# Loss Ratio Calculator

URL: https://speedycalculator.com/calculators/finance/loss-ratio/
Last updated: 2026-10-25

> The loss ratio calculator works out an insurer's loss ratio – claims paid plus loss adjustment expenses divided by earned premiums – and, for health insurers, checks the ACA medical loss ratio minimum (80% individual and small group, 85% large group).

## Inputs

- Incurred claims
- Loss adjustment expenses
- Earned premiums
- Quality improvement spending (health)
- Taxes and fees (health)
- Health market (ACA)

## Results

- Loss ratio
- ACA medical loss ratio
- Estimated ACA rebate
- ACA MLR check

## Formula

```
Loss ratio = (incurred claims + loss adjustment expenses) ÷ earned premiums × 100
ACA MLR = (medical claims + quality improvement) ÷ (premiums − taxes and fees)
```

## Explanation

A higher loss ratio means more of the premium goes to paying claims. U.S. health insurers that fall below the ACA medical loss ratio must pay rebates to customers.

### How to use the Loss Ratio Calculator

- **Incurred claims**
- **Loss adjustment expenses**
- **Earned premiums**
- **Quality improvement spending (health)**
- **Taxes and fees (health)**
- **Health market (ACA)**

Results update as you type, and every field accepts the units shown in its menu.

### How it works

Enter incurred claims, loss adjustment expenses and earned premiums – and, for health plans, quality improvement spending, taxes and the market.

### Tips

- Enter figures for the same period and in the same currency.
- Exchange rates and prices change constantly – update them before you rely on a result.
- Use results as estimates and confirm important figures with the official source.
- Everything runs in your browser – try different values to compare scenarios.

### Common mistakes to avoid

- Mixing gross and net figures.
- Using outdated rates.
- Treating rules of thumb as exact.

### Inputs explained

FieldWhat to enterIncurred claimsAmount in your currencyLoss adjustment expensesAmount in your currencyEarned premiumsAmount in your currencyQuality improvement spending (health)Amount in your currencyTaxes and fees (health)Amount in your currencyHealth market (ACA)Choose one: Individual / small group (80%), Large group (85%)

### What each result means

- **Loss ratio** = ([Incurred claims] + [Loss adjustment expenses])÷[Earned premiums]×100
- **ACA medical loss ratio** = ([Incurred claims] + [Quality improvement spending (health)])÷([Earned premiums] - [Taxes and fees (health)])×100
- **Estimated ACA rebate** = max([Health market (ACA)]÷100 - ([Incurred claims] + [Quality improvement spending (health)])÷([Earned premiums] - [Taxes and fees (health)]), 0)×([Earned premiums] - [Taxes and fees (health)])

### Example values

How the main result changes when **Incurred claims** changes and everything else stays at the example values above:

Incurred claimsLoss ratio (%)3,500,000405,250,00057.57,000,000758,750,00092.510,500,00011014,000,000145

## Worked example

Inputs — Incurred claims: $7,000,000; Loss adjustment expenses: $500,000; Earned premiums: $10,000,000; Quality improvement spending (health): $200,000; Taxes and fees (health): $300,000; Health market (ACA): Individual / small group (80%).

Results — **Loss ratio = 75 %**; ACA medical loss ratio = 74.23 %; Estimated ACA rebate = $560,000.00; ACA MLR check = Below the minimum – rebates due.

## FAQ

**What is a loss ratio?**
The share of premiums paid out in claims and claim expenses.

**What is the ACA medical loss ratio?**
Health insurers must spend 80–85% of premiums on care and quality improvement.

**Is a high loss ratio good?**
Good for customers; too high is unprofitable for the insurer.

**What formula does the Loss Ratio Calculator use?**
Loss ratio = (incurred claims + loss adjustment expenses) ÷ earned premiums × 100.


## Sources

- [CMS – Medical loss ratio](https://www.cms.gov/marketplace/private-health-insurance/medical-loss-ratio)