CMS-10418 MLR Form Instructions

Centers for Medicare & Medicaid Services (CMS)
Medical Loss Ratio (MLR) Annual Reporting Form
Filing Instructions for the 2014 MLR Reporting Year
Table of Contents
Instructions for the 2014 MLR Reporting Year .........................................................................................1
Changes to the 2014 MLR Annual Reporting Form ..................................................................................3
General Instructions....................................................................................................................................4
Column Definitions for MLR Annual Reporting Form − Parts 1 and 2 ....................................................7
Instructions for MLR Annual Reporting Form − Part 1 ...........................................................................12
(Summary of Data) ...................................................................................................................................12
Instructions for MLR Annual Reporting Form − Part 2 ...........................................................................25
(Premium and Claims)..............................................................................................................................25
Instructions for MLR Annual Reporting Form − Part 3 ...........................................................................35
(MLR and Rebate Calculation) ................................................................................................................35
Instructions for MLR Annual Reporting Form – Part 4 ...........................................................................48
(Rebate Disbursement) .............................................................................................................................48
Instructions for MLR Annual Reporting Form – Part 5 ...........................................................................51
(Additional Responses) ............................................................................................................................51
Instructions for MLR Annual Reporting Form − Part 6 ...........................................................................52
(Expense Allocation Methodology) .........................................................................................................52

PRA Disclosure Statement
According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-1164. The time
required to complete this information collection is estimated to average 64 hours or 3,840 minutes per response, including the
time to review instructions, search existing data resources, gather the data needed and complete and review the information
collection. If you have comments concerning the accuracy of the time estimate(s) or suggestions for improving this form,
please write to: CMS, 7500 Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore,
Maryland 21244-1850.

Instructions for the 2014 MLR Reporting Year
These are the filing instructions for the report to the Secretary required by section 2718 of the Public
Health Service Act (PHSA), which includes elements that make up the medical loss ratio (MLR) and the
calculation and provision of rebates to enrollees. The data included in the MLR Annual Reporting Form
(MLR Form) are the exact data that will be used to calculate an issuer’s MLR and rebates, if any, under
section 2718 of the PHSA and the implementing regulation, codified at 45 CFR Part 158. The data
included in the MLR Form will also be used to calculate an issuer’s payments or receipts related to the
risk corridors (RC) program established by section 1342 of the Patient Protection and Affordable Care
Act (ACA) and the implementing regulation, codified at 45 CFR Part 153.
The MLR implementing regulations can be found at:
http://www.cms.gov/cciio/resources/regulations-and-guidance/index.html#Medical Loss Ratio.
The implementing regulations for the risk corridors program can be found at:
http://www.cms.gov/cciio/Resources/Regulations-and-Guidance/index.html#Premium Stabilization
Programs.
These MLR Form Filing Instructions only apply to the 2014 MLR reporting year and its reporting
requirements. These Filing Instructions will be revised to reflect changes that apply to the filing years
subsequent to 2014. Filing requires a one-time registration by the issuer through the secured CMS
Enterprise Portal for the Health Insurance Oversight System (HIOS) to submit its report to the Secretary.
If an issuer registered for a previous MLR reporting year, it does not need to reregister, but will need to
confirm or update its issuer associations. The CMS Enterprise Portal can be accessed at
https://portal.cms.gov/wps/portal/unauthportal/home/.
Risk corridors information reported through this reporting form should only include data for plans that
were compliant with the market reforms of the Affordable Care Act during the 2014 calendar year. The
Affordable Care Act market reforms are set forth in sections 2701 through 2707 of the Public Health
Service Act (P.L. 410), and the implementing regulations in Title 45 of the Code of Federal Regulations.
References are made in these instructions to the National Association of Insurance Commissioners
(NAIC) Statements of Statutory Accounting Principles (SSAP) and Supplemental Health Care Exhibit
(SHCE) (as filed by many issuers with the NAIC) in effect for the MLR reporting year. 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 PHSA 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, 45 CFR Part 153 (as it pertains to the risk corridors program), and the
PHSA.
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 PHSA.
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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. In addition, the issuer must submit a Grand Total (GT) template containing the grand total of its
business in all States. (Note: The experience of expatriate and student health plans is aggregated on a
national basis and should be reported only on the GT template.) Parts 1 and 2 must be completed 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). Parts 3 through 5 must be completed for any
State in which there are non-zero amounts in Part 1. Part 6 should be completed in the GT template only.

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Changes to the 2014 MLR Annual Reporting Form
The MLR reporting form has been updated to incorporate provisions in 45 CFR Part 158 and 45 CFR Part
153 that are effective for the 2014 MLR reporting year. Below are the most significant changes.
Formatting Changes: Adjusted shading and formatting to enhance compatibility with screen reader
software and to improve accessibility. Moved header and legend information previously displayed on
each Part to a new Company Information tab. Moved Expense Allocation (previously Part 3) to the end of
the MLR Form and renumbered Parts 3-6 accordingly.
Risk Corridors: Added rows and columns to Parts 1, 2, and 3 to collect the Federal risk corridors
program data in compliance with 45 CFR Part 153.
Additional Lines: Added lines in Part 1 for the ACA section 9010 fee and the Federal transitional
reinsurance program contributions. Added lines in Parts 2 and 3 for the Federal transitional reinsurance
program receipts, Federal risk adjustment program net payments or charges, Federal risk corridors net
payments or charges, advance premium tax credit receipts, and advance cost-sharing reduction receipts.
Calculation: Modified formula descriptions to incorporate the payments and receipts under the Federal
premium stabilization programs.

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General Instructions
Reinsurance
Experience under a 100% assumption reinsurance agreement (with a novation) must be reported
by the assuming issuer as direct business, 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 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 as direct business, and must not be reported
by the ceding issuer.
If a reinsurance arrangement does not meet the exact criteria specified in the two preceding
paragraphs, the experience under that reinsurance arrangement must be reported by the ceding
issuer and not by the assuming issuer.
Closed Blocks of Business
All health insurance issuers offering health insurance coverage subject to Section 2718 of the
PHSA must submit an MLR report. CMS will use its enforcement discretion and will not initiate
an enforcement action against an issuer of group or individual health insurance coverage who fails
to submit a full MLR report if the issuer’s only health insurance coverage consists of
grandfathered plans in closed blocks of business. To qualify, the issuer must provide and the
issuer’s CFO and CEO must attest to the following information regarding the applicable MLR
reporting year:
1. The issuer has ceased offering health insurance coverage, as defined by §2791(b)(1) of the
PHSA, in the small group, large group, and individual health insurance markets in every
State in which it is licensed to offer health insurance coverage;
2. The issuer has only grandfathered health plans (as defined in 45 CFR §147.140(a)) in
closed blocks of business that are in run-off;
3. The issuer did not submit a Supplemental Health Care Exhibit (SHCE) or other similar
State filing for business during the applicable MLR reporting year, has been exempted
from filing a SHCE or similar State filing by the State in which it is domiciled, and
submits to CMS evidence of this exemption on State letterhead. If the issuer is not subject
to a SHCE or similar State filing requirement, this criterion is not applicable;
4. The issuer has less than 1,000 life-years nationwide (combined for all health insurance
coverage) for the MLR reporting year; and
5. The issuer has non-credible experience in each State market in which it provides coverage.
The issuer must report the number of life-years in each State market for each MLR
reporting year that is aggregated to determine whether the issuer has non-credible
experience.
Like all issuers that are subject to the MLR reporting requirements, a company that meets all of
the criteria described above must register with the MLR module of CMS’s Health Insurance
Oversight System (HIOS), and complete, update, or confirm the “company issuer association”
form in HIOS. A company that meets all of the above criteria may select “yes” in the “small
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closed blocks of business” box on the HIOS company issuer association confirmation. When a
company that selects “yes” in the “small closed blocks of business” box downloads the MLR
reporting form from HIOS, it may complete only Part 3, Line 4.1 of the MLR reporting form for
every State and market in which it has health insurance coverage. The company should use HIOS’
“upload supplemental material” function to submit an attestation statement that affirms the criteria
described above. The company should also upload any State Supplemental Health Care Exhibit
(or other similar State required filing) exemption it has received from its State of domicile. The
company should then complete the HIOS process.
Issuers satisfying the above criteria may instead choose to complete the full MLR form for their
grandfathered plans in closed blocks of business. The option described in this closed block of
business policy is intended to reduce MLR reporting burden.
If CMS determines that an issuer does not satisfy the criteria described above, CMS will notify the
issuer that it must complete the full MLR reporting form as specified in 45 CFR Part 158.
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 40 and 41 of Parts 1 and 2 for that State, and instead combine Government
Program Plans and Other Health Business experience (Columns 40 and 41) in Column 42 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
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.

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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 only in-network coverage 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.
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. 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 MEWA has its principal place of business
(if the MEWA is the policyholder). For employer business issued through a non-MEWA
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.
Definition of Small Group and Large Group:
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 if a
State uses “50” employees as the upper limit for a small employer, then “50” may be substituted
for “100” employees until 2016.
• For the purposes of the MLR program, 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.
• For the purposes of the risk corridors program, the definition of employer size and the
employee counting method applicable under State law will determine whether a plan is
considered to be offered in the small group market.
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
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written by the reporting entity, outpatient coverage written by an unaffiliated separate entity) must not be
included in this MLR Form.
Issuers of health insurance coverage in the Massachusetts and Vermont individual and small group
markets that merge their markets in accordance with state law should indicate “Yes” in the Merge
Markets – Ind/SmGrp box on the Company Information tab of the MLR Form. Please report all
experience separately for the individual and small group markets, and combine it only in MLR numerator,
denominator, and credibility life-years fields and RC calculation fields (Part 3, Lines 1.8, 1.9, 2.3, 3.13.10, and 4.1).

