80% Rule

The 80/20 rule, also known as the “Medical Loss Ratio” or “MLR,” means that insurance companies must spend at least 80% of the money they take from healthcare premiums on medical costs (such as medical claims) and for activities that improve your quality of care.

This leaves the remaining 20% for things such as overhead costs for the company.

If an insurance company does not hit its 80% target, you may get back some of the money you spent on your healthcare premium that year.

The 80/20 rule does not apply if the insurance company has fewer than 1,000 enrollees in a particular market.