Incurred Health and Disability Claims

By Actuarial Standards Board · 2017 · ASOP No. 5

The Actuarial Standards Board's guidance to actuaries estimating or reviewing incurred claims under a health benefit plan, when preparing or reviewing financial reports, claims studies, rates, or other actuarial communications as of a valuation date. This revised edition (Doc. No. 186) was adopted in March 2017 and is effective for actuarial work products issued on or after September 1, 2017.

On the syllabus

Exam GH-201U — Outcomes 1g; the standard excluding its Appendices.

Transmittal Memorandum

1 Purpose, Scope, Cross References, and Effective Date

1.1 Purpose
1.2 Scope

- Applies to actuaries who estimate or review incurred claims under health benefit plans on behalf of risk-bearing entities, such as managed-care entities, self-funded employer plans, health care providers, government-sponsored plans or risk contracts, or government agencies.

- Does not give guidance on reserves such as policy reserves, premium reserves, or claim settlement expense reserves, and does not address interpretations of statutory or generally accepted accounting practices.

1.3 Cross References
1.4 Effective Date

- Effective for any actuarial work product covered by the scope issued on or after September 1, 2017.

2 Definitions

2.1 Block of Business
2.2 Capitation
2.3 Carve-Outs
2.4 Contract Period
2.5 Development (or Lag) Method
2.6 Exposure Unit
2.7 Health Benefit Plan
2.8 Incurral Date
2.9 Incurred Claims
2.10 Long-Term Product
2.11 Projection Method
2.12 Providers
2.13 Risk-Bearing Entity
2.14 Tabular Method
2.15 Time Value of Money
2.16 Trends
2.17 Unpaid Claims Liability
2.18 Valuation Date

3 Analysis of Issues and Recommended Practices

3.1 Introduction
3.2 Considerations for Estimating Incurred Claims

- 3.2.1 Health Benefit Plan Provisions and Business Practices

- 3.2.2 Economic and Other External Influences

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- 3.2.3 Behavior of Claimants
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- 3.2.4 Organizational Claims Administration

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- 3.2.5 Claim Seasonality
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- 3.2.6 Credibility
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- 3.2.7 Risk Characteristics and Organizational Practices by Block of Business

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- 3.2.8 Legislative Requirements
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- 3.2.9 Carve-Outs
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- 3.2.10 Special Considerations for Long-Term Products

3.3 Analysis of Incurred Claims
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- 3.3.1 Unpaid Claims Liability
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- 3.3.2 Categories of Incurred Claims
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- 3.3.3 Reinsurance Arrangements
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- 3.3.4 Large Claims
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- 3.3.5 Coordination of Benefits (COB), Subrogation, and Government Programs

- 3.3.6 Provider Contractual Arrangements

3.4 Methods Used for Estimating Incurred Claims
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- 3.4.1 Development Method
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- 3.4.2 Projection Methods
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- 3.4.3 Tabular Method
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3.5 Follow-Up Studies
3.6 Reliance on Data or Other Information Supplied by Others
3.7 Reliance on Assumptions and Methods Selected by Others
3.8 Documentation

4 Communications and Disclosures

4.1 Actuarial Communication
4.2 Additional Disclosures

Appendix 1 Background and Current Practices

Appendix 2 Comments on the Exposure Draft and Responses

Sources

Actuarial Standard of Practice No. 5, Incurred Health and Disability Claims, Doc. No. 186 (ASB, 2017) — the document: title page, table of contents, sections 1–4 and the appendixes list; section 4's numbering follows the body (the contents page prints 4.1 twice)
ASOP No. 5, Incurred Health and Disability Claims (Actuarial Standards Board) — the ASB's page for the standard, which links the same PDF
SOA GH 201U syllabus, Nov 2026/Mar 2027/Jul 2027 — the citation and the assigned scope