Column Definitions for MLR Annual Reporting Form − Parts 1 and 2
Health insurance coverage, Columns 1 through 15, 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 from Columns 1–15 mini-med plans,
since they are reported separately in Columns 16–24 of each State MLR Form, and exclude expatriate
plans and student health plans reported in Columns 25–39 on the GT template. Exclude from Columns
2A and 7A grandfathered plans and non-grandfathered plans that are not ACA-compliant.
Do not include in Columns 1–39 business specifically included in Columns 40–43 (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 PHSA). 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 if the coverage
does not meet the definition of “excepted benefits” under the PHSA.
The experience of stop loss or excess of loss coverage for self-funded groups should be reported in Parts 1
and 2, Column 41 – Other Health Business Plans (business excluded by statute). Column 41 includes
information reported in Column 11 of the SHCE.
For any data element that is not separately reported in the financial statement filings to the issuer’s
regulatory authority, an issuer does not need to separately report that element in the 12/31 column of the
MLR Form. However, an issuer must separately report that data element in the 3/31 column as required
by 45 CFR Part 158 and as instructed in the MLR Form instructions. For example, an issuer may not
need to report the amount of contingent benefit and lawsuit reserves in Part 2, Line 2.13 in the 12/31
column, but must report such amounts in the 3/31 column. An issuer must still report, in the detail
provided by the MLR form, the amounts for premiums and unearned premium reserves, taxes and fees,
claims and claims-related reserves, quality improving activities, and non-claims costs, in both the 12/31
and the 3/31 columns, to the extent the issuer reports such amounts to the issuer’s regulatory authority.
Columns 1, 6, 11, 16, 19, 22, 25, 30, 35, 40, 41, 42, 43 – Business as of 12/31 of the MLR reporting
year

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Financial information reported for the 12/31 columns are to equal the exact amounts that were
reported directly to the State regulatory authority of the issuer, including amounts that may have
been amended in the SHCE the issuer submitted to the NAIC prior to filing the 2014 MLR Form.
Include:
Experience of policies in each of the relevant markets for the MLR reporting year,
as reported as of December 31, to the regulatory authority 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, 2A, 7, 7A, 12, 17, 20, 23, 36 – Business as of 3/31 of subsequent MLR reporting year
Financial information reported in the 3/31 columns should equal the amount of each element
related specifically to experience in the 2014 MLR reporting year and paid through March 31 of
the subsequent reporting year (incurred in 12, paid or received in 15), plus any provision for items
properly allocable to the 2014 MLR reporting year but not yet paid as of 3/31 of the following
year, except as otherwise noted in line instructions. For example, these columns could include
differences from the 12/31 columns in the upper limit for a small group and the lower limit for a
large group, if state group size regulations differ from federal group size regulations. (See the
Definitions of Small Group and Large Group, in the General Instructions above.) These columns
could also include differences from the 12/31 columns in the accounting for the Federal
reinsurance, risk corridors, and risk adjustment amounts. If the issuer elects to treat the out-ofnetwork experience of an affiliate that provides the out-of-network coverage as if it were related to
the contract providing the in-network coverage, the issuer must include such out-of-network
experience in the 3/31 columns, as well as separately report it in the Dual Contract columns (see
the column definition below).
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.

Columns 2A and 7A only – Individual and Small Group Health Insurance [Risk Corridors]
Companies that did not offer QHPs through the Exchange in 2014 do not need to complete the risk
corridors columns 2A and 7A.
Exclude:
Grandfathered plans and non-grandfathered plans that are not ACA-compliant.
Grandfathered plans are plans that were in effect on March 23, 2010, and that have not been
changed in ways that substantially reduce benefits or increase cost-sharing for consumers,
pursuant to the regulations at 45 CFR Part 147.140. A plan is not ACA-compliant if it was not
compliant with Affordable Care Act market reforms during the 2014 calendar year. The
Affordable Care Act market reforms are set forth in sections 2701 through 2707 of the Public
Health Service Act (Public Law 78-410), and the implementing regulations in Title 45 of the Code
of Federal Regulations.
Columns 3, 8, 13, 18, 21, 24, 37 – Dual Contract
If an issuer chooses to treat the out-of-network experience of an affiliate that provides the out-ofnetwork coverage as if it were related to the contract providing the in-network coverage, the issuer
8

must report the out-of-network experience in the 3/31 columns, as well as the Dual Contract
column.
Include:

Experience reported in columns 2, 7, 12, 17, 20, 23, and 36 that is attributable to
dual contracts. Note that these amounts are a subset of what is reported as of 3/31.

Columns 4, 9, 14, 38 – Deferred Newer Business from prior MLR reporting year
Include:

Experience from policies for the relevant market newly issued in the 2013 MLR
reporting year (PY1), previously deferred, as provided in the General Instructions.
Data elements constituting adjusted incurred claims for business deferred from the
preceding MLR reporting year should be restated as of 3/31 of the year following
the MLR reporting year.

Columns 5, 10, 15, 39 – Deferred Newer Business for the MLR reporting year
Include:

Columns 1–5
Include:

Columns 6–10
Include:

Columns 11–15
Include:

Columns 16–24
Include:

Columns 25–34
Include:

Policies for the relevant market newly issued in the 2014 MLR reporting year, as
defined more specifically in the General Instructions, deferred for reporting
purposes at the issuer’s option.
Individual Market
Health insurance where the policy is issued to an individual covering the individual
and his or her dependents in the individual market.
Small Group Market
All policies issued in the small group market (including fully insured State and
local government policies).
Large Group Market
All policies issued in the large group market (including the Federal Employees
Health Benefit Program and fully insured State and local government policies).
Mini-Med Plans
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.
Expatriate Plans (GT Template only. 12/31 column only.)
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, as of
12/31 on the GT template only.
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Columns 35–39

Student Health Plans (GT template only.)

Include:

All health insurance policies issued to students and their dependents pursuant to a
written agreement between the issuer and the institution of higher education, as
defined by 45 CFR §147.145.

Exclude:

Policies reported in other columns. Also exclude amounts paid to a provider for
services that do not represent reimbursement for covered services provided to an
enrollee and are directly covered by a student administrative health fee.

Column 40
Include:

Government Program Plans (Not Subject to Section 2718 of the PHSA)
Government sponsored programs that are not subject to section 2718 of the PHSA,
such as Medicare (Title XVIII, including Medicare Advantage Part C and Medicare
Part D plans), 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 regulatory authority in the
issuer’s State of domicile or as filed on the NAIC SHCE filing for the MLR
reporting year.

Column 41

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

Information reported here is similar to that reported in the SHCE Part 1, Columns 9 and 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 1–39, including stand-alone dental and vision coverage, long-term care, disability
income, etc.
Include:
Short-term, limited-duration insurance (as defined under 45 CFR §144.103);
supplemental coverage if offered as a separate policy, certificate, or contract of insurance (45 CFR
§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 CFR §146.145), and other
“excepted benefits” as specified by regulations promulgated by HHS (45 CFR §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 if the coverage does not meet the definition of
“excepted benefits” under the PHSA.

10

Report the experience of the issuer’s Other Business for the MLR reporting year as of December
31, as reported to the regulatory authority in the issuer’s State of domicile or as filed on the NAIC
SHCE filing for the MLR reporting year.
Column 42
Include:

Column 43
Include:

2% Aggregate Rule
Experience otherwise reportable in Columns 40–41, if issuer’s total earned
premium on health insurance coverage and mini-med experience (Columns 1, 6,
11, 16, 19, and 22) for a particular State is less than 2% of its total health earned
premium for that State (Columns 1, 6, 11, 16, 19, 22, 40, and 41). See General
Instructions, above.
Uninsured (Self-Funded) Plans
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 regulatory authority 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
(Summary of Data)
These MLR Form Filing Instructions only apply to the 2014 MLR reporting year and its reporting
requirements. These Filing Instructions will be revised to reflect changes that apply to the filing years
subsequent to 2014.
In addition to the instructions below, the General Instructions and Column Definitions at the beginning of
these Filing Instructions apply to Part 1. The General Instructions and Column Definitions include
instructions regarding reporting of reinsurance, 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 Parts 153
and 158 and are not identical to the definitions or instructions of the NAIC’s SHCE.
Section 1 – Premium
Line 1.1 – Total direct premium earned
Part 2, Lines 1.1 + 1.2 – 1.3 – 1.7 + 1.8 + 1.9 + 1.10 + 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 Line 2.4.
Line 1.4 – 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 1.5 – 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.

12

Line 1.6 – Risk revenue
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.
Section 2 – Claims
Line 2.1 – Total incurred claims
Part 2, Line 2.16.
(Note: In the 2011 MLR reporting form, Part 1, Line 2.1 was equal to Total adjusted incurred
claims, which included Allowable fraud reduction expense. The 2012 and later MLR reporting
form Part 1, Line 2.1 is Total incurred claims, which does not include Allowable fraud
reduction expense. Allowable fraud reduction expense is accounted for in calculating Adjusted
incurred claims in Part 3.)
Line 2.2 – Prescription drugs (informational only)
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.
Line 2.3 – Pharmaceutical rebates (informational only)
Line 2.4 – State stop loss, market stabilization, and claim/census based assessments (informational only)
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

13

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
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 (report as a negative amount if offsetting Part 2, Line 2.15).
Line 2.7 – Rebates paid
MLR rebates paid during the MLR reporting year.
Line 2.8 – Estimated rebates unpaid at the end of the previous MLR reporting year
Amount should equal Line 2.9 from the previous MLR reporting form.
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 staff-model HMOs).

Deduct:

Medical expenses associated with fee-for-service business.

