How to Calculate Your Medical Loss Ratio for Canada Health Insurance
In Canada, the Medical Loss Ratio (MLR) is a tool that offers precise insights into the value of your health insurance. In this article, we’ll explore the significance of MLR for Canadians seeking private health insurance, explain what constitutes a good MLR, and provide a step-by-step guide on how to calculate it for your own policy.
What Is Medical Loss Ratio (MLR) in Canadian Health Insurance?
The Medical Loss Ratio (MLR) refers to the percentage of premiums collected by an insurer that is spent on medical care. In Canada, MLR helps ensure that you’re making the most of your private health insurance. It also helps determine whether your premiums are being used for the cost of your care, or whether they’re mainly contributing to your insurance provider’s revenue.
Why MLR Matters to Canadians
Understanding MLR is essential for Canadians seeking private health coverage. It gives you insight into the true value of your private health insurance coverage.
A higher MLR means that a greater portion of premiums is being spent on healthcare services, meaning the plan truly benefits policyholders.
A lower MLR would indicate the opposite, the majority of premiums are being used to fund the insurance provider’s administrative and marketing costs, or contribute to their annual revenue.
Knowing an insurance provider’s MLR gives you a transparent idea of how they utilize your premium payments, allowing you to make better decisions about who covers you.
What Is a Good Medical Loss Ratio?
What’s considered “good” can vary. Generally, a medical loss ratio of 80% or more is considered a good ratio. An MLR of 80% means that 80% of the premiums are used for medical care costs.
How to Calculate Your Medical Loss Ratio: A Step-by-Step Guide
Find Total Health Claims Paid by Your Insurer During the Year
Since it’s not easy to find overall totals, you can also use your personal health claims and compare it with the total premiums you’ve paid during the year.
Divide by Total Premiums Paid (Excluding Taxes or Applicable Fees)
Multiply by 100 to Get the Percentage
Medical Loss Ratio Formula
Medical Loss Ratio (MLR) = (Total Health Claims Paid ÷ Total Premiums Paid) × 100
Example:
You pay your insurance company $4,000 in premiums and they cover $2,500 worth of your medical care.
MLR = (2,500 ÷ 4,000) × 100 = 62.5%
Not Satisfied with Your MLR? Consider a New Policy
If your MLR isn’t where you think it should be, consider seeking out new insurance providers to find a policy that suits your needs and budget. Don’t let yourself be overcharged for what you don’t need!
With our Quick Quotes tool, you can instantly compare plans that match your coverage preferences — all without talking to a broker.
If you prefer an expert opinion, our experienced brokers can help you navigate Canada’s pool of insurance providers. We’ll compare quotes together to help you make a confident decision about your insurance coverage.