The ACA caps how much of your premium dollar an insurer can keep for overhead and profit — spend too little on actual care and the insurer owes policyholders a rebate.
How it works
Multiplying premium revenue by the applicable threshold (80% for individual/small group, 85% for large group) gives the required spend on claims and quality improvement; falling short of that spend produces a rebate equal to the shortfall.
What this does not include
This does not include the three-year rolling average insurers actually use to calculate MLR compliance, or the distinction between fully-insured plans (subject to this rule) and self-funded employer plans (which are not).
How to use this calculator
- Enter total premium revenue, spending on claims and quality improvement, and the market type.
Frequently asked questions
Who actually receives the rebate?
It depends on the market — individual market rebates typically go to the policyholder directly, while group market rebates often go to the employer, who may need to share a portion with employees.
Why is the large group threshold higher than individual/small group?
Large group plans generally have lower administrative costs per member, so regulators set a stricter (higher) required claims-spending share for that market.
Does a rebate mean the insurer did something wrong?
Not necessarily — it can simply reflect a year with lower-than-expected claims, which under the MLR rule must be shared back with policyholders rather than kept entirely as profit.
