Expenses which otherwise meet the definitions for QI but which were paid for with grant money or other funding separate from premium revenues shall NOT be included in QI expenses.”

• NAIC Medical Loss Ratio Model Regulation §§ 8I and 8J(1), rebate calculation

  “The credibility-adjusted medical loss ratio is subtracted from the applicable minimum medical loss ratio standard (individual, small group or large group). J. (1) If the result of I is greater than zero, this number is rounded to the nearer one-tenth of one percentage point and multiplied by the...”

• NAIC Medical Loss Ratio Model Regulation § 5.A (levels of aggregation and allocation of experience)

  “A. Medical loss ratios shall be calculated at the licensed entity level within a state, with experience allocated to states based on the situs of the contract, except that for individual business sold through an association, the allocation shall be based on the issue state of the certificate of...”

• NAIC Medical Loss Ratio Model Regulation § 8.H (credibility-adjusted medical loss ratio)

  “H. The credibility-adjusted medical loss ratio is calculated as the unrounded sum of the medical loss ratio calculated in G and any applicable credibility adjustment.”

• NAIC Medical Loss Ratio Model Regulation § 7.A(2)(b) (Table 2 factor and the default value)

  “(b) The Table 2 factor may be determined using the plan year 2011 average plan deductible, weighted by life years, for the aggregation. The Table 2 factor for a value that is between two deductible categories is calculated by linearly interpolating the value between the lower and upper deductible...”

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