Medical Loss Ratio (MLR)

Medical Loss Ratio (MLR) is the percentage of an insurance company's premium revenue that is actually spent on paying for healthcare services and medical claims for policyholders, rather than administrative costs or profits. A higher MLR indicates the insurer is dedicating more of your premium dollars directly to healthcare, which is generally seen as better value for consumers. For example, an MLR of 80% means that 80 cents of every dollar collected go toward health care, while the remaining 20% covers expenses and profit. Regulations often require insurers to maintain a minimum MLR to ensure sufficient spending on medical care.