One number could change your fully insured renewal: medical loss ratio (MLR)

If you're a fully insured employer, there's a good chance your carrier has never shown you detailed claims data. Ask why your renewal came in at 12% and you'll usually get a shrug: trend is high this year, costs are up everywhere, that's just the market. You're told to accept the number because you don't have the information to argue with it.

Here's what most fully insured HR leaders don't know: even if you can't get your claims data, you can almost always get your medical loss ratio (MLR). And that one number can tell you whether your renewal is fair, or whether it's worth pushing back.

What is medical loss ratio, and why does it matter at renewal

Medical loss ratio (MLR) is the percentage of premium dollars a carrier pays out in claims and quality improvement, versus what it keeps for administration, overhead, and profit.

Example: If your plan collects $1 million in premium and the carrier pays out $600,000 in claims, your MLR is 60%.

The Affordable Care Act sets a regulatory floor for this number. According to CMS, insurers must spend:

• At least 80% of premium on medical care in the individual and small group markets
• At least 85% of premium on medical care in the large group market

Fall short of that, and the carrier owes policyholders a rebate. That's the version of MLR most people have heard of, the check that shows up in the mail with a note about "medical loss ratio rebate."

But for HR leaders managing a renewal, MLR matters for a different reason: carriers use it internally to decide how much room they have to raise your rate. Knowing your number gives you the same information they're using against you.

Why fully insured groups are stuck without claims data

Not all funding models give you the same visibility into your own plan.

Self-funded and level-funded employers see detailed claims data as part of how their plan works, including:

• Utilization by category
• Individual claimant activity
• Pharmacy spend

They get this because they're the ones actually paying the claims.

Fully insured employers don't have that visibility by default:

• Under HIPAA's Privacy Rule, a fully insured plan sponsor can only receive summary health information (de-identified claims data) or enrollment and disenrollment info, unless the plan formally amends its documents and certifies specific privacy safeguards to receive more
• Very few small, fully insured groups have gone through that amendment process, so in practice most only ever see the summary version
• Even when a plan has cleared that step, carriers tend to stay conservative with small groups, since in a population of 50 or 100 people, de-identified data can often still be traced back to a specific person
• The result: the smaller you are, the less detail you tend to get, and groups under 100 employees (sometimes under 100 enrolled, depending on the carrier) often see nothing beyond a renewal summary

That opacity is a real structural problem. It's one of the strongest arguments for exploring alternative funding options if full visibility into your own utilization is the goal.

But if you're staying fully insured, you're not entirely without options.

Medical loss ratio isn't gated behind the same restrictions as claims data. Carriers calculate and report it as a matter of course. In our experience working with fully insured employers, we've never had a carrier refuse to share it when asked directly. They may push back. They will eventually provide it.

What your MLR actually tells you

Carriers generally manage toward an MLR in the mid-80s as their internal target, above the regulatory floor, to build in a margin buffer. Where your plan sits against that target tells you whether your renewal ask has real justification behind it.

Reading your number:

• MLR well below the carrier's target: You likely have room to negotiate a lower increase, hold your rate flat, or in some cases push for a decrease
• MLR at or above the target: The carrier has a legitimate basis for an increase, though you can still contest specific claims that shouldn't be baked into the calculation

A real example

A fully insured group of about 130 employees had been fielding renewal increases for years with no real explanation. Once they asked their carrier for three things (trailing 12-month MLR, number of large claimants, and pooling point), the carrier came back with an MLR around 55%, well under the mid-80s target, with no large claims driving cost.

The carrier had proposed close to a 10% increase anyway. With the MLR data in hand, Nava was able to argue that even a full year of double-digit trend would still land the plan well under target, and negotiated a rate pass instead.

Pooling point

Think of it like a deductible, but for the carrier's entire pool of customers, not just your plan.

When one employee has a catastrophic claim, say $500,000 for a cancer treatment, the carrier doesn't necessarily pass the full cost on to your renewal. Above a certain dollar amount (the pooling point), the carrier spreads that cost across its whole book of business instead of charging it to your group alone.

