Annual MLR Report

CENTERS FOR MEDICARE & MEDICAID SERVICES (CMS)
MEDICAL LOSS RATIO (MLR) ANNUAL REPORTING FORM
FILING INSTRUCTIONS FOR ALL PARTS

Table of Contents
INSTRUCTIONS FOR THE 2011 MLR REPORTING YEAR ONLY ........................................................................................ 2
INSTRUCTIONS FOR MLR ANNUAL REPORTING FORM - PART 1 ................................................................................. 10
INSTRUCTIONS FOR MLR ANNUAL REPORTING FORM - PART 2 ................................................................................. 18
INSTRUCTIONS FOR MLR ANNUAL REPORTING FORM - PART 3 ................................................................................. 27
INSTRUCTIONS FOR MLR ANNUAL REPORTING FORM - PART 4 ................................................................................. 34
INSTRUCTIONS FOR MLR ANNUAL REPORTING FORM - PART 5 ................................................................................. 36
INSTRUCTIONS FOR MLR ANNUAL REPORTING FORM - PART 6 ................................................................................. 40

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INSTRUCTIONS FOR THE 2011 MLR REPORTING YEAR ONLY
This filing is the report to the Secretary required by section 2718 of the Public Health Service Act (PHS
Act), including the elements that make up the medical loss ratio and calculation and provision of rebates
to enrollees. The numbers included in this MLR Annual Reporting Form (MLR Form) are the exact
numbers that will be used to calculate an issuer’s medical loss ratio (MLR) and rebates, if any, under
section 2718 of the PHS Act and the implementing regulation, codified at 45 CFR Part 158.
The MLR implementing regulations can be found at:
http://cciio.cms.gov/resources/regulations/index.html#mlr.
The annual MLR reporting form Filing Instructions only apply to the 2011 MLR Reporting Year and its
reporting requirements. These Filing Instructions will be revised to reflect changes that apply to the filing
years subsequent to 2011. Filing will require a one-time registration, by the issuer, with the CMS Health
Insurance Oversight System (HIOS) to submit its report to the Secretary.
References are made in these instructions to the National Association of Insurance Commissioners
(NAIC) Statements of Statutory Accounting Principles (SSAP) as of March 2011 and Supplemental
Health Care Exhibit (SHCE) as adopted June 30, 2011, filed by many issuers with the NAIC. These
references are solely for the convenience of the filer in identifying the information needed for this MLR
Form.
These Filing Instructions are to be used in completing the MLR Form by all health insurance issuers
(issuers) offering health insurance coverage subject to section 2718 of the PHS Act and the MLR
implementing regulations. All terms used in these Filing Instructions that are not defined here have the
meaning used in 45 CFR Part 158 and the PHS Act.
The term “health insurance coverage” means benefits consisting of medical care (provided directly,
through insurance or reimbursement, or otherwise and including items and services paid for as medical
care) under any hospital or medical service policy or certificate, hospital or medical service plan contract,
or health maintenance organization contract offered by a health insurance issuer. The definition includes
any insurance product, such as drug, chiropractic, or mental health coverage, whether sold as a standalone product or in conjunction with any other health insurance coverage, unless specifically identified as
“excepted benefits” by the PHS Act.
An MLR Form must be prepared and submitted for each State in which the issuer has written direct health
insurance coverage or has direct amounts paid, incurred or unpaid for the provision of health care
services. (Note: The experience of expatriate plans is aggregated on a national basis and should be
reported on the “Grand Total” MLR Form for each issuer.) In addition, a schedule must be prepared and
submitted that contains the grand total (GT) for the issuer. An issuer required to file the MLR Form must
complete Parts 1 and 2 for each State in which the issuer provides any health insurance coverage, even if a
particular State will show $0 earned premium in Part 1 (see the 2% instruction below). Also, Parts 3
through 6 must be completed for any State in which there are non-zero amounts in Part 1.

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Note: The MLR Form is an excel workbook that contains many calculated fields based on the
information inputted into the data fields by the issuer. Calculated cells or cells not requiring any data
input for the MLR Reporting Year, have been shaded and a key provided on each tab within the
workbook for further clarification. This workbook includes calculations for any credibility adjustment
based on an issuer’s life-years and average deductible.
The various “Parts” of the MLR Form contain calculated fields, which will assist in reducing data input
for the various elements required in the reporting form. Many of the fields within Part 1 of the MLR
Form copy over calculated information from data that are entered into Part 2 and Part 3.
(Recommendation: Begin inputting data into Part 2 and Part 3, prior to completing Part 1.) Once the
information has been inputted into the cells not shaded in Part 2, Part 3, Part 1 and Part 5, the MLR and
Rebate Calculation – Part 5 will automatically calculate the issuer’s MLR and rebate for each market in
each State.
Reinsurance
Experience under a 100% assumption reinsurance agreement (with a novation) must be reported by the
assuming issuer for the entire MLR reporting year during which the policies are assumed and must not
be reported by the ceding issuer.
Reporting of 100% indemnity reinsurance and administrative agreements is limited to only those
agreements both entered into and effective prior to March 23, 2010, where the assuming entity is
responsible for 100% of the ceding entity’s financial risk and takes on all of the administration of the
block of business. Experience under those indemnity reinsurance and administrative agreements must
be reported by the assuming issuer and must not be reported by the ceding issuer.

Aggregate 2% Rule
If the issuer’s total earned premium for health insurance coverage in the individual, small group
and large group markets, including any active and credible “mini-med” policies for a particular
State, is less than 2% of its total health earned premium for that State, the issuer may choose to not
complete Columns 32 and 33 of Parts 1 and 2 for that State, and instead combine Government
Program Plans and Other Health Business experience (Columns 32 and 33) in Column 34 of Parts
1 and 2.
Deferred Business
If, for any aggregation as defined in 45 CFR §158.120, 50% or more of the total earned premium
for an MLR reporting year is attributable to newly issued policies with less than 12 months of
experience in that MLR reporting year, then the experience of these policies may be deferred, at
the option of the issuer. If an issuer defers the reporting of newer business as provided in this
paragraph, then the experience of such policies must be excluded from the MLR reporting year in
which it occurred and must be added to the experience reported in the following MLR reporting
year.
Allocation of Expenses
Each expense must be reported under only one type of expense, unless a portion of the expense fits
under the definition of or criteria for one type of expense and the remainder fits into a different
type of expense, in which case the expense must be pro-rated between the two (or more) types of
expenses. Expenditures that benefit more than one affiliate may be allocated, on a pro rata basis,
between the affiliates that benefit from these expenditures. Expenditures that benefit all lines of
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business or products, including but not limited to those that are for or benefit self-funded plans,
must be reported on a pro rata basis.
Aggregation of Experience
An issuer’s experience, aggregated by individual, small group and large group markets, with respect to
each policy must be included on the report submitted with respect to the State where the policy was
issued, except as specified below.
Group Coverage in Multiple States:
Group coverage issued by a single issuer to an employer that covers employees in multiple States
must be reported for the State where the contract is sitused. Situs of the contract is the jurisdiction
in which the contract is issued or delivered, as stated in the contract.
Dual-Contract Group Health Coverage:
If an issuer has a group health plan which provides coverage for in-network coverage only and an
affiliate issuer provides only out-of-network coverage solely for the purpose of providing a group
health plan that offers both in-network and out-of-network benefits, the issuer may choose to treat
the out-of-network experience of the affiliate that provides the out-of-network coverage as if it
were related to the contract providing the in-network coverage. If an issuer chooses this method
of aggregation, it must do so for a minimum of three consecutive reporting years and the affiliate
that provides the out-of-network coverage must not report this experience. After an issuer applies
this method for the initial three consecutive reporting years, the issuer may either continue to
apply this method for any number of additional consecutive reporting years, or may choose to
discontinue applying this method. Affiliated issuers that choose to make such an adjustment must
do so for all policies with blended rates in the applicable State market.
Individual Business through an Association:
For individual business sold through an association, the issuer shall include the experience in the
State report for the issue State of the certificate of coverage.
Employer Business through Group Trust, Association or MEWA:
For employer business issued through a group trust, the issuer shall include the experience in the
State report for the State where the employer has its principal place of business or where the trust
is located. For employer business issued through a multiple employer welfare association
(MEWA), the issuer shall include the experience in the State report for the State where the
employer or MEWA has its principal place of business. For employer business issued through an
association, experience with respect to each employer shall be reported as large group or small
group based on the size of each employer and be reported in each State based upon the
aggregation rules for employer based insurance.
The large group and small group markets are defined as those where health insurance coverage is obtained
by a large or small employer, respectively. Large employer and small employer are defined by the number
of employees employed; a small employer has 1 to 100 employees, but a State may substitute “50”
employees for “100” employees until 2016. A sole proprietor or a sole proprietor’s spouse is not
considered a group of one. An employer’s number of employees is determined by averaging the total
number of all employees employed on business days during the preceding calendar year. This includes
each full-time, part-time and seasonal employee.

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An issuer must report on this MLR Form only the business issued by the reporting entity. Business that is
written by an unaffiliated entity as part of a package provided to the enrollee (e.g., inpatient coverage
written by the reporting entity, outpatient coverage written by an unaffiliated separate entity) must not be
included in this MLR Form.
Health Insurance Coverage:
Do not include health insurance coverage specifically not subject to section 2718 of the PHS Act, such as
government-sponsored programs, (e.g., Medicare (Title XVIII, including Medicare Advantage), Medicaid
(Title XIX), State Children’s Health Insurance Program (SCHIP) (Title XXI), and other Federal or State
government-sponsored coverage (other than the Federal Employees Health Benefits Program or State
government sponsored coverage for State employees or retirees), or uninsured business. Stop (or excess)
loss coverage for self insured groups should be reported in Parts 1 and 2 – Other Health Business
(business excluded by statute).

