An MLR is the percentage of each health care premium dollar used to pay for clinical services and activities that improve the health care quality provided to enrollees (your clients’ employees and their dependents). For example, an MLR of 80 percent means that an insurer spends 80 cents of every premium dollar to pay for clinical services and activities that improve the health care quality for enrollees.
The group-size information is used to classify groups appropriately under the MLR rules established by the federal ACA. The MLR percentage thresholds vary, so it is very important that affected customers are reported correctly. Failure to submit this information could result in misreporting to the U.S. Department of Health and Human Services (HHS) and could affect any potential MLR rebates for your clients and their employees.
The federal definition of an employee is any person for which an employer issues a W-2 form (including full-time, part-time or seasonal employees), regardless of whether or not the employee has medical coverage through the employer.
Note: The federal definition of an employee is different from the New Jersey state definition. New Jersey defines employees for MLR purposes as the number of employees eligible for health coverage from the employer. New Jersey’s definition excludes part-time employees, seasonal employees and any other employees not eligible for health coverage under the group’s rules.