What a share ratio is, and why it matters

A share ratio answers one question: of every dollar members contributed, how many cents went to sharing their medical costs? Divide what you shared by what you collected. That is the whole calculation.

It is the health sharing equivalent of an insurer's medical loss ratio, and it is the first number anyone from outside your ministry will reach for — a board member, an auditor, a state regulator, a reporter, a member who has started asking questions.

The benchmark, and why it applies to you even though it does not

Under the Affordable Care Act, regulated health plans must spend at least 80.0% of premium revenue on medical care in the individual and small-group market, and 85.0% in the large-group market. Fall short and they owe rebates.

Health care sharing ministries are exempt. There is no medical loss ratio requirement, no solvency requirement, and no statutory obligation to pay a claim on any timetable.

That exemption is exactly why the benchmark is worth adopting voluntarily. You will be compared to it regardless — every journalist and regulator who looks at this category reaches for it — so the only question is whether you know your number before they do.

Computing it honestly

Three decisions determine whether the number means anything.

First, use a trailing window rather than a single month. Sharing is lumpy — one large case can swing a month by twenty points in either direction. Three months smooths that without hiding a real trend.

Second, separate administrative fees from sharing contributions on the way in. If members pay a distinct application or administrative fee, it is not part of the sharing pool and including it flatters your ratio dishonestly.

Third, categorize outflows before you need to. Sharing, administration, marketing, and related-party payments are four different things, and a ledger that lumps them together cannot answer the question at all.

Reading a low ratio fairly

A low ratio in one period is not evidence of wrongdoing. Reserves get built. Claims lag contributions. A quiet quarter is a real thing, and a ministry that grew quickly will show contributions ahead of claims for a while simply because new members have not needed anything yet.

What is hard to explain innocently is a sustained pattern: a ratio that falls quarter after quarter, overhead that consistently exceeds sharing, or months where contributions arrived and nothing at all went out. Regulators have alleged organizations retaining the large majority of contributions, and federal authorities have alleged one collecting millions while distributing nothing to members for an extended period.

The useful discipline is simply to know your own number monthly, and to be able to explain any month that looks unusual before somebody else asks.