Glossary · Benefits
MLR (Medical Loss Ratio)
The percentage of health-insurance premiums spent on medical claims and quality improvement, as opposed to administration and profit.
The Medical Loss Ratio (MLR) is a regulatory metric established by the Affordable Care Act. Insurers in the small-group market must spend at least 80% of premium on medical claims and quality activities (85% in the large-group market) or rebate the difference.
MLR is relevant to PEO benefits comparisons because PEO master health plans are typically structured as large-group plans, which carry the higher 85% MLR threshold and different rating rules than small-group ACA plans.
Related terms
- Master Health PlanA single health insurance plan sponsored by a PEO that aggregates risk and purchasing power across all of its client employers.
- ACA (Affordable Care Act)Federal law governing employer-sponsored health coverage, including employer-mandate, reporting (1094/1095), and minimum-essential-coverage requirements.
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