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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

self-funding actuaral graph

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

Max Prob.
$600,000 35%
$700,000 50%
$800,000 60%
$900,000 69%
$1,000,000 77%
$1,200,000 90%
$1,600,000 96%
$2,000,000 99%

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.

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