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COLUMN DEFINITIONS FOR MEDICAL LOSS RATIO ANNUAL REPORTING FORM–
PARTS 1 AND 2
The annual MLR reporting form Filing Instructions only apply to the 2011 MLR Reporting Year and its
reporting requirements. These Filing Instructions will be revised to reflect changes that apply to the filing
years subsequent to 2011.
Health insurance coverage, Columns 1 through 31, includes policies that provide medical coverage,
including office visits, hospital, surgical and major medical (illness and injury). Include risk contracts and
the Federal Employees Health Benefit Plan (FEHBP). Exclude mini-med plans and expatriate plans from
Columns 1 through 15, as they are reported separately (Columns 16-21 and 22-31, respectively).
Do not include in Columns 1-31 business specifically included in Columns 32-35 (e.g., uninsured or selffunded business, Medicare (Title XVIII, including Medicare Advantage), Medicaid (Title XIX), vision
only, dental only, State Children’s Health Insurance Program (SCHIP) (Title XXI), other Federal or State
government-sponsored coverage (other than the Federal Employees Health Benefits Program or State
government sponsored coverage for State employees or retirees), and short-term, limited duration
insurance as further defined in the PHS Act). The experience for pharmacy, chiropractic, or mental health
coverage, whether sold as a stand-alone product or in conjunction with any other health insurance
coverage, should be reported with the health insurance coverage for the applicable market, as these are not
“excepted benefits” under the PHS Act.
The experience of stop loss or excess of loss coverage for self-funded groups should be reported in Parts 1
and 2, Column 33 – Other Health Business Plans (business excluded by statute). Column 33 includes
information reported in Columns 9 and 10 of the SHCE.

Columns 1, 6, 11, 16, 18, 20, 22, 27, 32, 33, 34, and 35 – Business as of 12/31 of the MLR reporting
year
Include:
Experience of policies in each of the relevant markets (individual market, small
group market, large group market, mini-med individual market, mini-med small group market,
mini-med large group market, expatriate small group market, or expatriate large group market) for
the MLR reporting year, as reported as of December 31, to the department of insurance in the
issuer’s State of domicile or as filed on the NAIC SHCE filing for the MLR reporting year
regardless of incurred date.
Columns 2, 7, 12, 17, 19, 21, 23, and 28 – Business as of 3/31 of subsequent MLR reporting year
Include:
Experience of policies in each market, incurred, paid or received relevant only to
the MLR reporting year, reported as of March 31 of the subsequent MLR reporting year.
For purposes of actuarial elements related to claims, the 3/31 column items should generally
follow the structure of amounts incurred in the MLR reporting year settled through 3/31 of the
following year (traditionally described as incurred 12 paid 15), plus any provision remaining as of
3/31 for items properly allocable to the prior period but not yet paid as of 3/31.

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Columns 3, 8, 13, 24, and 29 - Deferred Newer Business from prior MLR reporting year
(Not applicable to the 2011 MLR Reporting Year)
Include:
Beginning with the 2012 MLR Reporting Year, experience from policies for the
relevant market newly issued in the prior MLR reporting year, previously deferred, as provided in
the Preliminary Instructions.
Columns 4, 9, 14, 25, and 30 - Deferred Newer Business for the MLR reporting year
Include:
Policies for the relevant market newly issued in the MLR reporting year, as defined
more specifically in the Preliminary Instructions, deferred for reporting purposes at the issuer’s
option.

Columns 1 – 5

Individual Market

Include:
Health insurance where the policy is issued to an individual covering the individual
and his or her dependents in the individual market.
Exclude:

Policies reported in other columns

Column 1- 4

See instructions for these columns, above

Column 5 –

Total for the MLR reporting year as of 3/31/YY. (Col 2 + Col 3 – Col 4)

Columns 6 – 10

Small Group Market

Include:

All policies issued in the small group market (including fully insured State and
local government policies)

Exclude:

Policies reported in other columns

Columns 6 – 9 See instructions for these columns, above
Column 10 – Total for the MLR reporting year as of 3/31/YY. (Col 7 + Col 8 – Col 9)

Columns 11 – 15

Large Group Market

Include:
All policies issued in the large group market (including the Federal Employees
Health Benefit Program and fully insured State and local government policies)
Exclude:

Policies reported in other columns

Columns 11 –14 See instructions for these columns, above
Column 15 – Total for the MLR reporting year as of 3/31/YY. (Col 12 + Col 13 – Col 14)

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Columns 16 – 21

Mini-med Plans

Include:
All policies that have a total annual limit of $250,000 or less for individual, small
group and large group markets, in their respective columns.
Exclude:

Policies reported in other columns

Columns 16 - 21 See instructions for these columns, above

Columns 22 - 31

Expatriate Plans (Report separately (on the ‘Grand Total’ page) from other health
insurance coverage business)

Include:
All group policies written in the United States that provide coverage for employees
working outside their country of citizenship; working outside of their country of citizenship and
outside the employer’s country of domicile; or non-U.S. citizens working in their home country.
These policies are to be reported on a nationwide, aggregated basis, separately for the small group
and the large group markets, in their respective columns for the MLR reporting year, as of March
31 of the subsequent year, on the Grand Total page of the MLR Form.
Exclude:

Policies reported in other columns

Columns 22 – 25 See instructions for these columns, above
Column 26 –

Total for the MLR reporting year as of 3/31/YY. (Col 23 + Col 24 – Col 25)

Columns 27 – 30 See instructions for these columns, above
Column 31 – Total for the MLR reporting year as of 3/31/YY. (Col 28 + Col 29 – Col 30)

Column 32

Government Program Plans (Excluded by Statute)

Include:
Government sponsored programs that are not subject to section 2718 of the PHS
Act, such as Medicare (Title XVIII, including Medicare Advantage), Medicaid (Title XIX), State
Children’s Health Insurance Program (SCHIP) (Title XXI), and other Federal or State
government-sponsored coverage (other than the Federal Employees Health Benefits Program or
State government sponsored coverage for State employees or retirees).
Report the experience of the issuer’s government program plans for the MLR reporting year as of
December 31, reported to the department of insurance in the issuer’s State of domicile or as filed
on the NAIC SHCE filing for the MLR reporting year.

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Column 33

Other Health Business (Not Subject to Section 2718 of the PHS Act)

Information reported here is similar to that reported in the SHCE Part 1 Columns 9 & 10.
Report health plan arrangements that are not group or individual health insurance coverage
provided by a health insurance issuer. Report all other health care business that is not reported in
Columns 1 through 32, including stand alone dental and vision coverage, long-term care, disability
income, etc.
Include:
Short-term, limited-duration insurance (as defined under 45 C.F.R. §144.103);
supplemental coverage if offered as a separate policy, certificate, or contract of insurance (45
C.F.R §146.145), including Medicare supplemental health insurance (as defined under section
1882(g)(1) of the Social Security Act), coverage supplemental to the coverage provided under
chapter 55 of title 10, United States Code, and similar supplemental coverage provided under a
group health plan; hospital or other fixed indemnity insurance, and specified disease or illness
coverage if offered under a separate policy, certificate, or contract of insurance (45 C.F.R.
§146.145), and other “excepted benefits” as specified by regulations promulgated by HHS (45
C.F.R §146.145). The experience for pharmacy, chiropractic, or mental health coverage, whether
sold as a stand-alone product or in conjunction with any other health insurance coverage, should
be reported with the health insurance coverage for the applicable market, as these are not
“excepted benefits” under the PHS Act.
Report the experience of the issuer’s Other Business for the MLR reporting year as of December
31, as reported to the department of insurance in the issuer’s State of domicile or as filed on the
NAIC SHCE filing for the MLR reporting year.
Column 34

2% Aggregate Rule

Include:
Experience otherwise reportable in Columns 32 – 33, if issuer’s total earned
premium on health insurance coverage and “mini-med” experience (Columns 1, 6, 11, 16, 18, and
20) for a particular State is less than 2% of its total health earned premium for that State (Columns
1, 6, 11, 16, 18, 20, 32, and 33). See Preliminary Instructions, above.
Column 35

Uninsured (Self Funded) Plans

Include:
Plans for which a reporting entity, as an administrator, performs administrative
services such as claims processing for an employer that is at risk, and accordingly, the
administrator has not issued an insurance policy.
Report the experience of the issuer’s Uninsured (Self Funded) Plans for the MLR reporting year as
of December 31, as reported to the department of insurance in the issuer’s State of domicile or as
filed on the NAIC SHCE filing for the MLR reporting year.

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INSTRUCTIONS FOR MLR ANNUAL REPORTING FORM - PART 1
(Data Development – Summary)
The annual MLR reporting form Filing Instructions only apply to the 2011 MLR Reporting Year and its
reporting requirements. These Filing Instructions will be revised to reflect changes that apply to the filing
years subsequent to 2011.
In addition to the instructions below, the Preliminary Instructions and Column Definitions at the
beginning of these Filing Instructions also apply to this Part 1. The Preliminary Instructions and Column
Definitions include instructions regarding reporting of reinsurance, assumed and ceded insurance,
deferred business, individual business through an association, employer business through a group trust or
MEWA, group coverage in multiple states, and dual contract group health coverage.
Please note that the MLR Form and Filing Instructions implement the requirements of 45 CFR Part 158
and are not identical to the definitions or instructions of the NAIC’s SHCE.