Line 2.11 – Allowable fraud reduction expenses
Part 2, Line 2.17.
Section 3 – Federal and State Taxes and Licensing or Regulatory Fees
Any amounts for ACA fees collected in advance of the MLR reporting year in which the fee is payable
may not be reported in Section 3.
Line 3.1 – Federal taxes and assessments incurred by the reporting issuer during the MLR reporting year
3.1a – Federal income taxes deductible from premiums in MLR calculations
14

Include:

Federal income taxes attributed to the MLR reporting year allocated to the
respective lines of business reported.

Exclude: Federal income taxes on investment income and capital gains.
3.1b – Patient Centered Outcomes Research Institute (PCORI) Fee
This fee is imposed on an issuer of a specified health insurance policy and a plan sponsor of an
applicable self-insured health plan.
Include:

PCORI fees attributed to applicable policies during the MLR reporting year.

3.1c – Affordable Care Act section 9010 Fee
This fee is imposed on an issuer of fully insured health plans with at least $25 million in net
premiums in proportion to the issuer’s market share.
Include:

ACA section 9010 fees payable during the MLR reporting year.

Exclude: ACA section 9010 fees payable in the preceding or following reporting years,
regardless of whether such fees were incorporated in or billed with premium for the
MLR reporting year.
3.1d – Other Federal Taxes (other than income tax) and assessments deductible from premium
Include:

Federal taxes and assessments (other than income taxes) allocated to the respective
lines of business.

Exclude: Fines, penalties, and fees for examinations by any Federal departments.
Line 3.2 – State insurance, premium, and other taxes incurred by the reporting issuer during the MLR
reporting year (deductible from premium in MLR calculation)
3.2a – State income, excise, business, and other taxes, allocated to the respective lines of business
reported, that may be excluded from earned premium under 45 CFR §158.162(b)(1)
Include:
• 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, or market
stabilization redistributions, or cost transfers for the purpose of rate subsidies, not
directly tied to claims, and that are authorized by State law
• 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
15

•

State income, excise, and business taxes other than premium taxes

Exclude: Fines, penalties, and fees for examinations by any State departments.
3.2b – State premium taxes
Include:

State premium taxes or State taxes based on policy reserves if in lieu of premium
taxes related to the respective lines of business.

3.2c – Community benefit expenditures deductible from premium in MLR calculations
Federal tax exempt issuers: May report a value for 3.2b and 3.2c. Community benefit
expenditures are limited to the highest of either:
1. Three percent of earned premium; or
2. The highest health insurance coverage premium tax rate in the State for which the
report is being submitted, multiplied by the issuer's earned premium in the applicable
State market.
Non-Federal tax exempt issuers: May report a value for 3.2b or 3.2c, but not both. Issuers may
not report zero ($0) community benefit expenditures in lieu of negative State premium taxes.
Community benefit expenditures are limited to:
• The highest health insurance coverage premium tax rate in the State for which the
report is being submitted, multiplied by the issuer’s earned premium in the applicable
State market.
If an issuer uses the highest premium tax rate in the State, the issuer must report the applicable
highest State health premium tax rate in Part 6, Line 1.
Note: Issuers must indicate their Federal tax exempt status in the Company Information tab.
**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:
• 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
3.3a – Federal Transitional Reinsurance Program Contributions
16

Include:

Federal reinsurance contributions required under Section 1341 of the Affordable
Care Act owed for the MLR reporting year. Report the entire contribution amount,
including contribution amounts allocable to the reinsurance payment pool and
program administrative expense, and to the General Fund of the U.S. Treasury.

3.3b – Other Federal and State 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
authority, including user fees paid to State-based, State Partnership, or Federallyfacilitated Marketplace, and examination fees in lieu of premium taxes as specified by
State law.
• Amounts paid out to a third party administrator or incurred by or for the issuer in
contraceptive claims costs under the accommodations for self-insured group health
plans of eligible organizations, plus the associated allowance for administrative cost
and margin allowed under 45 CFR 156.50(d)(3)(ii), plus the net Federally Facilitated
Exchange user fee paid to HHS.
Exclude: Fines, penalties, and fees for examinations by any State or Federal regulatory
authority other than as specifically included in Line 3.3.
Section 4 – Health Care Quality Improvement Expenses Incurred
Expenses for Quality Improvement (QI) activities are expenditures for activities conducted by issuers that
are 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.
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:
17

•
•
•
•
•

•
•
•
•
•
•
•
•
•

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, including
maintenance of ICD-10 code sets adopted pursuant to the Health Insurance Portability and
Accountability Act (HIPAA), 42 U.S.C. §1320d-2, as amended, and ICD-10 implementation costs
in excess of 0.3% of earned premium
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 Lines 4.1 through 4.6, 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

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
Medical Errors, and Lower Infection and Mortality Rates, and Implement, Promote, and Increase
Wellness and 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 and
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.
Line 4.1 – Improve Health Outcomes
18

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 Lines 4.1 through 4.6
• 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
Line 4.2 – 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
Line 4.3 – 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
• 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
Line 4.4 – Wellness and health promotion activities
19

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
PHSA
• 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)
Line 4.5 – Health information technology (HIT) expenses related to improving health care quality
Report information technology expenses associated with the activities in Lines 4.1 through 4.4
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 Lines 4.1 through 4.4
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 payments are not included in reimbursement for clinical services as
defined in 45 CFR §158.140;
2. 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;
3. Providing technical assistance to support adoption and meaningful use of certified
electronic health records technologies;
4. 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
20

5.

6.
7.

8.

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 governmentbased health organizations for the purposes of identifying or treating specific
conditions or controlling the spread of disease; or
Provision of electronic health records, patient portals, and tools to facilitate patient
self-management.

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
(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 all expenditures related to ICD-10 which should be
reported in Lines 4.6 and 5.8.
Line 4.6 – Allowable ICD-10 Implementation Expenses
Include:

ICD-10 conversion costs incurred in the MLR reporting year up to 0.3% of earned
premium in the relevant State market.

Exclude: ICD-10 maintenance costs, as well as ICD-10 implementation expenses in excess
of 0.3% of earned premium.
Section 5 – Non-Claims Costs
Line 5.1 – 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
(including amounts reported in Part 2, Line 2.17a)
• Expenses for internal and external appeals

21

•

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

Exclude: Cost-containment expenses that improve the quality of health care reported in Part
1, Section 4.
Line 5.2 – All other claims adjustment 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 or cost containment expenses.
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
• Supplies and postage
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
5.5a – Taxes and assessments not excluded from premium. (Do not include amounts reported in
Section 3 or Line 9.)
Include:
• Taxes and assessments not deducted from Premium in Section 3
• 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
5.5b – Fines and penalties of regulatory authorities, and fees for examinations by any State or Federal
departments other than those included in Line 3.3b, above.
Line 5.6 – Other general and administrative expenses
22

Include:

General and Administrative Expenses not previously reported in Sections 3, 4, or 5
above.

These expenses include such examples as:
• Salaries
• Outsource services
• EDP equipment, other equipment
• Accreditation and certification fees
• Reimbursement by uninsured plans and fiscal intermediaries
• ICD-10 maintenance costs
• ICD-10 implementation expenses in excess of 0.3% of earned premium
• Community benefit expenditures – report only the amount in excess of what is already
reported in Part 1, Line 3.2c
• Other additional expenses not included in another category such as rent, legal fees and
expenses, medical examination expenses, inspection reports, professional consulting
fees, travel, advertising, postage, utilities, etc.
Exclude:
• Any elements already reported on Lines 5.1, 5.2, 5.3, 5.4, and 5.5
• Services provided by affiliates under management agreements
• Rating agencies and other similar organizations
Line 5.7 – Total community benefit expenditures (informational only; include amounts reported in Lines
3.2c and 5.6)
Line 5.8 – Total ICD-10 expenses (informational only; include amounts reported in Lines 4.6 and 5.6)
Include all implementation and maintenance expenses associated with ICD-10.
Section/Line 6 – Income from fees on uninsured plans
Section 7 – Other indicators or information
Line 7.1 – Number of policies/certificates
In the individual market, this is the number of individual policies, not counting dependents, in
force as of the last day of the reporting year.
In the group markets, this is the number of certificates issued to individuals covered under a
group policy in force as of the last day of the reporting year (e.g. number of employees, NOT
counting dependents). It is NOT the number of group policyholders (e.g. employers).
Reasonable approximations are allowed when exact information is not available to the issuer
for group business.
Line 7.2 – Number of covered lives
23

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 year. Reasonable approximations are
allowed when exact information is not available to the issuer.
Line 7.3 – Number of groups
Applicable to the group markets only. This is the total number of employer groups insured as
of the last day of the reporting year. This is NOT the number of certificates, employees,
covered lives, or life-years.
Line 7.4 – Member months
The total number of lives, including dependents, 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 7.5 – Number of life-years
Part 1, Line 7.4 / 12.
Section 8 – Net investment income and other gain/(loss)
Enter the Grand Total as of 12/31 for ALL markets in Columns 1–43 of each State filing.
Section 9 – Other Federal income taxes
Enter the Grand Total as of 12/31 for ALL markets in Columns 1–43 of each State filing.
Include: Federal income taxes on investment income and capital gains.
Exclude: Taxes entered on Part 1, Lines 3.1a-d.

