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Health Insurance Glossary

Definitions for common health insurance terms

medical loss ratio

DEFINITION: Obamacare requires health insurance carriers to spend the bulk of the premiums they collect on medical expenses for their insureds.  Individual and small-group carriers must spend at least 80 percent of premiums on medical expenses, and for large-group plans the requirement is 85 percent.

Profits and administrative expenses can make up no more than 20 percent (15 percent for large groups) of premiums collected.  If administrative expenses exceed those amounts, they must remit refunds to their insureds.