Line 1 – Premium:
Line 1.1 – Total direct premium earned (from MLR Form, Part 2 Line 1.11)
Line 1.2 - Federal high risk pools
Enter subsidies received or (assessments paid) under Federal high risk pools
Line 1.3 – State high risk pools
Enter subsidies received or (assessments paid) under State high risk pools
Exclude: Amounts included in Part 1 Line 2.4.
Line 1.4 – Premium earned including State and Federal high risk programs
(Lines 1.1 + 1.2 + 1.3)
Line 1.5 – Net assumed less ceded reinsurance premiums earned
The amount to net against the assumed reinsurance premiums earned is: the ceded
reinsurance premiums written; plus the change in unearned premium reserve that is
transferred to the company assuming the risk; plus the change in reserve credit taken
other than for unearned premiums.
Line 1.6 – Other adjustments due to MLR calculations – premiums
Include: Any amounts excluded from premium for MLR calculation purposes that are
normally included in premiums for financial statement purposes.
Amounts for rate credits paid and the change in reserve for rate credits that were
excluded from Line 1.1 Total Direct Premiums Earned.
Line 1.7 – Risk revenue

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Include: Amounts charged by the reporting entity as a provider or intermediary for
specified medical services (e.g., full professional, dental, radiology, etc.) provided to
the policyholders or members of another issuer or reporting entity.
Unlike premiums that are collected from an employer group or individual member,
risk revenue is the prepaid (usually on a capitated basis) payment, made by another
insurer or reporting entity to the reporting issuer in exchange for services to be
provided or offered by such organization.
Line 1.8 – Premium earned including federal and state high risk programs net of reinsurance
(Lines 1.4 + 1.5 + 1.6 + 1.7)
Line 2 – Claims:
Line 2.1 – Adjusted incurred claims: (from MLR Form, Part 2, Lines 2.17 and 2.18)
Line 2.2 – Prescription drugs - (informational only; already included in line 2.1 above)
Include: Expenses for prescription drugs and other pharmacy benefits covered by the
reporting entity.
Exclude: Prescription drug charges that are included in a hospital billing which
should be classified as Hospital/Medical Benefits on line 2.1 above.
Line 2.3 – Pharmaceutical rebates - (informational only; already excluded in line 2.1 above)
Line 2.4 – State stop loss, market stabilization and claim/census based assessments
(Informational only; already excluded in line 2.1 above)
Adjustments that must be included in incurred claims:
• Market stabilization payments or receipts by issuers that are directly tied to
claims incurred and other claims-based or census-based assessments;
• State subsidies based on a stop-loss payment methodology.
Adjustments that must be either included in or deducted from incurred claims:
• Payment to and from unsubsidized State programs designed to address
distribution of health risks across issuers via charges to low risk issuers that
are distributed to high risk issuers must be included in or deducted from
incurred claims, as applicable.
Line 2.5 – Net assumed less ceded claims incurred
Assumed reinsurance claims paid; plus the change in the assumed reinsurance claims
liability and aggregate assumed reinsurance claims reserve; less the ceded
reinsurance claims paid; plus the change in the ceded reinsurance claims liability and
aggregate ceded reinsurance claims reserve; less the change in claims related
reinsurance recoverable.
Line 2.6 – Other adjustments due to MLR calculation – claims incurred

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Any amounts excluded from claims for MLR calculation purposes that are normally
included in claims for financial statement purposes. For example, premium deficiency
reserves are excluded from contract reserves for MLR purposes in Part 2; thus,
premium deficiency reserves would be included on this Line. Include the adjustment
for multi-option coverage amounts (if offsetting Part 2, Line 2.15; report as a negative
amount).
Line 2.7 – Rebates paid (Not applicable to the 2011 MLR Reporting Year)
MLR rebates paid during the MLR reporting year.
Line 2.8 – Estimated rebates unpaid at the end of the prior MLR reporting year.
Should equal Line 2.9 from the prior year.
Line 2.9 – Estimated rebates unpaid at the end of the MLR reporting year
MLR rebates estimated but unpaid as of the end of the MLR reporting year.
Line 2.10 – Fee-for-service and co-pay revenue (net of expenses)
Include: Revenue recognized by the issuer for collection of co-payments from
members and revenue derived from health services rendered by reporting entity
providers that are not included in member policies (generally only applicable to staffmodel HMOs).
Deduct:

Medical expenses associated with fee-for-service business.

Line 2.11 – Net incurred claims after reinsurance (Lines 2.1 + 2.5 + 2.6 + 2.7 – 2.8 + 2.9 – 2.10)

Line 3 – Federal and State Taxes and Licensing or Regulatory Fees
Line 3.1 – Federal taxes and assessments incurred by the reporting issuer during the MLR
reporting year
Include:
• All federal taxes and assessments allocated to health insurance coverage reported
under Section 2718 of the Public Health Service Act.
Exclude:
• Federal income taxes on investment income and capital gains;
• Fines and penalties of regulatory authorities, and fees for examinations by any
Federal departments other than as specified in 45 CFR §158.161(a) as other nonclaims costs, that are not included as an adjustment to premium revenue.
Line 3.2 – State insurance, premium and other taxes incurred by the reporting issuer during the
MLR reporting year.

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Include:
3.2a – State income, excise, business, and other taxes that may be excluded from earned
premium under 45 CFR §158.162(b)(1).
• Any industry wide (or subset) assessments (other than surcharges on specific
claims) paid to the State directly, or premium subsidies that are designed to cover
the costs of providing indigent care or other access to health care throughout the
State.
• Guaranty fund assessments
• Assessments of State industrial boards or other boards for operating expenses or for
benefits to sick employed persons in connection with disability benefit laws or
similar taxes levied by States
• Advertising required by law, regulation or ruling, except advertising associated
with investments
• State income, excise, and business taxes other than premium taxes
3.2b – State premium taxes
• State premium taxes or State taxes based on policy reserves if in lieu of premium
taxes
3.2c – Community Benefit Expenditures
For the 2011 MLR Reporting Year ONLY: Not-for-profit health issuers report one
of the following types of payments:
• Payments by a not-for-profit issuer to a State of premium tax exemption values in
lieu of State premium taxes, limited to the State premium tax rate applicable to forprofit entities subject to premium tax multiplied by the allocated premiums earned
for individual, small group and large group;
• Payments by a not-for-profit issuer for community benefit expenditures**
(described below in these Filing Instructions) if made pursuant to a State-based
requirement, limited to the State premium tax rate applicable to for-profit entities
subject to premium tax multiplied by the allocated premiums earned for individual,
small group, and large group;
• Payments by an issuer exempt from Federal income tax for community benefit
expenditures** (described below in these Filing Instructions), limited to the State
premium tax rate applicable to for-profit entities subject to premium tax multiplied
by the allocated premiums earned for individual, small group, and large group.
NOTE: These expenditures may not be reported multiple times or in multiple categories;
if reported in Line 3.2c, the Federal or State assessments may not be included in Lines 3.1,
3.2a, or 3.2b or in the Quality Improvement expenses reported in Lines 4.1 through 4.5.
**A deduction from premium for community benefit expenditures is available to a not-for-profit
issuer who is exempt from Federal or State taxes and assessments but is required to make
community benefit expenditures in lieu of taxes. Community benefit expenditures are for
activities or programs that seek to achieve the objectives of improving access to health services,
enhancing public health and relief of government burden. This includes activities that:
13

•
•
•
•
•

Are available broadly to the public and serve low-income consumers;
Reduce geographic, financial or cultural barriers to accessing health services, and if
ceased to exist would result in access problems (e.g., longer wait times or increased
travel distances);
Address federal, state or local public health priorities, such as advancing health care
knowledge through education or research that benefits the public;
Leverage or enhance public health department activities, such as childhood
immunization efforts; or
Otherwise would become the responsibility of government or another tax-exempt
organization.

Line 3.3 – Regulatory authority licenses and fees incurred by the reporting issuer during the MLR
reporting year.
Include: Statutory assessments to defray operating expenses of any State or Federal
regulatory department, and examination fees in lieu of premium taxes as specified by
State law.
Exclude: Fines and penalties of regulatory authorities, and any fees for examinations by
any State or Federal regulatory departments other than as specifically included in this
Line 3.3.
Line 3.4 – Total Federal and State taxes and fees to be excluded from Premium
(Lines 3.1 + 3.2a + Max (3.2b or 3.2c) + 3.3)
Line 4 - Health Care Quality Improvement Expenses Incurred
Line 4.1 – Improve Health Outcomes
Report the amount listed in the MLR Form, Part 3 Column 1 for each respective market.
Line 4.2 – Activities to Prevent Hospital Readmission
Report the amount listed in the MLR Form, Part 3 Column 2 for each respective market.
Line 4.3 – Improve Patient Safety and Reduce Medical Errors
Report the amount listed in the MLR Form, Part 3 Column 3 for each respective market.
Line 4.4 – Wellness and Health Promotion Activities
Report the amount listed in the MLR Form, Part 3 Column 4 for each respective market.
Line 4.5 – Health Information Technology (HIT) expenses related to improving health care quality
Report the amount listed in the MLR Form, Part 3 Column 5 for each respective market.
Line 4.6 – Total Health Care Quality Improvement Expenses Incurred (Lines 4.1 + 4.2 + 4.3 + 4.4
+ 4.5)
Line 5 – Non-Claims Costs

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Line 5.1 – Cost Containment expenses not included in quality improvement expenses on Line 4.6
Report the amount listed on the MLR Form, Part 3 Column 6 for each respective market.
Line 5.2 – All other claims adjustment expenses:
Report the amount listed on the MLR Form, Part 3 Column 7 for each respective market.
Line 5.3 – Direct sales salaries and benefits
Include compensation (including but not limited to salary and benefits) to employees
engaged in soliciting and generating sales to policyholders for the issuer.
Line 5.4 – Agents and brokers fees and commissions
All expenses incurred by the issuer payable to a licensed agent, broker, or producer who is
not an employee of the issuer in relation to the sale and solicitation of policies for the
company.
Line 5.5 – Other taxes
Line 5.5a – State taxes and assessments not excluded from premium under 45 CFR
§158.162(b)(2). (Not included in Line 3.2)
Include:
• State sales taxes if the issuer does not exercise the option of including such
taxes with the cost of goods sold and services purchased;
• Any portion of commissions or allowances on reinsurance assumed that
represent specific reimbursement of premium taxes;
• Any portion of commissions or allowances on reinsurance ceded that represents
specific reimbursement of premium taxes;
Line 5.5b – Report fines and penalties of regulatory authorities, and fees for examinations
by any State or Federal departments other than those included in Line 3.3, above.
Line 5.6 – Other general and administrative expenses
General and Administrative Expenses not Included in Line 4.6, Line 5.1 or Line 5.2
Line 5.7 – Community benefit expenditures
Report all community benefit expenditures not including those reported in Line 3.2c.
Line 5.8 – Total non-claims costs (Lines 5.1 + 5.2 + 5.3 + 5.4 + 5.5a + 5.5b + 5.6 + 5.7)
Line 5.9 – ICD-10 Implementation expenses (already included in line 5.6; informational for 2011)
Line 6 – Pre-tax underwriting gain/(loss) as of 12/31/XX (Lines 1.8 – 2.11 – 4.6 – 5.8 + 5.5a + 5.5b –
Part 2 Line 2.16)
Line 7 – Income from fees on uninsured plans
Line 8 – Net investment income and other gain/ (loss)
Line 9 – Other Federal income taxes not included on line 3.1 above.

