Section 2718(b) of the Public Health Service Act, as added by the Patient Protection and Affordable Care Act (PPACA), requires health insurance issuers to provide rebates to enrollees when the issuer’s medical loss ratio does not exceed 85% for the large group insured market and 80% for the individual and small group insured markets. This requirement is effective beginning in 2011, with rebates first payable in 2012.

This report examines the 2010 preliminary medical loss ratios of health insurance issuers, including the allowable adjustments in the medical loss ratio calculation, and presents illustrative rebate estimates based upon 2010 experience.