24

Instructions for MLR Annual Reporting Form − Part 2
(Premium and Claims)
These MLR Form Filing Instructions only apply to the 2014 MLR reporting year and its reporting
requirements. These Filing Instructions will be revised to reflect changes that apply to the filing years
subsequent to 2014.
In addition to the instructions below, the General Instructions and Column Definitions at the beginning of
these Filing Instructions apply to Part 2. The General Instructions and Column Definitions include
instructions regarding reporting of reinsurance, 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. Include advance payments of the premium tax credit. Any amounts for ACA
fees collected in advance of the MLR reporting year in which the fee is payable must not be reported as
unearned premium.
Line 1.1 – Direct premium written
12/31 Column – report amount as of 12/31 of the MLR reporting year, as reported to the
regulatory authority in the issuer’s State of domicile or as filed on the NAIC SHCE filing
for the MLR reporting year.
3/31 Column (premium for coverage in MLR reporting year only) – report premium collected
from 1/01 of the MLR reporting year through 3/31 of the year following the MLR
reporting year for coverage in the MLR reporting year only, plus uncollected (due and
unpaid) premium for coverage in the MLR reporting year only as of 3/31 of the year
following the MLR reporting year. Premium should reflect retroactive eligibility
adjustments related to coverage in the MLR reporting year. PLEASE NOTE that this
methodology differs from NAIC SHCE methodology. However, issuers may choose to
report amounts on the same basis as in the 12/31 columns.
Premium should include all amounts collected toward ACA fees, regardless of whether the
fees were included in premium or billed as a separate line item.
Include:
• Premium assumed 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
• Premium assumed under a 100% indemnity reinsurance and administrative agreement,
limited to only those agreements both entered into and also effective prior to March 23,
25

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 (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
• Premium ceded under a 100% indemnity reinsurance and administrative agreement,
limited to only those agreements both entered into and also 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)
12/31 Column – report reserves established to account for the portion of the premium paid prior to
the MLR reporting year that was intended to provide coverage during the MLR reporting
year. Report reserves as of 12/31 of the year preceding the MLR reporting year, as
reported to the regulatory authority in the issuer’s State of domicile or as filed on the
NAIC SHCE filing for the year preceding the MLR reporting year.
3/31 Column (premium for coverage in the MLR reporting year only) – report premium for
coverage in the MLR reporting year only, collected in the immediately preceding MLR
reporting year. Report amounts as of 12/31 of the year preceding the MLR reporting year.
PLEASE NOTE that this methodology differs from NAIC SHCE methodology. However,
if the issuer chose to report direct written premium in Line 1.1 on the same basis as in the
12/31 column, the issuer should report unearned premium reserves consistently with how it
reports direct written premium.
Line 1.3 – Unearned premium (MLR reporting year)
12/31 Column – 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. Report reserves as of 12/31 of the MLR reporting year, as reported to the
regulatory authority in the issuer’s State of domicile or as filed on the NAIC SHCE filing
for the MLR reporting year.
3/31 Column – report zero (note that if collected and due and unpaid premium is reported
correctly in Line 1.1 above, Line 1.1 should not include amounts that would constitute
unearned premium for coverage in years subsequent to the MLR reporting year). PLEASE
NOTE that this methodology differs from the NAIC SHCE methodology. However, if the
issuer chose to report direct written premium in Line 1.1 on the same basis as in the 12/31
column, the issuer should report unearned premium reserves consistently with how it
reports direct written premium. Do not include any amounts collected during 2014 for
2015 ACA fees as unearned premium.
Line 1.4 – Experience rating refunds (rate credits) paid or received
26

1.4a – 12/31 Column – report all refunds paid or received through 12/31 of the MLR reporting
year.
1.4b – 3/31 Column – report refunds associated only with claims incurred during the MLR
reporting year, paid or received through 3/31 of the following year.
Include:

Experience rating refunds and State premium refunds paid or received 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.

Exclude: Federal and State MLR rebates.
Line 1.5 – Reserves for experience rating refunds (MLR reporting year)
12/31 Column – all refunds unpaid as of 12/31 of the MLR reporting year.
3/31 Column –refunds associated only with claims incurred during the MLR reporting year, not
paid or received through 3/31 of the following year.
Include:

Reserves for experience rating refunds, plus reserves for State premium refunds.

Exclude: Reserves for Federal and State MLR rebates.
Deduct:

Amounts receivable under retrospectively rated funding arrangements.

Line 1.6 – Reserves for experience rating refunds (year preceding the MLR reporting year)
12/31 Column – as of 12/31 of the year preceding the MLR reporting year.
See instructions for Line 1.5.
Line 1.7 – 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
Exclude:
• Reserves for bad debt or statutory non-admitted amounts
Line 1.8 – 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
27

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 Part 2, Section 2 – Claims.)
Line 1.9 – Federal Transitional Reinsurance Program Payments
Include:

Expected payments from HHS, as shown on the notification received from HHS by
June 30 of the year following the MLR reporting year.

Line 1.10 – Federal Risk Adjustment Program Net Receipts or Charges
Include:

Expected net payments from HHS (enter as a positive amount) or charges payable to
HHS (enter as a negative amount), as shown on the notification received from HHS by
June 30 of the year following the MLR reporting year.

Line 1.11 – Federal Risk Corridors Program Receipts or Charges
Include:

The risk corridors payment or charge amount in Tab 3 Line 10 of the Risk Corridors
Plan-level Reporting Form.

Line 1.12 – Premium ceded under 100% reinsurance (informational only; excluded from Line 1.1)
Include:
• Premium ceded under a 100% assumption reinsurance agreement (with a novation)
• Premium ceded under a 100% indemnity reinsurance and administrative agreement,
limited to only those agreements both entered into and also 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 (with a novation)
• Premium assumed under a 100% indemnity reinsurance and administrative agreement,
limited to only those agreements both entered into and also 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 1.14 – Advance Payments of the Premium Tax Credit Received from HHS (informational only;
included in Lines 1.1-1.11)
Include:

Amount of advance premium tax credit received from HHS for the applicable benefit
year (MLR reporting year).
28

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.
2.1b – 3/31 Column – claims incurred only during the MLR reporting year, paid from 1/01 of the
MLR reporting year through 3/31 of the following year.
Include:
• Report payments net of risk share amount collected or paid
• Any overpayment that has not yet been recovered should be included in paid claims and
included in health care receivables
• Market stabilization payments 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 (include as a negative
adjustment)
• Claims assumed 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
• 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
• Payment by a group health insurance issuer for contraceptive services for participants and
beneficiaries of its insured health plans under the accommodations for eligible
organizations
Exclude:
• Claims ceded 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
• 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
29

•
•
•
•

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 payments made to providers (to be reported in Line 2.11)
In the 3/31 Column, exclude amount of cost-sharing reductions for the applicable benefit
year (MLR reporting year) (to be reported in Line 2.18). PLEASE NOTE that this
methodology may differ from the NAIC SHCE methodology, which should be used in the
12/31 Column

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
• Market stabilization receipts by issuers that are directly tied to claims incurred and other
claims based or census based assessments
• 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)
2.2a – 12/31 Column – liability as of 12/31 of MLR reporting year for all claims regardless of
incurred date.
2.2b – 3/31 Column – liability based on claims incurred only during the MLR reporting year, and
unpaid as of 3/31 of the following year.
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 claims incurred only during the MLR reporting year and
not reported by 3/31 of the following 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 prior year (year preceding the MLR reporting year)
12/31 Column – liability as of 12/31 of the year preceding the MLR reporting year, as reported to
the regulatory authority in the issuer’s State of domicile or as reported on the NAIC SHCE
filing for the year preceding the MLR reporting year.
Line 2.4 – Direct claim reserves (MLR reporting year)
30

2.4a – 12/31 Column – reserves as of 12/31 of MLR reporting year for all claims regardless of
incurred date.
2.4b – 3/31 Column – reserves based on experience incurred only in the MLR reporting year,
calculated as of 3/31 of the following year.
Report reserves related to healthcare services for present value of amounts not yet due on claims.
Line 2.5 – Direct claim reserves prior year (year preceding the MLR reporting year)
12/31 Column – reserves as of 12/31 of the year preceding the MLR reporting year, as reported to
the regulatory authority in the issuer’s State of domicile or as reported on the NAIC SHCE
filing for 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.
Include:

Contract reserves and other claims related reserves.

Exclude: Premium deficiency reserves.
Reserves for expected MLR rebates.
2.6a – 12/31 Column – reserves as of 12/31 of the MLR reporting year, as reported to the
regulatory authority in the issuer’s State of domicile or as reported on the NAIC SHCE
filing for the MLR reporting year.
2.6b – 3/31 Column – 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. Calculate as of 12/31 of the MLR reporting year.
Line 2.7 – Direct contract reserves prior year (year preceding the MLR reporting year)
12/31 Column – amount reported as of 12/31 of the year preceding the MLR reporting year.
3/31 Column – amount reported on Line 2.6b in the 3/31 Column of the MLR Form for the
preceding year.
Line 2.8 – Experience rating refunds (rate credits) paid or received
2.8a – 12/31 Column – report all refunds paid or received through 12/31 of the MLR reporting
year.
31

2.8b – 3/31 Column – report refunds associated only with claims incurred during the MLR
reporting year, paid or received through 3/31 of the following year.
Include:

Experience rating refunds and State premium refunds paid or received 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.

Exclude: Federal and State MLR rebates.
Line 2.9 – Reserves for experience rating refunds (MLR reporting year)
2.9a – 12/31 Column – all refunds unpaid as of 12/31 of the MLR reporting year.
2.9b – 3/31 Column – refunds associated only with claims incurred during the MLR reporting
year, not paid or received as of 3/31 of the following year.
Include:

Reserves for experience rating refunds, plus reserves for State premium refunds.

Exclude: Reserves for Federal and State MLR rebates.
Deduct:

Amounts receivable under retrospectively rated funding arrangements.