15

Include:
Federal income taxes on investment income and capital gains

Line 10 – After-tax net gain/(loss) as of 12/31/XX (Lines 1.8 – 2.11 – 3.4 – 4.6 – 5.8 + 7 + 8 – 9)

16

OTHER INDICATORS OR INFORMATION
Data reported should be allocated to each State and market (e.g., individual, small group, large group) in
the same manner as premium. See the MLR Form Filing Instructions, Preliminary Instructions.
Line 11.1 – Number of Policies / Certificates
This is the number of individual policies (for individual business) or certificates issued to
individuals covered under a group policy in force as of the last day of the reporting period. It is not
the number of persons covered under individual policies or group certificates. Reasonable
approximations are allowed when exact information is not available to the issuer for group
business.
Line 11.2 – Number of Covered Lives
This is the total number of lives insured, including dependents, under individual policies and
under group certificates as of the last day of the reporting period. Reasonable approximations are
allowed when exact information is not available to the issuer.
Line 11.3 – Number of Groups
This is the total number of groups insured as of the last day of the reporting period.
Line 11.4 – Member Months
The sum total number of lives insured on a pre-specified day of each month of the reporting
period. Reasonable approximations are allowed when exact information is not available to the
issuer.
Line 11.5 – Number of Life-Years
The number of member months divided by 12.

17

INSTRUCTIONS FOR MLR ANNUAL REPORTING FORM - PART 2
(Data Development - Premium and Claims)
The annual MLR reporting form Filing Instructions only apply to the 2011 MLR Reporting Year and its
reporting requirements. These Filing Instructions will be revised to reflect changes that apply to the filing
years subsequent to 2011.
In addition to the instructions below, the Preliminary Instructions and Column Definitions at the
beginning of these Filing Instructions also apply to this Part 2. The Preliminary Instructions and Column
Definitions include instructions regarding reporting of reinsurance, assumed and ceded insurance,
deferred business, individual business through an association, employer business through a group trust or
MEWA, group coverage in multiple states, and dual contract group health coverage.
Please note that the MLR Form and Filing Instructions implement the requirements of 45 CFR Part 158
and are not identical to the definitions or instructions of the NAIC’s SHCE.
SECTION 1 – HEALTH PREMIUMS EARNED
Earned premium means all monies paid by a policyholder or subscriber as a condition of receiving
coverage from the issuer, including any fees or other contributions associated with the health plan and
reported on a direct basis.
Line 1.1 – Direct premium written
Include:
 Premium assumed under a 100% assumption reinsurance agreement (treated as a
novation) must be reported by the assuming issuer for the entire MLR reporting year
during which the policies are assumed and must not be reported by the ceding issuer.
 Premium assumed under a 100% indemnity reinsurance and administrative agreement,
limited to only those agreements both entered into and effective prior to March 23, 2010,
where the assuming entity is responsible for 100% of the ceding entity’s financial risk
and takes on all of the administration of the block of business.
Exclude:
 Premium ceded under a 100% assumption reinsurance agreement (treated as a novation)
must be reported by the assuming issuer for the entire MLR reporting year during which
the policies are assumed and must not be reported by the ceding issuer.
• Premium ceded under a 100% indemnity reinsurance and administrative agreement,
limited to only those agreements both entered into and effective prior to March 23, 2010,
where the assuming entity is responsible for 100% of the ceding entity’s financial risk
and takes on all of the administration of the block of business.
• Assessments paid to or subsidies received from State and Federal high risk pools;
• Amounts for rate credits paid
Line 1.2 - Unearned premium (year preceding the MLR reporting year)
Report reserves established to account for the portion of the premium paid in the prior MLR
reporting year that was intended to provide coverage during the MLR reporting year.
Calculate reserves as of December 31 of the year preceding the MLR reporting year

18

Line 1.3 - Unearned premium (MLR reporting year)
Report reserves established to account for the portion of the premium paid in the MLR reporting
year that was intended to provide coverage during the following MLR reporting year.
Calculate reserves as of December 31 of the MLR reporting year
Line 1.4 – Change in unearned premium (Lines 1.2 – 1.3)
Line 1.5 – Experience rating refunds paid
12/31 Columns - Based on all payments through 12/31 of the MLR reporting year.
3/31 Columns - Based on refunds incurred during the MLR reporting year and paid through 3/31
of the following MLR reporting year for those refunds incurred during the MLR reporting
year
Experience rating refunds associated with premium earned during the MLR reporting year,
including State premium refunds paid during the MLR reporting year. Experience rating refund is
the return of a portion of premium pursuant to a retrospectively rated funding arrangement when
the sum of incurred losses, retention and margin are less than earned premium.
Line 1.6 – Reserve for experience rating refunds (rate credits) (MLR reporting year)
12/31 Columns – based on all refunds unpaid as of 12/31 of the MLR reporting year.
3/31 Columns – based on refunds incurred only in the MLR reporting year and unpaid through
3/31 of the following year
Include:
• Reserves for the return of a portion of premium pursuant to a retrospectively rated
funding arrangement when the sum of incurred losses, retention and margin are less than
earned premium, plus reserves for State premium refunds incurred during the MLR
reporting year.
Exclude: Reserves for MLR rebates.
Deduct:

Amounts receivable under retrospectively rated funding arrangements.

Line 1.7 – Reserve for experience rating refunds (rate credits) (year preceding the MLR reporting year)
12/31 Columns – As of 12/31 of the year preceding the MLR reporting year.
Include:
• Reserves for the return of a portion of premium pursuant to a retrospectively rated
funding arrangement when the sum of incurred losses, retention and margin are less than
earned premium, plus reserves for State premium refunds incurred during the year
preceding the MLR reporting year.

19

Exclude: Reserves for MLR rebates.
Deduct:

Amounts receivable under retrospectively rated funding arrangements.

Line 1.9 – Premium write-offs
Include:
• Agents’ or premium balances determined to be uncollectible and written off as losses;
• Recoveries made during the MLR reporting year on balances previously written off;
• Include actual write offs; not reserves for bad debt or statutory non-admitted amounts.
Line 1.10 – Group conversion charges
If the amount entered on Line 1.1 has been reduced or increased by the amount of any conversion
charges associated with group conversion privileges between Group and Individual lines of
business in your annual statement accounting, enter the reverse of these charges on this line in the
appropriate columns.
If an issuer transfers portions of earned premium associated with group conversion privileges
between group and individual lines of business in its Annual Statement, these amounts must be
added to or subtracted from incurred claims. (See section 2 – Claims below)
Line 1.11 – Total direct premium earned

(Lines 1.1 + 1.4 – 1.9 + 1.10)

Line 1.12 – Premium ceded under 100% reinsurance (informational only; excluded from Line 1.1)
Include:
• Premium ceded under a 100% assumption reinsurance agreement (treated as a novation).
• Premium ceded under a 100% indemnity reinsurance and administrative agreement,
limited to only those agreements both entered into and effective prior to March 23, 2010,
where the assuming entity is responsible for 100% of the ceding entity’s financial risk
and takes on all of the administration of the block of business..
Line 1.13 – Premium assumed under 100% reinsurance agreement (informational only; included in Line
1.1)
Include:
• Premium assumed under a 100% assumption reinsurance agreement (treated as a
novation).
• Premium assumed under a 100% indemnity reinsurance and administrative agreement,
limited to only those agreements both entered into and effective prior to March 23, 2010,
where the assuming entity is responsible for 100% of the ceding entity’s financial risk
and takes on all of the administration of the block of business..

20

SECTION 2 - CLAIMS
Amounts reported in Section 2 must include direct claims paid to or received by physicians and other nonphysician clinical providers, including under capitation contracts with those providers, whose services are
covered by the policy for clinical services or supplies covered by the policy. Non-physician clinical
providers must be licensed, accredited, or certified to perform clinical health services, consistent with
State law, and engaged in the delivery of medical services to enrollees.
Reimbursement for clinical services to enrollees is also referred to as incurred claims.
Line 2.1 – Claims paid
2.1a – 12/31 Column – Claims paid during the MLR reporting year regardless of incurred date.
Report payments net of risk share amount collected.
2.1b – 3/31 Column - Claims paid only on claims incurred during the MLR reporting year, and
paid through 3/31 of the following year for those claims incurred during the MLR reporting
year.
Include:

Claims incurred during the MLR reporting year that were either paid during the MLR
reporting year or paid through March 31 of the year following the MLR reporting year;

Any overpayment that has not yet been recovered should be included in paid claims and
included in health care receivables.

Market stabilization payments or receipts by issuers that are directly tied to claims
incurred and other claims based or census based assessments.

State subsidies based on a stop-loss payment methodology.

Claims assumed under a 100% assumption reinsurance agreement (treated as a novation)
must be reported by the assuming issuer for the entire MLR reporting year during which
the policies are assumed and must not be reported by the ceding issuer.

Claims assumed under a 100% indemnity reinsurance and administrative agreement,
limited to only those agreements both entered into an effective prior to March 23, 2010,
where the assuming entity is responsible for 100% of the ceding entity’s financial risk
and takes on all of the administration of the block of business.

