Risk Memos are a service that can be provided by Self-Funding Actuarial Services and offer an easy to understand assessment of a health plan’s risk.
Sample Risk Memo
Here is a summary of actuarial calculations of the claims for your company’s Health Care plans as of January 1, 2016. Total Projected 2016 Claims are $800,000 (rounded to the nearest $50,000). There is a 77% chance that the total claims will be less than $1 million.
Projected 2016 Claims
The annual projected claims is not just a single expected amount, but rather a range of possible outcome as shown in the above graph and the table below. I expect the range to gradually narrow as the end of the year approaches.
Probability of Maximum Claims
The above table shows the probabilities that the total annual claims will be less than the maximum amounts. I will revise these estimates after the January claims history and census information is available.