There are a few different ways to obtain IBNR reserves for your groups.
1. Hire an actuarial consulting firm.
2. Ask the plan administrator for an estimate.
3. Perform your own calculation in-house.
4. Use actuarial software tools.
The right reserve estimation process for future claim payments depends on your company’s resources and your client’s needs.
Actuarial value is calculated by estimating the expected costs of a health insurance plan and determining the percentage of costs the plan sponsor and insured population will pay for those medical expenses. The Claros Analytics health plan design module, ClarosPlan, includes a cost calculator for each plan, which includes an actuarial value calculator.
Employee benefits plans can be broken out into two structures: the traditional fully insured plan or the self-funded plan. In a fully insured plan, a group purchases insurance by paying a premium to an insurance carrier. The carrier then covers all claims incurred by the plan members. In a self-insured (also known as self-funded) plan, employers pay for the claims themselves. They usually work with a third-party administrator (TPA) to process claims and often incorporate stop loss insurance to protect themselves from large claims. They may also add additional services to promote employee well-being, manage pharmacy benefits, or otherwise improve upon the components of their benefits plan. Another option not covered here is a level-funded plan. Read our blog post on level-funded pros and cons to understand this self-funded plan design that feels similar to a fully insured plan for many plan sponsors.