Payment to unsubsidized State programs designed to address distribution of health risks
across issuers via charges to low risk issuers that are distributed to high risk issuers must
be included in incurred claims.
Exclude:

Claims ceded under a 100% assumption reinsurance agreement (treated as a novation)
must be reported by the assuming issuer for the entire MLR reporting year during which
the policies are assumed and must not be reported by the ceding issuer.

Claims ceded under a 100% indemnity reinsurance and administrative agreement, limited
to only those agreements both entered into an effective prior to March 23, 2010, where
the assuming entity is responsible for 100% of the ceding entity’s financial risk and takes
on all of the administration of the block of business.

Amounts paid to third party vendors for secondary network savings;
21





Amounts paid to third party vendors for network development, administrative fees and
profit, claims processing, and concurrent or post-service utilization management or any
other issuer function;
Amounts paid, including amounts paid to a provider, for professional or administrative
services that do not represent compensation or reimbursement for covered services
provided to an enrollee;
Incentive and bonus payment made to providers (to be reported in Line 2.11).

Deduct:
• Any overpayment that has already been received from providers should not be reported
as a paid claim;
• Prescription drug rebates, refunds, incentive payments, bonuses, discounts charge backs,
coupons, grants, direct or indirect subsidies, direct or indirect remuneration, upfront
payments, goods in kinds or similar benefits received by the issuer;
• Payment from unsubsidized State programs designed to address distribution of health
risks across issuers via charges to low risk issuers that are distributed to high risk issuers
must be deducted from incurred claims.

Line 2.2 – Direct claim liability (MLR reporting year)
12/31 Column – liability based on all claims unpaid as of 12/31 of the MLR reporting year
3/31 Column – liability based on claims incurred during the MLR reporting year, and unpaid as of
3/31 of the following year for those claims incurred during the MLR reporting year
For the 3/31 Column, calculate as of March 31 of the year following the MLR reporting
year, based on claim payments made through March 31 of that year and report in the
appropriate column.
Report the outstanding liabilities for healthcare services related to claims in the process of
adjustment, incurred but not reported and amounts withheld from paid claims and capitation
payments.
Include:
• Unpaid claims, including claims reported in the process of adjustment, percentage
withholds from payments made to contracted providers, recoverable for anticipated
coordination of benefits (COB) and subrogation (including third party liability).
• Incurred but not reported - Report the claims incurred but not reported in the MLR
reporting year. Except where inapplicable, the reserve included in these lines should be
based on past experience, modified to reflect current conditions, such as changes in
exposure.

Line 2.3 – Direct claim liability (year preceding the MLR reporting year)
12/31 Column – Amount reported as of 12/31 of the year preceding the MLR reporting year
22

Line 2.4 – Direct claim reserves (MLR reporting year)
12/31 Column – based on all claims regardless of the incurred date, calculated as of 12/31 of the
MLR reporting year
3/31 Column – based on claims incurred only in the MLR reporting year, calculated as of 3/31 of
the following year for those claims incurred during the MLR reporting year
For the 3/31 Column, calculate as of March 31 of the year following the MLR reporting year,
based on claim payments made through March 31 of that year related to claims incurred for
the MLR reporting year.
Report reserves related to healthcare services for present value of amounts not yet due on claims.

Line 2.5 – Direct claim reserve (year preceding the MLR reporting year)
12/31 Column – Amount reported as of 12/31 of the year preceding the MLR reporting year

Line 2.6 – Direct contract reserve (MLR reporting year)
Report the amount of reserves required when due to the gross premium structure, the future
benefits exceed the future net premium. Contract reserves are in addition to claim liabilities and
claim reserves. For policies issued prior to 2011, contract reserves may only be used in the MLR
calculation if such reserves were held prior to 2011, and may include reserves used for the purpose
of leveling policy duration-based variation in claims experience only if durational contract
reserves were held for such policies prior to 2011. Reported contract reserves may not exceed
contract reserves calculated using the applicable product pricing assumptions.
Include:

Contract reserves and other claims related reserves.
Calculate as of December 31 of the MLR reporting year.

Exclude:

Premium deficiency reserves.
Reserves for expected MLR rebates

Line 2.7 – Direct contract reserve (year preceding the MLR reporting year)
See instructions for line 2.6.
Calculate as of December 31 of the year preceding the MLR reporting year.

Line 2.8 – Experience rating refunds paid –
2.8a

12/31 Column – based on all payments through 12/31 of the MLR reporting year

23

2.8b

3/31 Column – based on refunds incurred during the MLR reporting year and paid
through 3/31 of the following year for those refunds incurred during the MLR reporting
year

Experience rating refunds associated with premium earned during the MLR reporting year,
including State premium refunds paid during the MLR reporting year. Experience rating refund is
the return of a portion of premium pursuant to a retrospectively rated funding arrangement when
the sum of incurred losses, retention and margin are less than earned premium.

Line 2.9 – Reserve for experience rating refunds (rate credits) (MLR reporting year)
12/31 Column – based on all payments through 12/31 of the MLR reporting year
3/31 Column – based on refunds incurred during the MLR reporting year and unpaid through 3/31
of the following year for those refunds incurred during the MLR reporting year
Include:
• Reserves for the return of a portion of premium pursuant to a retrospectively rated funding
arrangement when the sum of incurred losses, retention and margin are less than earned
premium, plus reserves for State premium refunds incurred during the MLR reporting year.
Exclude: Reserves for MLR rebates.
Deduct:

Amounts receivable under retrospectively rated funding arrangements.

Line 2.10 – Reserve for experience rating refunds (rate credits) (year preceding the MLR reporting year)
12/31 Column – Amount reported as of 12/31 of the year preceding the MLR reporting year
Include:
• Reserves for the return of a portion of premium pursuant to a retrospectively rated funding
arrangement when the sum of incurred losses, retention and margin are less than earned
premium, plus reserves for State premium refunds incurred during the year preceding the
MLR reporting year.
Exclude: Reserves for MLR rebates.
Deduct:

Amounts receivable under retrospectively rated funding arrangements.

Line 2.11 – Incurred medical incentive pools and bonuses
12/31 Column – based on all payments through 12/31 of the MLR reporting year

24

3/31 Column – payments based on amounts incurred during the MLR reporting year and paid
through 3/31 of the following year for the amounts incurred during the MLR reporting year
Include arrangements with providers and other risk sharing arrangements whereby the reporting
entity agrees to either share savings or make incentive payments to providers.
2.11a – Paid medical incentive pools and bonuses for the MLR reporting
year
2.11b – Accrued medical incentive pools and bonuses for the MLR reporting year. Exclude
amounts recorded on line 2.11a, include only the amount of medical incentive and bonus pool
payments that are estimated to be owed but not yet paid for the MLR reporting year.
2.11c – Accrued medical incentive pools and bonuses for the year preceding the MLR
reporting year.

Line 2.12 – Net healthcare receivables
12/31 Column – receivables reported as of 12/31 of the MLR reporting year
3/31 Column – receivables incurred during the MLR reporting year and that remain outstanding as
of 3/31 of the following year
2.12a – Healthcare receivables (MLR reporting year)
2.12b – Healthcare receivables (prior reporting year)
The amounts on these lines are the gross healthcare receivable assets, not just the admitted portion.
These amounts should not include those healthcare receivables, such as loans or advances to nonrelated party hospitals, established as prepaid assets that are not expensed until the related claims
have been received from the provider.

Line 2.13 – Contingent benefit and lawsuit reserves for claims incurred in the MLR reporting year.
Include:
Exclude:

The claims-related portion of reserves for contingent benefits and lawsuits.
Reserves related to costs associated with claims lawsuits within Line 2.13; i.e. legal
fees, court costs, pain and suffering damages, punitive damages, etc.

Line 2.14 – Group conversion charges
If there are any group conversion charges for a health plan, the conversion charges must be
subtracted from the incurred claims for the aggregation that includes the conversion policies and
this same amount must be added to the incurred claims for the aggregation that provides coverage
that is intended to be replaced by the conversion policies.

25

If an issuer transfers portions of earned premium associated with group conversion privileges
between group and individual lines of business in its annual statement accounting, these amounts
must be added to or subtracted from incurred claims.
Line 2.15 – Blended rate adjustment
Affiliated issuers that offer group coverage at a blended rate may choose whether to make an
adjustment to each affiliate’s incurred claims and activities to improve health care quality, to
reflect the experience of the issuer with respect to the employer as a whole, according to an
objective formula the issuer defined prior to January 1, 2011, so as to result in each affiliate
having the same ratio of incurred claims to earned premium for that employer group for the MLR
reporting year as the ratio of incurred claims to earned premium calculated for the employer group
in the aggregate. From the date an issuer chooses to use such an adjustment, it must be used for a
minimum of three consecutive MLR reporting years. Affiliated issuers that choose to make such
an adjustment must do so for all policies with blended rates in the applicable State market.
Line 2.16 – Allowable fraud reduction recovery expenses
Report the amount of claims payments recovered through fraud reduction efforts not to exceed the
amount of fraud reduction expenses.
This amount is limited to the lesser of the total fraud reduction expenses reported on Line 2.16a
and actual fraud recoveries collected on paid claims on Line 2.16b.
Line 2.16a – Total Fraud Reduction expense:
Line 2.16b – Total Fraud Reduction Recoveries that Reduced PAID claims.
Include collected fraud recoveries on paid claims only.
Line 2.17 – Total adjusted incurred claims - 12/31 Column (Lines 2.1a + 2.2 – 2.3 + 2.4 – 2.5 + 2.6 – 2.7
+ 2.8a + 2.9 – 2.10 + 2.11a + 2.11b – 2.11c – 2.12a + 2.12b + 2.13 + 2.14 + 2.15 + 2.16)
Line 2.18 – Total adjusted incurred claims - 3/31 Column (Lines 2.1b + 2.2 + 2.4 + 2.6 – 2.7 + 2.8b +
2.9 + 2.11a + 2.11b – 2.12a + 2.13 + 2.14 + 2.15 + 2.16)