Line 2.10 – Reserves for experience rating refunds (year preceding the MLR reporting year)
12/31 Column – as of 12/31 of the year preceding the MLR reporting year.
See instructions for Line 2.9.
Line 2.11 – Incurred medical incentive pools and bonuses
12/31 Column – based on all payments through 12/31 of the MLR reporting year.
3/31 Column – based on amounts incurred only during the MLR reporting year and paid through
3/31 of the following 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.
32

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 (year preceding the MLR 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
12/31 Column – reserves as of 12/31 of the MLR reporting year.
If not separately reported in annual financial filings to the issuer’s regulatory authority, the
issuer does not need to separately report this element in this column.
3/31 Column – reserves related to claims incurred during the MLR reporting year and unpaid as of
3/31 of the following year.
Issuer must separately report this data element in the 3/31 column as provided in 45 CFR
Part 158 and as noted in the General Instructions.
Include:

The claims-related portion of reserves for contingent benefits and lawsuits.

Exclude: Reserves related to costs associated with claims lawsuits within Line 2.13; e.g., 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.
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
33

reflect the experience of the issuer with respect to the employer as a whole, according to an
objective formula the issuer defined prior to the beginning of the MLR reporting year, 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 Total incurred claims
12/31 Column – Part 2, Lines 2.1a + 2.2a – 2.3 + 2.4a – 2.5 + 2.6a – 2.7 + 2.8a + 2.9a – 2.10 +
2.11a + 2.11b – 2.11c – 2.12a + 2.12b + 2.13 + 2.14 + 2.15
3/31 Column – Part 2, Lines 2.1b + 2.2b + 2.4b + 2.6b – 2.7 + 2.8b + 2.9b + 2.11a + 2.11b – 2.12a
+ 2.13 + 2.14 + 2.15
(Note: Allowable fraud reduction expenses are added to Incurred Claims in the calculation of
Adjusted Incurred Claims in Part 3, Line 1.2.)
Line 2.17 – Allowable fraud reduction 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 2.17a or
the actual fraud recoveries collected on paid claims on Line 2.17b. If either Line 2.17a or Line
2.17b is equal to zero (0) then the allowable amount is equal to zero (0).
2.17a – Total fraud reduction expense.
2.17b – Total fraud recoveries that reduced PAID claims in Part 2, Line 2.1.
Include collected fraud recoveries on paid claims only.
Line 2.18 – Advance Payments of Cost-sharing Reductions
Include: Amount of cost-sharing reductions received for the applicable benefit year (MLR
reporting year). CMS will publish future guidance specifying how issuers should report costsharing reduction payments for MLR and risk corridors for the 2014 benefit year.

34

Instructions for MLR Annual Reporting Form − Part 3
(MLR and Rebate Calculation)
These MLR Form Filing Instructions only apply to the 2014 MLR reporting year and its reporting
requirements. These Filing Instructions will be revised to reflect changes that apply to the filing years
subsequent to 2014.
No data should be entered in any of the cells shaded grey.
COLUMN DEFINITIONS – PART 3
Columns 1, 5, 9, 13, 17, 21 – PY2
Report the information for the MLR reporting year that is 2 years prior to the MLR reporting year.
Report corrected amounts if reported in error in prior MLR Form submissions. All elements
should be reported in accordance with the applicable reporting year’s instructions. Exception: Line
1.1 should be reported as originally submitted.
Columns 2, 6, 10, 14, 18, 22 – PY1
Report the information for the MLR reporting year that is 1 year prior to the MLR reporting year.
Report corrected amounts if reported in error in prior MLR Form submissions. All elements
should be reported in accordance with the applicable reporting year’s instructions. Exception: Line
1.1 should be reported as originally submitted.
Columns 3, 7, 11, 15, 19, 23, 35 – CY
Report the information for the MLR reporting year.
Columns 4, 8, 12, 16, 20, 24, 36 – Total
For Sections 1 and 2 and Line 3.1, report the sum of the amounts in PY2, PY1, and CY columns,
except for Lines 1.5, 1.6, and 2.3. Otherwise, follow line instructions. The Total column is used to
calculate the numerator and denominator of the MLR calculation. CY adjusted premium is used to
calculate the issuer’s rebate, if any.
Columns 4A, 8A – RC
For Section 3, report information for the risk corridors calculation for the applicable benefit year
(MLR reporting year). Follow line instructions for Lines 3.1 through 3.12. Information reported
in column 4A should be for individual market business only. Information reported in column 8A
should be for small group market business only.
Companies that did not offer QHPs through the Exchange in 2014 do not need to complete the risk
corridors columns 4A and 8A.
Exclude: Grandfathered plans and non-grandfathered plans that are not ACA-compliant.
Grandfathered plans are plans that were in effect on March 23, 2010, and that have not been
35

changed in ways that substantially reduce benefits or increase cost-sharing for consumers,
pursuant to the regulations at 45 CFR Part 147.140. A plan is not ACA-compliant if it was not
compliant with Affordable Care Act market reforms during the 2014 calendar year. The
Affordable Care Act market reforms are set forth in sections 2701 through 2707 of the Public
Health Service Act (Public Law 78-410), and the implementing regulations in Title 45 of the Code
of Federal Regulations.
Risk corridors amounts in Columns 4A and 8A, Lines 3.1 through 3.12 must be exactly the same
as the corresponding amounts in Tab 3 of the Risk Corridors Plan Level Data Form. Tab 3 of the
Risk Corridors Plan Level Data Form indicates the lines where the data input must be the same as
the data input in Part 3 of the MLR Reporting Form. Note that companies that did not offer QHPs
through the Exchange in 2014 do not need to complete the Risk Corridors Plan Level Data Form.
Column Groupings
For the definitions for each of the following markets, see the Column Definitions at the beginning of these
Filing Instructions.
Columns 1–4A
Columns 5–8A
Columns 9–12
Columns 13–16
Columns 17–20
Columns 21–24
Columns 25–28
Columns 29–32
Columns 33–36

–
–
–
–
–
–
–
–
–

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 (Not applicable for 2014)
Expatriate plans – Large Group Market (Not applicable for 2014)
Student Health plans – Individual Market (GT template only)

LINE INSTRUCTIONS – PART 3
Columns 1–24 are not applicable for the GT template.
Section 1 – Medical Loss Ratio Numerator
Line 1.1 – Adjusted incurred claims as reported on the MLR Form for prior year(s)
PY2 Column – 2012 MLR Form, Part 1, Line 2.1 + Part 2, Line 2.17, Columns 3/31 + Deferred
PY– Deferred CY
PY1 Column – 2013 MLR Form, Part 1, Lines 2.1 + 2.11, Columns 3/31 + Deferred PY– Deferred
CY
Line 1.2 – Adjusted incurred claims as of 3/31 of the year following the MLR reporting year
Report corrected amounts if prior year’s information was reported inaccurately.
PY2 Column – enter the amount of adjusted incurred claims reported on Part 1, Lines 2.1 + Part 2,
Line 2.17, Columns 3/31 + Deferred PY1 – Deferred CY of the MLR Form 2 years prior to
36

the MLR reporting year, restated as of 3/31 of the year following the MLR reporting year.
For example, for reporting year 2014, enter 2012 adjusted incurred claims restated as of
3/31/2015. (This is also known as claims incurred in 12 months and paid in 39 months.)
Restate all applicable elements of adjusted incurred claims, including reserves and the
allowable fraud reduction expense, in accordance with the Filing Instructions from 2 years
prior to the MLR reporting year.
PY1 Column – enter the amount of adjusted incurred claims reported on Part 1, Line 2.1 + 2.11,
Columns 3/31 + Deferred PY1 – Deferred CY of the MLR Form for the preceding MLR
reporting year, restated as of 3/31 of the year following the MLR reporting year. (This is
also known as claims incurred in 12 months and paid in 27 months). Restate all applicable
elements of adjusted incurred claims, including reserves and the allowable fraud reduction
expense, in accordance with the Filing Instructions from the year preceding the MLR
reporting year.
CY Column – Part 1, Lines 2.1 + 2.11, Columns 3/31 + Deferred PY1 – Deferred CY (Note that
adjusted incurred claims in the Deferred PY1 columns on Parts 1 and 2 should have been
restated as of 3/31 of the year following the MLR reporting year.)
RC Column – Part 1, Lines 2.1 + 2.11, Column [RC] 3/31
Line 1.3 – Improving Health Care Quality Expenses
PY2 and PY1 Columns – 2012 and 2013 MLR Forms, respectively, Part 1, Lines 4.1 + 4.2 + 4.3 +
4.4 + 4.5 + 4.6, Columns 3/31 + Deferred PY1 – Deferred CY
CY Column – Part 1, Lines 4.1 + 4.2 + 4.3 + 4.4 + 4.5 + 4.6, Columns 3/31 + Deferred PY1 –
Deferred CY
RC Column – Part 1, Lines 4.1 + 4.2 + 4.3 + 4.4 + 4.5 + 4.6, Column [RC] 3/31
Line 1.4 – Advance payments of Cost-Sharing Reductions
CY Column – Part 2, Line 2.18, Columns 3/31 + Deferred PY1 – Deferred CY
RC Column – Part 2, Line 2.18, Column [RC] 3/31
Line 1.5 – Federal Transitional Reinsurance Program payments
CY Column – Part 2, Line 1.9, Columns 3/31 + Deferred PY1 – Deferred CY
RC Column – Part 2, Line 1.9, Column [RC] 3/31
Line 1.6 – Net Federal Risk Adjustment Program payments or charges
CY Column – Part 2, Line 1.10, Columns 3/31 + Deferred PY1 – Deferred CY
RC Column – Part 2, Line 1.10, Column [RC] 3/31
37

