How much underwriting profit is allowed under the Affordable Care Act for large group market health plans?

Under the Affordable Care Act (ACA), the maximum allowable underwriting profit margin for large group market health plans is set at 15%. This regulation was established to ensure that health plans prioritize patient care and affordable coverage rather than maximizing profit margins. By capping underwriting profits at this level, the ACA aims to create a balance where insurers can sustain their operations while also providing value to consumers through accessible, cost-effective healthcare.

The requirement aligns with the overall objectives of the ACA to promote fairness and to lower healthcare costs for consumers, ensuring a significant portion of premium revenues is utilized for medical care and services rather than excessive administrative costs or profit margins. This focus on containment of underwriting profits is intended to foster competition among insurers while protecting consumers from rapidly rising healthcare costs.