26

INSTRUCTIONS FOR MLR ANNUAL REPORTING FORM - PART 3
(Expense Allocation Report)
The annual MLR reporting form Filing Instructions only apply to the 2011 MLR Reporting Year and its
reporting requirements. These Filing Instructions will be revised to reflect changes that apply to the filing
years subsequent to 2011.
In addition to the instructions below, refer to the Preliminary Instructions at the beginning of these Filing
Instructions, as well as the Column Definitions which follow the Preliminary Instructions, for the
definitions of various markets and business. The MLR Form and Filing Instructions implement the
requirements of 45 CF R Part 158 and are not identical to the definitions or instructions of the NAIC’s
SHCE.
This Part 3 to the MLR Form is intended to provide disclosure of expenses by major type of activity that
improves health care quality, as defined below, as well as the amount of those expenses that is used for
other activities, and reported separately for health insurance coverage (individual, small group and large
group business), mini-med plans (individual, small group and large group business), and expatriate plans
(small group and large group business). This exhibit also shows the amount of qualifying Health
Insurance Technology (HIT) expenses, reported separately for each such group of business.
Affiliated issuers that offer group coverage at a blended rate may choose whether to make an adjustment
to each affiliate’s incurred claims and activities to improve health care quality, to reflect the experience of
the issuer with respect to the employer that receives the blended rate as a whole, according to an objective
formula that the issuer defined prior to January 1, 2011, so as to result in each affiliate having the same
ratio of incurred claims to earned premium for that employer group for the MLR reporting year as the
ratio of incurred claims to earned premium calculated for the employer group in the aggregate. From the
date an issuer that chooses to use such an adjustment must be used for a minimum of three consecutive
MLR reporting years. Affiliated issuers that choose to make such an adjustment must do so for all policies
with blended rates in the applicable State market.

Improving Health Care Quality Expenses – General Definition:
Expenses for Quality Improvement (QI) activities are expenditures for activities conducted by an issuer
that is designed to:
• improve health quality;
• increase the likelihood of desired health outcomes in ways that are capable of being objectively
measured and of producing verifiable results and achievements;
• be directed toward individual enrollees or incurred for the benefit of specified segments of
enrollees or provide health improvements to the population beyond those enrolled in coverage
as long as no additional costs are incurred due to the non-enrollees; and,
• be grounded in evidence-based medicine, widely accepted best clinical practice, or criteria
issued by recognized professional medical associations, accreditation bodies, government
agencies or other nationally recognized health care quality organizations.

27

QI activities must be primarily designed to:
• Improve health outcomes including increasing the likelihood of desired outcomes compared to
a baseline and reduce health disparities among specified populations;
• Prevent hospital readmissions through a comprehensive program for hospital discharge;
• Improve patient safety, reduce medical errors and lower infection and mortality rates;
• Implement, promote, and increase wellness and health activities; or
• Enhance the use of health care data to improve quality, transparency, and outcomes and support
meaningful use of health information technology consistent with 45 CFR §158.151.
Expenditures and activities that must not be included in quality improving activities are:
• Those that are designed primarily to control or contain costs;
• The pro rata share of expenses that are for lines of business or products other than those being
reported, including but not limited to, those that are for or benefit self-funded plans;
• Those which otherwise meet the definitions for quality improvement activities but which were
paid for with grant money or other funding separate from premium revenue;
• Those activities that can be billed or allocated by a provider for care delivery and which are,
therefore, reimbursed as clinical services;
• Establishing or maintaining a claims adjudication system, including costs directly related to
upgrades in health information technology that are designed primarily or solely to improve
claims payment capabilities or to meet regulatory requirements for processing claims (for
example, costs of implementing new administrative simplification standards and code sets
adopted pursuant to the Health Insurance Portability and Accountability Act (HIPAA), 42
U.S.C. 1320d-2, as amended, including the new ICD-10 requirements);
• That portion of the activities of health care professional hotlines that does not meet the
definition of activities that improve health quality;
• All retrospective and concurrent utilization review;
• Fraud prevention activities;
• The cost of developing and executing provider contracts and fees associated with establishing
or managing a provider network, including fees paid to a vendor for the same reason;
• Provider credentialing;
• Marketing expenses;
• Costs associated with calculating and administering individual enrollee or employee incentives;
• That portion of prospective utilization that does not meet the definition of activities that
improve health quality;
• Any function or activity not expressly included in Columns 1 through 5, unless otherwise
approved by and within the discretion of the Secretary, upon adequate showing by the issuer
that the activity’s costs support the definitions and purposes in this Part or otherwise support
monitoring, measuring or reporting health care quality improvement
NOTE: Expenses which otherwise meet the definition for QI activities but which were paid for with grant
money or other funding separate from premium revenues shall NOT be included in QI activities expenses.
Notes:
a.
Healthcare Professional Hotlines: Expenses for healthcare professional hotlines should be
included in Claims Adjustment Expenses to the extent they do not meet the criteria for the above defined
columns of Improve Health Outcomes, Prevent Hospital Readmissions, Improve Patient Safety, Reduce

28

Medical Errors, and Lower Infection and Mortality Rates, and Implement, Promote, and Increase
Wellness & Health Activities.
b.
Prospective Utilization Review: Expenses for prospective Utilization Review should be included
in Claims Adjustment Expenses to the extent they do not meet the criteria for the above defined columns
of Improve Health Outcomes, Prevent Hospital Readmissions, Improve Patient Safety, Reduce Medical
Errors, and Lower Infection and Mortality Rates, and Implement, Promote, and Increase Wellness &
Health Activities, AND the prospective utilization review activities are not conducted in accordance with
a program that has been accredited by a recognized accreditation body.
Claim Adjustment Expenses for Accident and Health reporting entities and for managed care reporting
entities are those costs expected to be incurred in connection with the adjustment and recording of
accident and health claims and managed care claims. Certain claim adjustment expenses reduce the
number or cost of health services thereby resulting in lower premiums or lower premium increases. These
claim adjustment expenses shall be classified as cost containment expenses.
Claim adjustment expenses, including legal expenses, can be subdivided into cost containment expenses
and other claim adjustment expenses.
ROWS:
Health Insurance Coverage
Line 1.1a – Individual market
Line 1.1b – Deferred (PY)
Line 1.1c – Deferred (CY)
Line 1.2a – Small group market
Line 1.2b – Deferred (PY)
Line 1.2c – Deferred (CY)
Line 1.3a – Large group market
Line 1.3b – Deferred (PY)
Line 1.3c – Deferred (CY)
“Mini-med”
Line 2.1 – Individual market
Line 2.2 – Small group market
Line 2.3 – Large group market
Expatriate
Line 3.1a – Small group market
Line 3.1b – Deferred (PY)
Line 3.1c – Deferred (CY)
Line 3.2a – Large group market
Line 3.2b – Deferred (PY)
Line 3.2c – Deferred (CY)
Other Business
Line 4.1 – Government program plans
Line 4.2 – Other health business
Line 4.3 – Aggregate 2% rule
Line 4.4 – Uninsured / Self-funded plans

29

COLUMNS:
Under each column for the initiatives noted below, the issuer must report the amount expended for each of
the various markets (rows).
Column 1 – Improve Health Outcomes
Include expenses for the direct interaction of the insurer (including those services delegated by
contract for which the insurer retains ultimate responsibility under the insurance policy), providers
and the enrollee or the enrollee’s representatives (e.g., face-to-face, telephonic, web-based
interactions or other means of communication) to improve health outcomes.
This category can include costs for associated activities such as:
• Effective case management, care coordination, and chronic disease management,
including through the use of the medical homes model as defined in section 3606 of the
Affordable Care Act.
• Accreditation fees by a nationally recognized accrediting entity directly related to
quality of care activities included in Columns 1 through 5;
• Expenses associated with identifying and addressing ethnic, cultural or racial
disparities in effectiveness of identified best clinical practices and evidence based
medicine;
• Quality reporting and documentation of care in non-electronic format; and
• Health information technology expenses to support these activities (report in Column 5
- see instructions)
Column 2 – Activities to Prevent Hospital Readmission
Include expenses for implementing activities to prevent hospital readmissions.
This category can include costs for associated activities such as:
• Comprehensive discharge planning (e.g., arranging and managing transitions from one
setting to another, such as hospital discharge to home or to a rehabilitation center) in
order to help assure appropriate care that will, in all likelihood, avoid readmission to
the hospital;
• Personalized post discharge counseling by an appropriate health care professional;
• Any quality reporting and related documentation in non-electronic form for activities to
prevent hospital readmission; and
• Health information technology expenses to support these activities (report in Column 5
– see instructions)
Column 3 – Improve Patient Safety and Reduce Medical Errors
Include expenses for activities primarily designed to improve patient safety, reduce medical errors,
and lower infection and mortality rates.
This category can include costs for associated activities such as:
• The appropriate identification and use of best clinical practices to avoid harm;
• Activities to identify and encourage evidence based medicine in addressing
independently identified and documented clinical errors or safety concerns;
• Activities to lower risk of facility acquired infections;
30

•
•
•

Prospective prescription drug utilization review aimed at identifying potential adverse
drug interactions;
Any quality reporting and related documentation in non-electronic form for activities
that improve patient safety and reduce medical errors; and
Health information technology expenses to support these activities (report in Column 5
– see instructions)

Column 4 – Wellness & Health Promotion Activities
Include expenses for activities primarily designed to implement, promote, and increase wellness
and health activities.
This category can include costs for associated activities such as:
• Wellness assessment;
• Wellness/lifestyle coaching programs designed to achieve specific and measurable
improvements;
• Coaching programs designed to educate individuals on clinically effective methods for
dealing with a specific chronic disease or condition;
• Public health education campaigns that are performed in conjunction with state or local
health departments;
• Actual rewards/incentives/bonuses/reductions in co-pays, etc. (not administration of
these programs) that are not already reflected in premiums or claims should be allowed
as QI activities for the group market to the extent permitted by section 2705 of the PHS
Act;
• Any quality reporting and related documentation in non-electronic form for wellness
and health promotion activities;
• Coaching or education programs and health promotion activities designed to change
member behavior (e.g., smoking, obesity); and
• Health information technology expenses to support these activities (Report in Column
5 – see instructions).
Column 5 – Health Information Technology (HIT) Expenses for Health Care Quality Improvement
Activities
In Part 3 of the MLR Form, the issuer reports information technology expenses associated with the
activities for which expenses are reported. (45 CFR §158.151 allows “Health Information Technology”
expenses that are required to accomplish the activities allowed in 45 CFR §158.150.)
Include HIT expenses required to accomplish the activities reported in Columns 1 through 4 that are
designed for use by health plans, health care providers, or enrollees for the electronic creation,
maintenance, access, or exchange of health information as well as activities that are consistent with
Medicare and/or Medicaid meaningful use requirements, and which may in whole or in part improve
quality of care, or provide the technological infrastructure to enhance current quality improvement or
make new quality improvement initiatives possible by doing one or more of the following:
1. Making incentive payments to health care providers for the adoption of certified electronic
health record technologies and their ‘‘meaningful use’’ as defined by HHS to the extent such

31

2.