Line 1.7 – Federal Risk Corridors Program payments or charges
CY Column – Part 2, Line 1.11, Columns 3/31 + Deferred PY1 – Deferred CY
Line 1.8 – MLR numerator
PY2 and PY1 Columns – Lines 1.2 + 1.3
CY Column – Lines 1.2 + 1.3 – 1.4 – 1.5 – 1.6 – 1.7
Total Column – Lines 1.2 + 1.3 – 1.4 – 1.5 – 1.6 – 1.7
In states with different MLR standards for the current reporting year or either of the two prior
years, issuers may scale the experience included in the Total column for Line 1.8 to account
for the change(s) in MLR standards. The scaling adjustment for the prior year is the current
year standard minus the prior year standard, multiplied by the prior year adjusted premium.
The scaling adjustment for two years prior is the current year standard minus the standard from
two years prior, multiplied by the adjusted premium from two years prior. For example, an
issuer subject to a 67% MLR standard in 2011, a 75% standard in 2012, and an 80% MLR
standard in 2013, with adjusted premiums of $1,000,000, $1,200,000, and $1,300,000 in 2011,
2012, and 2013, respectively, would have an adjustment of (80% - 75%) * $1,200,000 and
(80% - 67%) * $1,000,000 = $60,000 + $130,000 = $190,000 in 2013. Note that the scaling
adjustment amount(s) should be added to the Total Column for Line 1.8, and not in the CY,
PY1, or PY2 columns.
For 2014, in States that adopted the transitional policy outlined in the CMS letter dated
November 14, 2013, if the issuer provided transitional coverage in the individual and/or small
group market(s), the issuer may multiply the sum of the amounts reported in the CY Column
Lines 1.2 + 1.3 by 1.0001 before including it in the calculation for Line 1.8, Total Column, in
the relevant State and market.
For 2014 only, in states where the issuer participated in the State and Federal Exchanges
(sometimes referred to as “Marketplaces”) in the individual and/or small group market(s), the
issuer may multiply the sum of the amounts reported in the CY Column Lines 1.2 + 1.3 by
1.0004 before including it in the calculation for Line 1.8, Total Column, in the relevant State
and market.
Massachusetts and Vermont only: Issuers with health insurance coverage in both the
individual and small group markets, who merge their markets in accordance with state law,
should combine Lines 1.2 + 1.3 – 1.4 – 1.5 – 1.6 – 1.7 for both markets and enter the
combined amounts on Line 1.8 in the PY2, PY1, CY, and Total Columns for both markets
(Columns 1-8). Please note that MLR numerator, denominator, and life-years to determine
credibility, and RC calculated fields are the only fields on the MLR Form where experience for
the two markets can be combined.
Line 1.9 – Mini-Med and Student Health Plan numerator after adjustment factor
38

PY2 Column –
Mini-Med: 1.75 x (Lines 1.2 + 1.3)
(Note: Use this amount to determine whether the base credibility factor in Line 4.2 is
allowed. Do NOT use this amount to calculate the 2014 MLR numerator in Line 1.9, Total
Column.)
PY1 Column –
Mini-Med: 1.5 x (Lines 1.2 + 1.3)
(Note: Use this amount to determine whether the base credibility factor in Line 4.2 is
allowed. Do NOT use this amount to calculate the 2014 MLR numerator in Line 1.9, Total
Column.)
Student Health: 1.15 x (Lines 1.2 + 1.3)
CY Column –
Mini-Med: 1.25 x (Lines 1.2 + 1.3)
Student Health: Lines 1.2 + 1.3
Total Column –
Mini-Med: 1.25 x (Total Column, Lines 1.2 + 1.3)
(Note: Mini-Med issuers must add the reported experience for each MLR year together and
then apply the multiplier for the 2014 MLR reporting year (1.25) to the aggregated
experience.)
Expatriate: Not applicable for the 2014 MLR reporting year
Student Health: Total Column, Lines 1.2 + 1.3
For 2014, in States that adopted the CMS transitional policy, if the issuer provided transitional
coverage in the individual and/or small group market(s), the issuer may multiply the sum of
the amounts reported in the CY Column Lines 1.2 + 1.3 by 1.0001 before including it in the
calculation for Line 1.9, Total Column, in the relevant State and market.
Massachusetts and Vermont only: Issuers with health insurance coverage in both the MiniMed individual and small group markets, who merge their markets in accordance with state
law, should combine Lines 1.2 + 1.3 for both markets and enter the combined amounts
(multiplied by the appropriate multiplier) on Line 1.9 in the PY2, PY1, CY, and Total Columns
for both markets (Columns 13-20). Please note that MLR numerator, denominator, and lifeyears to determine credibility, and RC calculated fields are the only fields on the MLR Form
where experience for the two markets can be combined.
Section 2 - Medical Loss Ratio Denominator
39

Line 2.1 – Premium earned including Federal and State high risk programs
PY2 and PY1 Columns – 2012 and 2013 MLR Forms, respectively, Part 1, Lines 1.1 + 1.2 + 1.3,
Columns 3/31 + Deferred PY1 – Deferred CY
CY Column – (Part 1, Lines 1.1 + 1.2 + 1.3, Columns 3/31 + Deferred PY1 – Deferred CY) –
(Part 3, Lines 1.5 + 1.6 + 1.7, Column CY)
RC Column – (Part 1, Lines 1.1 + 1.2 + 1.3, Column [RC] 3/31) – (Part 3, Lines 1.5 + 1.6,
Column RC)
Line 2.2 – Federal and State taxes and licensing or regulatory fees
PY2 Column – 2012 MLR Form, Part 1, Lines 3.1a + 3.1b + 3.2a + (the higher of 3.2b or 3.2c) +
3.3, Columns 3/31 + Deferred PY1 – Deferred CY
Note: If Line 3.2b is negative and Line 3.2c is zero or blank (or vice versa), zero may not
be used as the higher of the two: only the negative amount may be used in the equation.
PY1 Column –
Federal tax-exempt issuers:
2013 MLR Form, Part 1, Lines 3.1a + 3.1b + 3.1c + 3.2a + 3.2b + 3.2c + 3.3,
Columns 3/31 + Deferred PY1 – Deferred CY
Not Federal tax-exempt issuers:
2013 MLR Form, Part 1, Lines 3.1a + 3.1b + 3.1c + 3.2a + (the higher of 3.2b or
3.2c) + 3.3, Columns 3/31 + Deferred PY1 – Deferred CY
Note: If Line 3.2b is negative and Line 3.2c is zero or blank (or vice versa), zero
may not be used as the higher of the two: only the negative amount may be used in
the equation.
CY Column –
Federal tax-exempt issuers:
Part 1, Lines 3.1a + 3.1b + 3.1c + 3.1d + 3.2a + 3.2b + 3.2c + 3.3a + 3.3b, Columns
3/31 + Deferred PY1 – Deferred CY
Not Federal tax-exempt issuers:
Part 1, Lines 3.1a + 3.1b + 3.1c + 3.1d + 3.2a + (the higher of 3.2b or 3.2c) + 3.3a
+ 3.3b, Columns 3/31 + Deferred PY1 – Deferred CY
Note: If Line 3.2b is negative and Line 3.2c is zero or blank (or vice versa), zero
may not be used as the higher of the two: only the negative amount may be used in
the equation.
RC Column –
40

Federal tax-exempt issuers:
Part 1, Lines 3.1a + 3.1b + 3.1c + 3.1d + 3.2a + 3.2b + 3.2c + 3.3a + 3.3b, Column
[RC] 3/31
Not Federal tax-exempt issuers:
Part 1, Lines 3.1a + 3.1b + 3.1c + 3.1d + 3.2a + (the higher of 3.2b or 3.2c) + 3.3a
+ 3.3b, Column [RC] 3/31
Note: If Line 3.2b is negative and Line 3.2c is zero or blank (or vice versa), zero
may not be used as the higher of the two: only the negative amount may be used in
the equation.
Note: In all lines where taxes (Line 2.2.) are included, an issuer should not
consider risk corridors payments and charges when estimating taxes under the risk
corridors formula.
Line 2.3 – MLR denominator
All Columns – Lines 2.1 – 2.2
Massachusetts and Vermont only: For Health Insurance Coverage and Mini-med plans
respectively, issuers with experience in both the individual and small group markets who merge
markets in accordance with state law, should combine Lines 2.1 – 2.2 for both markets and enter
the combined amounts on Line 2.3 in the PY2, PY1, CY, and Total Columns for both markets
(Columns 1-8 for health insurance coverage, Columns 13-20 for Mini-med plans.). Please note
that MLR numerator, denominator, and life-years to determine credibility, and RC calculated
fields are the only fields on the MLR Form where experience for the two markets may be
combined.
Section 3 – Risk Corridors Calculation
Issuers who did not offer QHPs through the Marketplace during 2014 benefit year should leave Section 3
blank.
Line 3.1 – Allowable Costs
Lines 1.2 + 1.3 – 1.4 – 1.5 – 1.6
Line 3.2 – Administrative Costs Excluding Taxes
Part 1, Lines 5.1 + 5.2 + 5.3 + 5.4 + 5.5a + 5.5b + 5.6, Column [RC] 3/31
Line 3.3 – Ratio of Allowable Costs to After-Tax Premium
Lines 3.1 / (2.1 – 2.2)
Line 3.4 – Transitional Adjustment Percentage
41

