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- Using outdated rates.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
| Field | What to enter |
|---|---|
| Incurred claims | Amount in your currency |
| Loss adjustment expenses | Amount in your currency |
| Earned premiums | Amount in your currency |
| Quality improvement spending (health) | Amount in your currency |
| Taxes and fees (health) | Amount in your currency |
| Health 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 claims | Loss ratio (%) |
|---|---|
| 3,500,000 | 40 |
| 5,250,000 | 57.5 |
| 7,000,000 | 75 |
| 8,750,000 | 92.5 |
| 10,500,000 | 110 |
| 14,000,000 | 145 |
Formula
Loss ratio = (incurred claims + loss adjustment expenses) ÷ earned premiums × 100ACA MLR = (medical claims + quality improvement) ÷ (premiums − taxes and fees)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.
Frequently asked questions
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.