COBRA PREMIUM AND CLAIMS RESERVE

[Guest jfsga]

I understand that IRS proposed regulations stipulate that COBRA premiums for partially self-funded plans are actuarially determined. Can an employer or TPA determine COBRA premiums to charge participants without using an actuary? Is there an acceptable formula for determining this and for determining claims reserve.

[Larry M]

Anyone can use actuarial methods to determine COBRA premiums and claim reserves....which is unfortunate, not only for me and others in my profession, but more so for those who use the results derived from applying methods incorrectly.

It is similar to saying "anyone can draft a legal document."

Just be wary.

The penalties for being wrong are steep.

[KIP KRAUS]

Larry

Are there IRS medical plan underwriters who know how to underwrite medical plans?

[Larry M]

I do not know if there are any; there may be some.

However, I do know there are IRS auditors who hire actuarial experts to review claim reserves of plan sponsors.