3.
4.

5.

6.
7.

8.

payments are not included in reimbursement for clinical services as defined in 45 CFR
§158.140;
Implementing systems to track and verify the adoption and meaningful use of certified
electronic health records technologies by health care providers, including those not eligible for
Medicare and Medicaid incentive payments;
Providing technical assistance to support adoption and meaningful use of certified electronic
health records technologies;
Monitoring, measuring, or reporting clinical effectiveness, including reporting and analysis of
costs related to maintaining accreditation by nationally recognized accrediting organizations
such as NCQA or URAC, or costs for public reporting of quality of care, including costs
specifically required to make accurate determinations of defined measures (e.g., CAHPS
surveys or chart review of HEDIS measures and costs for public reporting mandated or
encouraged by law);
Advancing the ability of enrollees, providers, issuers or other systems to communicate patient
centered clinical or medical information rapidly, accurately and efficiently to determine patient
status, avoid harmful drug interactions or direct appropriate care – this may include electronic
health records accessible by enrollees and appropriate providers to monitor and document an
individual patient’s medical history and to support care management;
Tracking whether a specific class of medical interventions or a bundle of related services leads
to better patient outcomes;
Reformatting, transmitting or reporting data to national or international government-based
health organizations for the purposes of indentifying or treating specific conditions or
controlling the spread of disease; or
Provision of electronic health records, patient portals, and tools to facilitate patient selfmanagement.

Exclude:
Costs associated with establishing or maintaining a claims adjudication system, including costs
directly related to upgrades in HIT that are designed primarily or solely to improve claims
payment capabilities or to meet regulatory requirements for processing claims (e.g., costs of
implementing new administrative simplification standards and code sets adopted pursuant to the
Health Insurance Portability and Accountability Act (HIPAA), 42 U.S.C. 1320d-2, as amended,
including the new ICD-10 requirements.)
Column 6 – Cost Containment Expenses not included in quality improvement expenses
Include expenses that serve to actually reduce the number of health services provided or the cost
of such services.
This category can include costs only if they result in reduced costs or services such as:
• Post- and concurrent- claim case management activities associated with past or ongoing
care;
• Pre-Service Utilization review;
• Detection and prevention of payment for fraudulent requests for reimbursement;
• Expenses for internal and external appeals; and
• Network access fees to preferred provider organizations and other network-based health
plans (including prescription drug networks) and allocated internal salaries and related
costs associated with network development and/or provider contracting.
32

Exclude cost-containment expenses that improve the quality of health care (reported in
Columns 1 through 5).
Column 7 – Other Claims Adjustment Expenses:
Other claims adjustment expenses are those expenses that are not cost containment expenses.
Include any expenses for administrative services that do not constitute adjustments to premium
revenue, reimbursement for clinical services to enrollees or expenditures on quality improvement
activities.
This category can include such costs as:
• Estimating the amount of losses and disbursing loss payments;
• Maintaining records, general clerical and secretarial costs;
• Office maintenance, occupancy costs, utilities and computer maintenance;
• Supervisory and executive duties; and
• Supplies and postage.
Column 8 – General and Administrative Expenses
General and Administrative Expenses not Included in Columns 1 through 7.

33

INSTRUCTIONS FOR MLR ANNUAL REPORTING FORM - PART 4
(Expense Allocation Methodology Report)
The annual MLR reporting form Filing Instructions only apply to the 2011 MLR Reporting Year and its
reporting requirements. These Filing Instructions will be revised to reflect changes that apply to the filing
years subsequent to 2011. Complete Part 4 only within the Grand Total page of the submission.
Description of Methods to Allocate Expenses
A single (not State-by-State) Part 4 of the Grand Total MLR Form must be submitted by the issuer to
describe the methods used to allocate expenses, as reported on the MLR Form, including incurred claims,
quality improvement expenses, Federal and State taxes and licensing or regulatory fees, and other nonclaims costs, to each health insurance market (e.g., individual, small group, large group, mini-med plans,
expatriate plans, government program plans, other health business, and uninsured plans, each as defined
in the Column Definitions which follow the Preliminary Instructions at the beginning of these Filing
Instructions) in each State.
A detailed description of each expense element must be provided, including how each specific expense
meets the criteria for the type of expense in which it is categorized, as well as the method by which it was
aggregated.
For a new initiative that otherwise meets the definition of quality improvement activities (QI) (see Filing
Instructions for MLR Form, Part 3) but has not yet met the requirement that it be capable of being
objectively measured and of producing verifiable results and achievements, note that it is “NEW” in the
description of the QI and include the expected timeframe for the activity to meet this requirement.

Acceptable Bases for Allocation of Expenses
Allocation of each type of expense among health insurance markets should be based on a generally
accepted accounting method that is expected to yield the most accurate results. If this is not feasible, the
issuer should provide an explanation as to why it believes a more accurate result will be gained from its
allocation of expenses, including pertinent factors or ratios, such as studies of employee activities, salary
ratios or similar analyses.
Many entities operate within a group where personnel and facilities are shared. Shared expenses,
including expenses under the terms of a management or administrative services contract, must be
apportioned pro rata to the entities incurring the expense.
Any basis adopted to apportion expenses must be that which is expected to yield the most accurate results
and may result from special studies of employee activities, salary ratios, premium ratios or similar
analyses. Expenses that relate to a specific entity or sub-set of entities, such as personnel costs associated
with the adjusting and paying of claims, must be borne solely by that specific entity or subset of entities
and must not be apportioned to other entities within a group.

34

Line References
Line 1 – Incurred Claims (as reported on the MLR Form, Part 1, Line 2.1 and Part 2, Lines 2.1 through
2.18)
Line 2 – Federal and State Taxes and Licensing or Regulatory Fees (as reported on the MLR Form, Part 1,
Lines 3.1 through 3.3)
Line 3 – Quality Improvement Expenses (as reported on the MLR Form, Part 3 or Part 1 Section 4)
Line 3.a – Improve health outcomes (as reported on the MLR Form, Part 3 Column 1)
Line 3.b – Activities to prevent hospital readmission (as reported on the MLR Form, Part 3
Column 2)
Line 3.c – Improve patient safety and reduce medical errors (as reported on the MLR Form, Part 3
Column 3)
Line 3.d – Wellness and health promotion activities (as reported on the MLR Form, Part 3 Column
4)
Line 3.e – Health Information Technology (HIT) expenses related to health improvement (as
reported on the MLR Form, Part 3 Column 5)
Line 4 – Non-claims Costs (as reported on the MLR Form, Part 1, Lines 5.1 through 5.7)
Line 4.a – Cost containment expenses (as reported on the MLR Form, Part 1 Line 5.1)
Line 4.b – All other claims adjustment expenses (as reported on the MLR Form, Part 1 Line 5.2)
Line 4.c – Direct sales salaries and benefits (as reported on the MLR Form, Part 1 Line 5.3)
Line 4.d – Agents and brokers fees and commissions (as reported on the MLR Form, Part 1 Line
5.4)
Line 4.e – Other taxes (as reported on the MLR Form, Part 1 Line 5.5a and 5.5b)
Line 4.f – Other general and administrative expenses (as reported on the MLR Form, Part 1 Line
5.6)

35

INSTRUCTIONS FOR MLR ANNUAL REPORTING FORM - PART 5
(MLR and Rebate Calculation)
The annual MLR reporting form Filing Instructions only apply to the 2011 MLR Reporting Year and its
reporting requirements. These Filing Instructions will be revised to reflect changes that apply to the filing
years subsequent to 2011.
Most fields on Part 5 of each State page are self calculating based on data elements entered on other Parts.
No data need to be entered in any of the shaded cells.

COLUMN DEFINITIONS – PART 5
Prior years’ MLR reporting information is to be reported as initially submitted to the Secretary in the
MLR filing of the respective reporting year.

Columns 1, 5, 9, 13, 17, 21, 25 & 29 – PY2 (Not applicable to the 2011 MLR Reporting Year)
Beginning in the 2013 MLR reporting year, report the information for the MLR reporting year that
is 2 years prior to the MLR reporting year.

Columns 2, 6, 10, 14, 18, 22, 26 & 30 – PY1 (Not applicable to the 2011 MLR Reporting Year)
Beginning in the 2012 MLR reporting year, report the information for the MLR reporting year that
is 1 year prior to the MLR reporting year.
In the 2012 MLR reporting year only, if the issuer’s experience is fully credible (as defined below
in Part 5 Section 3), do not report the information for the 2011 MLR reporting year.

Columns 3, 7, 11, 15, 19, 23, 27 & 31 – CY
Report the information for the MLR reporting year.

Columns 4, 8, 12, 16, 20, 24, 28 & 32 – Total (Columns PY2 + PY1 + CY)
The information for PY2, PY1 and CY for each market (e.g., individual market, small group
market, etc.) should be added together for the total. For the 2011 MLR Reporting year, this
amount will be the same as the amount in the CY column. The amount in the Total column will be
used to calculate the issuer’s MLR and rebates owing, if any.

