What must insurers with a low Medical Loss Ratio (MLR) issue to enrollees?

Insurers with a low Medical Loss Ratio (MLR) are required to issue refunds to their enrollees. The MLR is a measure that indicates the percentage of premium dollars that an insurance company spends on medical care and health services for its members, as opposed to administrative costs or profits. Under the Affordable Care Act (ACA), insurers must spend a minimum percentage of premiums on medical care; if they fall below this threshold, they must compensate by refunding the difference to their policyholders.

The rationale for this requirement is to ensure that consumers receive value for their premiums, promoting transparency and accountability within the insurance industry. This policy is intended to protect enrollees by making sure a significant portion of their premium payments is used for actual healthcare services rather than excessive overhead or profits. Thus, when an insurer's MLR is low, issuing refunds serves as a corrective measure that aligns with regulatory standards designed to maintain fair practices in health insurance.