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
| 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.