If Line 3.3 is at least 80%: enter the percentage specified by CMS for the applicable State market
If Line 3.3 is less than 80%: enter zero
Line 3.5 – Profit for Risk Corridors calculation
Enter the greater of Lines 3.5a or 3.5b
3.5a – Earned profit: Lines 2.1 –3.1– 2.2 – 3.2
3.5b – Capped profit: (3% + Line 3.4) x (Lines 2.1 – 2.2)
Line 3.6 – Allowable Administrative Costs
Enter the lesser of Lines 3.6a or 3.6b
3.6a – Profit and administrative costs excluding taxes: Lines 3.2 + 3.5
3.6b – Capped administrative costs: (20% + Line 3.4) x (Lines 2.1 – 2.2) + Line 2.2
3.6c – Capped administrative costs without adjustment: 20% x (Lines 2.1 – 2.2) + Line 2.2
Note: As set forth at 45 CFR 153.520, allowable administrative costs must reflect an
amount equal to the pro rata portion of the aggregate amount of such expense across all of
the QHP issuer’s non-grandfathered health plans in a market within a State, allocated to the
QHP based on premiums earned.
Line 3.7 – Risk Corridors Adjusted Target Amount
Lines 2.1 – 3.6
Line 3.8 – Allowable Administrative Costs without (Transitional) Adjustment
Enter the lesser of Lines 3.6a or 3.6c
Note: For issuers in States that have not adopted CMS’s transitional policy, Line 3.8
should equal Line 3.6.
Line 3.9 – Risk Corridors Unadjusted Target Amount
Lines 2.1 – 3.8
Note: For issuers in States that have not adopted CMS’s transitional policy, Line 3.9
should equal Line 3.7
Line 3.10 – Unadjusted Risk Corridors Ratio
Lines 3.1 / 3.9
42

Line 3.11 – Risk Corridors Aggregate Amount by Market without Adjustment
2014 Risk Corridors Plan Level Data Form, Tab 3, Line 9
Line 3.12 – Risk Corridors Total Payment or Charge Amount Used for MLR calculation
2014 Risk Corridors Plan Level Data Form, Tab 3, Line 10
Massachusetts and Vermont only: Issuers with experience in both the individual and small group
markets who merge markets in accordance with state law, should combine the amounts for both
markets, and use the combined amounts to perform calculations on Lines 3.1 through 3.10 in the
RC Columns for both markets (individual market in column 4A and small group market in column
8A). Please note that MLR numerator, denominator, and life-years to determine credibility, and
RC calculated fields are the only fields on the MLR Form where experience for the two markets
may be combined.
Section 4 – Credibility Adjustment
Line 4.1 – Life-years
PY2 and PY1 Columns – 2012 and 2013 MLR Forms, respectively, Part 1, Line 7.5, Columns
3/31 + Deferred PY1 – Deferred CY
CY Column – Part 1, Line 7.5, Columns 3/31 + Deferred PY1 – Deferred CY
RC Column – Part 1, Line 7.5, Column [RC] 3/31
Massachusetts and Vermont only: For Health Insurance Coverage and Mini-med plans
respectively, issuers with experience in both the individual and small group markets who merge
their markets in accordance with state law, should combine Line 4.1 for both markets and enter
the combined amounts on Line 4.1 in the PY2, PY1, CY, and Total Columns for both markets
(Columns 1-8 for health insurance coverage, Columns 13-20 for Mini-med plans). Please note
that MLR numerator, denominator, and life-years to determine credibility, and RC calculated
fields are the only fields on the MLR Form where experience for the two markets may be
combined.
Line 4.2 – Base credibility factor
Non-credible experience: An issuer with aggregated life-years of less than 1,000 as reported in
Line 4.1, Total Column for the relevant market is presumed to meet or exceed the applicable MLR
standard and does not receive a credibility adjustment.
Fully credible experience: An issuer with 75,000 or more aggregated life-years as reported in Line
4.1, Total Column for the relevant market does not receive a credibility adjustment. Enter zero
(0%) or leave blank.

43

Partially credible experience: An issuer with at least 1,000 but fewer than 75,000 aggregated lifeyears as reported in Line 4.1, Total Column for the relevant market may receive a base credibility
factor calculated as follows:
Beginning with the 2013 reporting year, the credibility adjustment for an MLR based on partially
credible experience is zero if both of the following conditions are met:
(1) The current MLR reporting year and each of the two previous MLR reporting years
included experience of at least 1,000 life-years; and
(2) Without applying any credibility adjustment, the issuer’s MLR for the current MLR
reporting year and each of the two previous MLR reporting years were below the
applicable MLR standard for each year.
Specifically, the base credibility factor is zero if all of the following conditions are met:
• Line 4.1, PY2 Column is at least 1,000; and
• Line 4.1, PY1 Column is at least 1,000; and
• Line 4.1, CY Column is at least 1,000; and
• Line 5.1a or 5.1b, PY2 Column is less than Line 6.1, PY2 Column; and
• Line 5.1a or 5.1b, PY1 Column is less than Line 6.1, PY1 Column; and
• Line 5.1a or 5.1b, CY Column is less than Line 6.1, CY Column.
Otherwise, if the aggregated life-years as reported in Line 4.1, Total Column exactly matches a
life-year category listed in Table 1 below, the value associated with that number of life-years is the
base credibility factor. The base credibility factor for a number of life-years between the values
shown in Table 1 is determined by linear interpolation. DO NOT ROUND.
Table 1
Life Years
< 1,000
1,000
2,500
5,000
10,000
25,000
50,000
>= 75,000

Base credibility factor
No Credibility
8.3%
5.2%
3.7%
2.6%
1.6%
1.2%
0.0% (Full Credibility)

Line 4.3 – Average deductible
Issuers who choose to use a deductible factor of 1.0 can skip Steps 1 and 2, leave Line 4.3 blank,
and enter 1.0 on Line 4.4.
Step 1: Calculate average deductibles separately for policies in force in PY2, PY1, and CY.
The per-person deductible for a policy that covers a subscriber and the subscriber’s
dependents shall be calculated as follows:
44

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 offering products with differing deductibles should use a weighted average based
upon life-years for each deductible level of policies included in the aggregation.
Step 2: Calculate the weighted average (based upon life-years) of the PY2, PY1, and CY average
deductibles computed in Step 1. Enter this three-year weighted average deductible on Line 4.3.
Line 4.4 – Deductible factor
This amount is calculated based upon the average deductible reported in the Total Column for
Line 4.3. The deductible factor ranges from 1.0 to 1.736 and is shown in Table 2 below and in the
Tables tab of the MLR Form. When the average deductible used to determine the deductible factor
exactly matches a deductible level listed in Table 2, the deductible factor associated with that
average deductible level is the factor in Table 2. The deductible factor for a deductible level
between the values shown in Table 2 is determined by linear interpolation (do not round).
Table 2
Health plan deductible
< $2,500
$2,500
$5,000
>= $10,000

Deductible Factor
1.000
1.164
1.402
1.736

Enter the amount from the table corresponding with the average deductible. Issuers with noncredible or fully credible experience do not have a deductible factor and can enter a value of 1.0.
Line 4.5 – Credibility adjustment
Lines 4.2 x 4.4 (DO NOT ROUND)
Issuers with non-credible or fully credible experience do not receive a credibility adjustment and
should enter zero.
Section 5 – Medical Loss Ratio Calculation
Issuers with less than 1,000 aggregated life-years (Line 4.1, Total Column) are presumed to meet the
MLR standard and may leave Section 5 blank.
Line 5.1 – Preliminary Medical Loss Ratio
5.1a – Preliminary MLR
PY2 Column – (Lines 1.2 + 1.3) / (Lines 2.1 – 2.2)
45

PY1 Column – (Lines 1.2 + 1.3) / (Lines 2.1 – 2.2)
CY Column – (Lines 1.2 + 1.3 – 1.4 – 1.5 – 1.6 – 1.7) / (Lines 2.1 – 2.2)
Total Column – Line 1.8 / Line 2.3. Do not round.
5.1b – Preliminary MLR: Mini-Med and Student Health Plans
PY2 Column – ((Lines 1.2 + 1.3) x PY2 adjustment factor) / (Lines 2.1 – 2.2)
PY1 Column – ((Lines 1.2 + 1.3) x PY1 adjustment factor) / (Lines 2.1 – 2.2)
CY Column – ((Lines 1.2 + 1.3) x CY adjustment factor) / (Lines 2.1 – 2.2)
Total Column – Line 1.9 / Line 2.3. Do not round.
Line 5.2 – Credibility adjustment
Line 4.5, Total Column.
Line 5.3 – MLR including credibility adjustment (if applicable)
Lines 5.1a or 5.1b + 5.2, Total Column. After adding, round to three decimal places, e.g. 0.801 or
80.1%.
Section 6 – MLR Rebate Calculation
Line 6.1 – MLR Standard
PY2 Column – 2012 MLR Form, Part 4, Line 5.1, Total Column
PY1 Column – 2013 MLR form, Part 4, Line 5.1, Total Column
CY and Total Columns – The applicable MLR standard is 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); or
• 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.
• If an issuer thinks a State’s higher MLR standard does not apply to its MLR and rebate
requirements under Federal law, please contact CCIIO at [email protected].
Line 6.2 – Credibility-adjusted MLR
Line 5.3, Total column
Line 6.3 – Adjusted earned premium
46

Lines 2.1 – 2.2, CY Column only
Line 6.4 – Rebate amount if credibility-adjusted MLR is less than the MLR standard
(Lines 6.1 – 6.2) x Line 6.3, Total Column
If Line 6.3 is negative, enter zero ($0) in Line 6.4.
Section 7 – Optional Temporary Adjustments
Line 7.1 - ACA assessments on non-calendar year policies (Column PY1 only)
For the 2013 MLR reporting year, issuers were allowed to defer including in their MLR and rebate
calculations the portion of 2013 premiums collected for 2014 ACA assessments or fees on non-calendar
year policies, and the associated federal and state taxes and fees. If issuers elected to defer these amounts
in the 2013 MLR and rebate calculations, they must disclose and add back these amounts in the 2014
MLR and rebate calculations.
7.1a Disclose the deferred portion of premium for each respective State and market. If this amount
is excluded from Line 2.1, PY1 Column, add it to Line 2.1, CY Column.
7.1b Disclose the total Federal and State taxes paid on the associated premium revenue. If this
amount is excluded from Line 2.2, PY1 Column, add it to Line 2.2, CY Column.

