Apr 15, 2025
Effective with March 1, 2025, new business and renewal effective dates, UnitedHealthcare will be discontinuing the IBNR calculation as part of the employer reconciliations at the end of the plan year. This change, which applies in all states except Kentucky, means that IBNR reserves will no longer be deducted from surplus payments, nor will IBNR payments be made at the 60th month.
What is IBNR?
IBNR stands for "Incurred but not Reported." It refers to potential claims stemming from events that have occurred (i.e., someone has already received a treatment) but haven't yet been reported to the insurer or administrator (i.e., insurance hasn't yet been billed).
UnitedHealthcare previously included an IBNR calculation and deduction when computing terminal claims surplus amounts. Effective with level funded contracts on or after March 1, 2025, they will no longer be doing so.
What does this mean?
UnitedHealthcare level funded surplus payments will likely be higher since the IBNR reserve is no longer being deducted from them. However, they will now be paid (as an invoice credit) in the 19th month following the effective date, instead of the 16th month.
The new process simplifies reconciliations and ensures greater clarity for employers managing their plan year finances.
Do groups have to renew to receive the surplus?
Yes. Groups must renew and remain active through the 19th month following the contract date in order to receive their surpluses. Note that UnitedHealthcare had already required groups to renew and remain active through the 16th month. Both of these (16th month and 19th month) would fall before the end of any subsequent plan year, so disruptions should be minimal.
Will there be changes to the Administrative Services Agreement?
Yes. Section 1 (Definitions), Section 6.4 (Deferred Service Fees), and Sections 7.4/7.5 (Reconciliations) will be adjusted to remove references to the IBNR calculation.
What if I need more information or have additional questions?
Contact your Amwins Connect Regional Sales Manager with additional questions or for more information.
