Updated November 2026. A medical loss ratio (MLR) rebate is money a health insurer must return to customers when it spends too little of their premiums on medical care. Under the Affordable Care Act, insurers selling individual and small group plans must spend at least 80% of premium dollars on claims and quality improvement, and large group insurers at least 85%. Insurers that fall short owe the difference back, by September 30 each year.
Insurers paid $1.64 billion in rebates to 8.56 million people in 2025, based on the 2024 reporting year, an average of $192 each, according to Centers for Medicare & Medicaid Services (CMS) data. Since the rule took effect in 2012, rebates have totaled about $15.1 billion, according to KFF.
How the 80/20 Rule Works
| Market | Minimum share of premium spent on care and quality | Maximum for administration and profit |
|---|---|---|
| Individual | 80% | 20% |
| Small group (usually 1 to 50 employees) | 80% | 20% |
| Large group | 85% | 15% |
The calculation uses a three-year average, so rebates paid in 2026 reflect insurers’ results for 2023 through 2025. Taxes, licensing fees and certain quality improvement costs are deducted from premiums before the ratio is figured, and small insurers get a credibility adjustment.
Recent Rebates by Market
| Market | Rebates paid in 2025 | People receiving | Average per person |
|---|---|---|---|
| Individual | $1.18 billion | 5.06 million | $233 |
| Small group | $274 million | 1.44 million | $190 |
| Large group | $186 million | 2.05 million | $91 |
| Total | $1.64 billion | 8.56 million | $192 |
Rebates paid in fall 2026 are much smaller. KFF’s preliminary estimate, based on insurer filings, is about $759 million (KFF). CMS has not yet posted its final 2025 reporting year totals. Rebates swing with medical costs: they peaked at $2.5 billion in 2020, when the pandemic suppressed care, and shrink when claims run high.
How Rebates Are Paid
- Individual market: insurers pay you directly, as a premium credit, a check or a refund to the card or account you used to pay premiums.
- Employer plans: the rebate goes to the employer, which must share it with workers in proportion to what they paid toward premiums, often as a premium holiday or reduced contributions.
- Timing: rebates are due by September 30 following the reporting year, with a notice explaining the payment.
Self-funded and level-funded employer plans are not insured products, so the MLR rule does not apply to them; see our guide to self-funded and level-funded plans.
What MLR Rebates Tell You About an Insurer
A rebate means the insurer priced premiums above what care actually cost in that market and state. Repeated rebates in the same market can signal room for lower premiums in future filings, which state regulators can use in rate review. A low MLR in a market without a rebate can also come from the three-year average smoothing a single profitable year.
The rule has critics on both sides. Insurers argue it discourages spending on administration that can reduce fraud. Consumer advocates note that insurers can raise their ratio by paying more to their own affiliated providers and pharmacies, which large vertically integrated companies own.
How To Check Whether Your Insurer Owes a Rebate
- Look for a rebate notice from your insurer each fall.
- Search the CMS MLR data files, which list insurers owing refunds by state and market.
- If you get coverage through work, ask HR how the rebate was applied.
- If you have moved or changed plans, confirm the insurer has your current address.
For insurer rankings on a different measure, see our claim denial rates by insurer, and our List of Health Insurance Companies.
Sources
CMS, Medical Loss Ratio Data and System Resources, including Refunds by State and Market for 2024; 45 CFR Part 158; KFF, Medical Loss Ratio Rebates (2026).