Pooling keeps one large claim from driving the whole renewal.
Carriers often cap the amount of any one member’s claims counted in experience, and charge a pooling cost instead. The pooling level changes how your loss ratio looks.
What happens to a large claim in your renewal
A single very large claim can distort a group’s loss ratio. If a carrier priced the renewal on the full amount, a small group with one serious illness would see an increase it could never recover from. To prevent that, carriers limit how much of any one claim counts toward the group’s experience.
This is pooling. Claims above a set level, called the pooling point, are removed from the group’s experience and spread across the carrier’s wider pool. The group is usually charged a pooling fee, and that fee is part of the premium. The pooling point varies by carrier and by group size.
Pooling changes how the loss ratio should be read. A loss ratio that includes the full cost of a large claim and one that stops at the pooling point describe two different groups. Comparing renewals across carriers requires knowing which treatment each used.
When we review a renewal we ask what the pooling point is, what the group is charged for pooling, and whether the loss ratio shown is before or after pooling. On a self-funded plan the same idea appears as specific stop-loss.
What to decide and where it connects
Stop-Loss and Funding
Stop-loss in level-funded and captive plans.
Incurred but Not Reported
Claims that are not yet paid.
Run the Calculator
Calculate your group’s loss ratio.
Questions about this topic
What is pooling?
A method of capping individual claims in a group’s experience and spreading the excess across a pool.
Does pooling lower my renewal?
It can limit the effect of one large claim.
Is it the same as stop-loss?
They are related ideas. Stop-loss is the insurance a self-funded plan buys.
Ready? Send us your renewal, or talk it through with someone first. General information, not legal or tax advice.
Where these details come from.
CMS: Medical Loss Ratio: Federal MLR rule and rebate guidance.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
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