Here's how that plays out. Say your pooling point is $50,000:

• The first $50,000 of that claim counts against your renewal
• The remaining $450,000 gets absorbed across the carrier's broader pool of employers, not billed to you

Two employers with the exact same catastrophic claim could see very different renewal impacts, depending on where their pooling point sits. A lower pooling point protects you more, since less of any single claim lands on your plan.

If you're fully insured, ask your carrier what your pooling point is. It's a direct answer to "how much could one bad claim actually cost us at renewal."

Watch for shock claims

A shock claim is a one-time catastrophic cost, a premature birth, a major surgery, a cancer diagnosis, that hits your plan in a given year. Some carriers use that inflated claims total as the baseline for next year's renewal, even though the expense won't recur.

If your renewal jumps well beyond trend with no obvious explanation:

• Ask directly whether a shock claim was included in the calculation
• Push to have it removed before the renewal is finalized

How to request your MLR (even if you're small and fully insured)

Bring these three questions to your broker or carrier before you're locked into a renewal number:

1. What is our trailing 12-month medical loss ratio?
2. How many large claimants do we have, and what did they cost?
3. Where does our pooling point sit, and was a shock claim included in this year's renewal calculation?

A good broker should be bringing this information to you proactively, months before your renewal lands. If they're not, that's worth naming directly rather than assuming there's nothing to ask for.

Signs your broker is doing this work:

• They request a claims and MLR analysis well ahead of renewal, not after the number arrives
• They can tell you where your plan sits against the carrier's target MLR
• They push the carrier on shock claims and pooling points before accepting the renewal figure
• They bring you funding alternatives to discuss, not just a single renewal to accept

Signs you're not getting what you need:

• You receive a renewal number with no supporting data attached
• You're told "trend is just high this year" with no plan-specific explanation
• Nobody has ever mentioned your MLR, your claimant count, or your pooling point
• You only hear from your broker once a year, at renewal time

This matters more given where the market sits right now. PwC's Health Research Institute projects group medical cost trend at 9% for 2027, marking multiple consecutive years of trend running at levels not seen in over a decade. In an environment like that, the difference between accepting a renewal at face value and asking for your MLR first is real money.

Frequently asked questions

What is a good medical loss ratio?

There's no single universal number, but carriers typically manage toward the mid-80s as an internal target for fully insured group plans, above the ACA's regulatory floor of 80% for small group and 85% for large group. A plan running well below that target generally has room to negotiate at renewal.

Can a fully insured employer get their medical loss ratio from a carrier?

Yes. Even small, fully insured groups can request their MLR directly. Carriers calculate this figure regardless of group size, and while they may not volunteer it, they are required to have it and will typically provide it if you or your broker ask.

Why can't small fully insured groups get their claims data?

Under HIPAA, a fully insured plan sponsor can only receive summary health information by default, unless it amends its plan documents and certifies added privacy safeguards to receive more. Most small groups haven't gone through that process, and carriers tend to stay conservative with detailed data at small enrollment thresholds (commonly around 100 employees or enrolled members) regardless, since de-identified data is easier to re-identify in a small population. Self-funded and level-funded plans don't face the same restriction because the employer is the one paying claims directly.

How is medical loss ratio calculated?

MLR is calculated as total incurred claims plus quality improvement expenses, divided by earned premium (after subtracting certain taxes and regulatory fees). Carriers report this figure annually as part of ACA compliance requirements.

Get a clearer picture before your renewal lands

The MLR example in this post came from a real conversation on Renewals Unfiltered, Nava's ongoing series where our own benefits advisors talk through what actually happens behind the scenes of a renewal, the questions they ask carriers, and the leverage most employers don't realize they have.

Watch part one below to hear the full story, including what else this group's broker uncovered before their renewal was finalized.

You don't have to wait for a renewal number to find out where you stand. Nava's benchmarking report shows you how your plan compares to employers your size, industry, and geography, so you're walking into your next renewal conversation with information instead of guesswork.