Third Party Payers Practice Test

Since 2014, plans report their MLRs and are subject to penalties if their MLRs do not meet the ____% requirements.

85% 80% 90% 75%

Correct Answer:

85%

Explanation:

The key idea is that medical loss ratio (MLR) sets a minimum share of premium dollars that must go toward medical care and quality improvement, not administrative costs or profits. Since the Affordable Care Act, plans in the large-group market must meet an 85% MLR; if they don’t, they have to issue rebates to enrollees and may face penalties. This threshold is the one addressed by the question, which is why 85% is the correct standard to reference for penalties in this context. For contrast, the 80% threshold applies to the individual and small-group markets, but the question’s focus on penalties in this setting points to the 85% requirement for large groups.

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