47

Instructions for MLR Annual Reporting Form – Part 4
(Rebate Disbursement)
These MLR Form Filing Instructions only apply to the 2014 MLR reporting year and its reporting
requirements. These Filing Instructions will be revised to reflect changes that apply to the filing years
subsequent to 2014.
The Column Definitions, which immediately follow the General Instructions at the beginning of these
Filing Instructions, apply to the markets to be reported in Columns 1 through 9 of Part 4.
Column 1
Column 2
Column 3
Column 4
Column 5
Column 6
Column 7
Column 8
Column 9

–
–
–
–
–
–
–
–
–

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 (not applicable in 2014)
Expatriate plans – Large Group Market (not applicable in 2014)
Student Health plans – Individual Market

Additional definitions:
•

Group Policyholder means any entity that has entered into a contract with an issuer to receive health
insurance coverage. (Applicable only in the group markets.)

•

Subscriber (Applicable in all markets.)
o In the individual market, subscriber means the person who purchases an individual policy and
who is responsible for the payment of premiums. This does not include the number of
dependents and therefore does not correspond to the number of covered lives or life-years;
rather, this corresponds to the number of individual policies.
o In the group market, subscriber means the person, 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. This does not correspond to the number of group policyholders (e.g. employers).
This also does not include the number of dependents and therefore does not correspond to the
number of covered lives or life-years; rather, this corresponds to the number of certificates
(e.g. number of employees).

Section/Line 1 – Number of policies/certificates (from Part 1, Line 7.1)
Section 2 – Number of policyholders/subscribers owed rebates
Line 2.a – Number of group policyholders who are being paid a rebate (only applicable in the group
markets)
Include:

All group policies (e.g. employers) within the respective group markets that are due
a rebate and to whom the issuer is paying the rebate directly. This is a count of the
groups, not a count of the certificates, covered lives, or life-years in the groups.
48

Exclude:

Rebates being paid in the individual market and rebates in group markets which the
issuer is paying directly to the group’s subscribers rather than to the group
policyholder.

Line 2.b – Number of subscribers being paid a rebate
•
•

Individual market: All subscribers under individual policies that are due a rebate. This does
not include dependents; consequently, this is not the number of covered lives or life-years.
Small and large group markets: Those subscribers to whom the issuer is paying the rebate
directly. This does not include subscribers where the issuer is paying the rebate to the group
policyholder. This is not the number of employers, covered lives or life-years; typically, this
is the number of employees (not including dependents).

Line 2.c – Number of group policyholders whose calculated rebate is de minimis
De Minimis –
• 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. This is not the number of certificates, covered lives or life-years;
typically, this is the number of employers.
Line 2.d – Number of subscribers whose calculated rebate is de minimis
De Minimis –
• 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.
This is not the number of employers, covered lives or life-years; typically, this is the
number of employees (not including dependents).
• For an individual policy, if the total rebate owed to each subscriber is less than $5 for a
given MLR reporting year. This does not include dependents; consequently, this is not the
number of covered lives or life-years.
Section 3 – Total amount of rebates
Line 3.a – Total amount of rebates (from Part 3, Line 6.4)
Line 3.b – Total amount of de minimis rebates
Line 3.c – Amount of rebates being paid by premium credit
Line 3.d – Amount of rebates being paid by lump-sum reimbursement
Section 4 – Prior MLR year rebates
Line 4.a – Total amount of rebates paid for the previous MLR reporting year
Line 4.b – Total amount of rebates still owed for the previous MLR reporting year
49

Line 4.c – Percentage of rebate notices timely sent to individual and group policyholders owed a rebate
Enter the percentage of notices sent by August 1 following the prior MLR reporting year.
Line 4.d – Percentage of notices timely sent to subscribers of group policies owed a rebate
Enter the percentage of notices sent by August 1 following the prior MLR reporting year.
Line 4.e – Percentage of rebate amounts timely paid to individual and group policyholders owed a rebate
Include:
• Rebate amounts paid as a lump-sum check or reimbursement to individual policyholders
and directly to group policyholders (e.g., if this form is being filed for the 2013 MLR
reporting year, include rebates for the 2012 MLR reporting year that were disbursed as a
lump sum by August 1, 2013)
• Rebate amounts credited to individual policyholders and directly to group policyholders
for the premium due on or after August 1 following the prior MLR reporting year (e.g., if
this form is being filed for the 2013 MLR reporting year, enter the percentage of rebates
based upon the 2012 MLR reporting year that were paid as premium credit beginning
August 1, 2013)
Exclude: Rebates in group markets which the issuer paid directly to the group’s subscribers rather
than to the group policyholder.
Line 4.f – Percentage of rebates amounts timely paid directly to subscribers of group policies owed a
rebate
Enter the percentage of rebate amounts paid by August 1 following the prior MLR reporting year,
for rebates which the issuer paid directly to the group’s subscribers rather than to the group
policyholder.
Line 4.g – Amount of unclaimed rebates from the prior MLR reporting year
Report rebate checks issued but not presented for payment. 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 policyholder or subscriber.
Line 4.h – Describe the methods used to locate policyholders/subscribers to distribute the prior MLR
reporting year’s unclaimed rebates
Line 4.i – Disbursement method of the prior MLR reporting year’s unclaimed rebates
Describe the method used to disburse the prior MLR reporting year’s unclaimed rebates.

50

Instructions for MLR Annual Reporting Form – Part 5
(Additional Responses)
These MLR Form Filing Instructions only apply to the 2014 MLR reporting year and its reporting
requirements. These Filing Instructions will be revised to reflect changes that apply to the filing years
subsequent to 2014.
Line 1 – If the issuer reported amounts in Part 1, Line 3.2c, Community Benefit Expenditures, provide the
state premium tax rate that was used in determining the reported amount. Complete on each State
template and not on the GT template.
Line 2 – If the issuer reported amounts in Part 2, Line 2.15, Blended rate adjustment, provide the
affiliate(s)’ name(s) for which blended rate adjustments were made.
Line 3 – If the issuer reported amounts in the 3/31 Columns related to dual contract options with affiliates
providing out-of-network coverage, provide the affiliate(s)’ name(s) for which experience is being
reported.
Line 4 – If the issuer entered into any 100% assumption reinsurance agreements (with a novation) during
the MLR reporting year provide the name(s) of the entity(ies) with which the agreement was (were) made
and the effective date of the novation. Report only those agreements that are applicable to “health
insurance coverage” as defined at the beginning of these Filing Instructions.
Line 5 – If the issuer novated any business in the MLR reporting year, and that novation was effective
during the MLR reporting year, provide the name(s) of the entity(ies) to which the business was sold and
the date of the sale or transfer.
Line 6 – If the issuer has any 100% indemnity reinsurance and administrative agreements effective prior
to March 23, 2010, for which the assuming entity is responsible for 100 percent of the ceding entity’s
financial risk and takes on all of the administration of the block of business, provide name(s) of the
entity(ies) that is (are) reporting the experience related to such business. Report only those agreements
that are applicable to “health insurance coverage” as defined at the beginning of these Filing Instructions.

51

Instructions for MLR Annual Reporting Form − Part 6
(Expense Allocation Methodology)
These MLR Form Filing Instructions only apply to the 2014 MLR reporting year and its reporting
requirements. These Filing Instructions will be revised to reflect changes that apply to the filing years
subsequent to 2014. Complete Part 6 only within the GT template.
Description of Methods to Allocate Expenses
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 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. (See instructions within Parts 1 and 2 for descriptions of the various expense elements.)
For a new initiative that otherwise meets the definition of quality improvement activities (QI) (see Filing
Instructions for Part 1) 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.
Line References
Line 1 – Incurred Claims (as reported on Part 2, Lines 2.1 through 2.15)
Line 2 – Federal and State Taxes and Licensing or Regulatory Fees (as reported on Part 1, Section 3)
52

Line 2.a – Federal taxes and assessments (as reported on Part 1, Lines 3.1a-d)
Line 2.b – State insurance, premium, and other taxes (as reported on Part 1, Lines 3.2a and 3.2b)
Line 2.c – Community benefit expenditures (as reported on Part 1, Line 3.2c)
Line 2.d – Regulatory authority licenses and fees (as reported on Part 1, Lines 3.3a and 3.3b)
Line 3 – Quality Improvement Expenses (as reported on Part 1, Section 4)
Line 3.a – Improve health outcomes (as reported on Part 1, Line 4.1)
Line 3.b – Activities to prevent hospital readmission (as reported on Part 1, Line 4.2)
Line 3.c – Improve patient safety and reduce medical errors (as reported on Part 1, Line 4.3)
Line 3.d – Wellness and health promotion activities (as reported on Part 1, Line 4.4)
Line 3.e – Allowable ICD-10 expenses not to exceed 0.3 % of premium (as reported on Part 1,
Line 4.5)
Line 3.f – Health Information Technology (HIT) expenses related to health improvement (as
reported on Part 1, Line 4.6)
Line 4 – Non-claims Costs (as reported on Part 1, Section 5)
Line 4.a – Cost containment expenses (as reported on Part 1, Line 5.1)
Line 4.b – All other claims adjustment expenses (as reported on Part 1, Line 5.2)
Line 4.c – Direct sales salaries and benefits (as reported on Part 1, Line 5.3)
Line 4.d – Agents and brokers fees and commissions (as reported on Part 1, Line 5.4)
Line 4.e – Other taxes (as reported on Part 1, Line 5.5a and 5. 5b)
Line 4.f – Other general and administrative expenses (as reported on Part 1, Line 5.6)
Line 4.g – Community benefit expenditures (as reported on Part 1, Line 5.7)
Line 4.h – ICD-10 implementation and maintenance (as reported on Part 1, Line 5.8)

53