36

Column Groupings
For the definitions for each of the following markets, see the Column Definitions, which immediately
follow the Preliminary Instructions in the Filing Instructions for the MLR Form.
Columns 1 – 4
Columns 5 – 8
Columns 9 – 12
Columns 13 – 15
Columns 17 – 20
Columns 21 – 24
Columns 25 – 28
Columns 29 – 32

–
–
–
–
–
–
–
–

Individual Market
Small Group Market
Large Group Market
Mini-med plans – Individual Market
Mini-med plans – Small Group Market
Mini-med plans – Large Group Market
Expatriate plans – Small Group Market
Expatriate plans – Large Group Market

LINE INSTRUCTIONS – PART 5
Section 1- Medical Loss Ratio Numerator
Line 1.1 – Adjusted incurred claims (report the amount listed on the MLR Form, Part 1 Line 2.1)
Line 1.2 – Adjusted incurred claims for the prior MLR reporting years, restated as of March 31 of
the year following the MLR reporting year (Not applicable to the 2011 MLR Reporting Year)
Line 1.3 – Quality improving expenses (report the amount listed on the MLR Form, Part 1 Line
4.6)
Line 1.4 – MLR rebates paid based on experience for the two immediately preceding MLR
reporting years. (Not applicable to the 2011 MLR Reporting Year)
Line 1.5 – MLR numerator (MLR Form, Part 5, Lines 1.2 + 1.3 + 1.4)

Line 1.6 – Mini-Med / Expatriate numerator after adjustment factor (Line 1.5 x adjustment factor)
For the 2011 MLR reporting year, the adjustment factor is 2.
Section 2 - Medical Loss Ratio Denominator
Line 2.1 – Adjusted earned premium (report the amount listed on the MLR Form, Part 1 Line 1.4)
Line 2.2 – Federal and State taxes and licensing or regulatory fees (report the amount listed on the
MLR Form, Part 1 Line 3.4)
Line 2.3 – MLR denominator (MLR Form, Part 5, Lines 2.1 – 2.2)

37

Section 3 - Credibility Adjustment (Not applicable to the Grand Total page)
Line 3.1 – Life years to determine credibility (report the amount listed on the MLR Form, Part 1
Line 11.5)
Non-credible experience:
Less than 1,000 life-years as reported in the Total Column
for the relevant market. The issuer is presumed to meet or exceed the applicable MLR
standard and does not receive a credibility adjustment.
Partially credible experience: 1,000 to 75,000 life-years as reported in the Total Column
for the relevant market. Except as noted in the instructions for Line 3.5, below, the issuer
receives a credibility adjustment, which is calculated using the data reported in Lines 3.1
through 3.4 of this Part 5.
Fully credible experience:
More than 75,000 life-years as reported in the Total Column
for the relevant market. The issuer does not receive a credibility adjustment.
Line 3.2 – Base credibility factor
This amount is automatically calculated on the MLR Form based upon the number of lifeyears reported in the Total Column for Line 3.1.
Issuers with non-credible or fully credible experience do not have a base credibility factor.
Line 3.3 – Average deductible
The per person deductible for a policy that covers a subscriber and the subscriber’s
dependents shall be calculated as follows:
The lesser of the deductible applicable to each of the individual family members or the
overall family deductible for the subscriber and subscriber’s family divided by two
(regardless of the total number of individuals covered through the subscriber).
Issuers may choose to leave this field blank if they wish to use a deductible factor of 1.0.
Issuers with non-credible or fully credible experience do not report an average deductible.
Line 3.4 – Deductible factor
This amount is automatically calculated on the MLR Form based upon the average
deductible reported in the Total Column for Line 3.3. The deductible factor ranges from 1.0
to 1.736.
Issuers with non-credible or fully credible experience do not have a deductibility factor.
Line 3.5 – Credibility adjustment (MLR Form, Part 5, Lines 3.2 x 3.4)

38

This amount is automatically calculated on the MLR Form based upon the amounts reported
on Lines 3.2 and 3.4.
Issuers with non-credible or fully credible experience do not receive a credibility adjustment.

Section 4 - Medical Loss Ratio Calculation (Not applicable to Grand Total page)
Line 4.1 – Is the experience considered partially or fully credible?
Line 4.2 – Preliminary Medical Loss Ratio
4.2a – Preliminary MLR (MLR Form for the applicable MLR reporting year, Part 5, Lines
1.5 / 2.3)
4.2b – Preliminary MLR: Mini-Med / Expatriate (MLR Form for the applicable MLR
reporting year, Part 5, Lines 1.6/ 2.3)
Line 4.3 – Credibility adjustment (MLR Form, Part 5, Line 3.5)
Line 4.4 – MLR including credibility adjustment if applicable (Lines 4.2a or 4.2b + 4.3)

Section 5 - MLR Rebate Calculation
Line 5.1 – MLR Standard (Not applicable to Grand Total page)
The applicable MLR standard is automatically populated based on one of the following:
• The statutory MLR standard for the relevant market (i.e., 80% for the individual
market and small group market; and 85% for the large group market);
• The HHS-approved adjusted MLR standard for a particular State’s individual market;
or
• The State MLR standard, if the State requires a higher percentage than the statutory
MLR standard for the relevant market for rebate purposes.
Line 5.2 – Credibility-adjusted MLR (MLR Form, Part 5, Line 4.4)
(Not applicable to Grand Total page)
Line 5.3 – Adjusted earned premium, less Federal and State taxes and licensing or regulatory fees
(MLR Form, Part 5, Line 2.3, Column CY) (not applicable to Grand Total page)
Line 5.4 – Rebate amount if credibility-adjusted MLR is less than the MLR standard (MLR Form,
Part 5, Lines (5.1 – 5.2) x 5.3))
• On the Grand Total page, enter the sum of MLR rebates owed by the company for each
State and market (individual, small group, large group, mini-med individual, mini-med
small group, mini-med large group) and each market for expatriate plans (small group,
large group) in the respective Total Columns.

39

INSTRUCTIONS FOR MLR ANNUAL REPORTING FORM - PART 6
(Rebate Report)
The annual MLR reporting form Filing Instructions only apply to the 2011 MLR Reporting Year and its
reporting requirements. These Filing Instructions will be revised to reflect changes that apply to the filing
years subsequent to 2011.
The Column Definitions, which immediately follow the Preliminary Instructions at the beginning of these
Filing Instructions, apply to the markets to be reported in Columns 1 through 8 of Part 6.
Column 1
Column 2
Column 3
Column 4
Column 5
Column 6
Column 7
Column 8

–
–
–
–
–
–
–
–

Individual Market
Small Group Market
Large Group Market
Mini-med plans – Individual Market
Mini-med plans – Small Group Market
Mini-med plans – Large Group Market
Expatriate plans – Small Group Market
Expatriate plans – Large Group Market

Additional definitions:
• Policyholder means any entity that has entered into a contract with an issuer to receive health
insurance coverage.
• Subscriber refers to both the group market and the individual market. In the group market,
subscriber means the individual, generally the employee, whose eligibility is the basis for the
enrollment in the group health plan and who is responsible for the payment of premiums. In the
individual market, subscriber means the individual who purchases an individual policy and who is
responsible for the payment of premiums.
Line 1 – Is a rebate being paid?
This cell is automatically populated with a “Yes” if the amount on Part 5, Line 5.4, is greater than
0, otherwise it will populate with “No”. If no rebate is owed, do not complete Lines 2 through 4.
If no rebate is being paid, do not complete Lines 2 through 5.
Line 2 – Number of policies and certificates (from Part 1, Line 11.1)
Line 3 - Number of policyholders/subscribers being paid rebates
Line 3.a – Number of group policyholders who are being paid a rebate
Include: All group policies within the respective group markets that are due a rebate
Exclude: Rebates being paid in the individual market.
Line 3.b – Number of subscribers who are being paid a rebate.
Include: All subscribers under group and individual policies that are due a rebate.
Line 3.c – Number of group policyholders whose calculated rebate is de minimis.
De Minimis –

40

•

For a group policy for which the issuer distributes the rebate directly to the
policyholder, if the total rebate owed to the policyholder and its subscribers combined
is less than $20 for the MLR reporting year.

Line 3.d – Number of subscribers whose calculated rebate is de minimis.
Include the number of subscribers in the individual market and the number of subscribers
of policyholders in the group markets whose calculated rebate is de minimis.
De Minimis –
• For a group policy for which the issuer distributes the rebate to the policyholder, if the
total rebate owed to the policyholder and its subscribers combined is less than $20 for a
given MLR reporting year.
• For a group policy for which the issuer distributes the rebate directly to the subscribers,
if the total rebate owed to each subscriber is less than $5 for a given MLR reporting
year.
• For an individual policy, if the total rebate owed to each subscriber is less than $5 for a
given MLR reporting year.
Line 4 – Total amount of rebates
Line 4.a – Total amount of rebates (from Part 5, Line 5.4)
Line 4.b – Total amount of de minimis rebates
Report the total amount of rebates that are de minimis, as described above in Part 6
Section 3
Line 4.c – Amount of rebates being paid by premium credit
Line 4.d – Amount of rebates being paid by lump-sum reimbursement
Line 5 – Amount of unclaimed rebates from prior MLR reporting year
Report the amount of rebates owed based on the previous MLR reporting year which
remain unpaid because the issuer was unable, after making a good faith effort, to locate a
former enrollee or subscriber. (Not applicable to the 2011 MLR Reporting Year)
Line 5.a – Methods used to locate enrollees for unclaimed rebates
Describe the methods used to try to locate policyholders or subscribers to distribute the
prior MLR reporting year’s rebates which remain unclaimed. (Not applicable to the 2011
MLR Reporting Year)
Line 5.b – Disbursement method of prior MLR reporting year’s unclaimed rebates
Describe the method used to disburse the prior MLR reporting year’s unclaimed rebates.
(Not applicable to the 2011 MLR Reporting Year)

41