Risk Memorandum

A Risk Memorandum is a Document used by a health care plan  (a) practitioner, (b) professional, (c) administrator or (d) insurer to transmit certain risk/actuarial work-products to end-users (usually the plan sponsor, auditor or regulator).

These features of the Risk Memorandum make it unique: (a) such is instigated by the practitioner, etc. as a value-added service to the plan sponsor at a minimal cost, (b) uses the letterhead of the practitioner, etc., (c) uses the new millennium labor division of the (i) computer-prepared Work-Product (actuarial responsibility), (ii) consulting is 100% responsibility of practitioner and (ii) practitioner with respect data-input to the subject Risk/Actuarial Work-Product may be reactive, proactive or mixed as chosen by such and (d) carries no liability to the practitioner. The Risk Memorandum is designed to meet all of the present and anticipated future regulatory requirements including those of the new Health Care Reform Law and Sabanes-Oxley.

The Work-Products that are the subject of the Risk Memorandum are described in detail at www.awpse.com including their Sticker Prices.  Such Work-Products may be e-mailed to the practitioner for the published fee of $50 per e-mail if (a) such practitioner inputs the data and (b) the Work-Product
does not have an inked signature.

The following is the Menu of seven Risk Memorandum and a brief description of each.  A sample of such Memorandum as well as the Work-Product that is the subject thereof is linked.

  1. Claims Experience Monitoring
    This memorandum gives a month-to-month reading of the most critical indices that measure and monitor the claims experience of the plan.

  2. Benefit Content Valuations
    This Memorandum shows how the expected total annual cost of the plan-provided benefits are trifurcated between the three payers: participant, employer and stop loss. This methodology uses Monte Carlo simulation and is expected to be used when the PPACA regulations are published. It provides for a triple net-work and stop-loss as well as varying plan terms.  Such measures are very helpful in plan design deliberations.

  3. Statistical Analysis of the Projected Claims and Stop-Loss Terms
    This Memorandum permits the practitioner to analyze the possible plus/minus variations of the actual to the expected paid claims using statistical methods. Such  variations may be both with and without stop-loss.  The economic value of the stop-loss compared to the contracted price is often requested; such exercise is commonly used when stop-loss terms are being modified. Responds to the new ERM demands of the Sarbanes-Oxley Legislation.

  4. HRA Option – Feasibility, Funding and COBRA Rates 
    This Memorandum has current popularity and usefulness because of the interest in using the HRA Option with existing health care plans (either self-funded or fully insured).  This Memorandum may be used as either a new plan feasibility analysis or a renewal feasibility analysis.

  5. Discrimination Testing
    This Memorandum may transmit a variety of Work-Products all related to health care plan discrimination.  The form and structure of this Memorandum are under construction.

  6. Annual Risk Actuarial Report (COBRA)
    This Memorandum permits the Practitioner to offer a Risk/Actuarial Work-Product that provides for the projected plan year the (a) recommended funding factors and (b) the COBRA rates that meet regulatory requirements. It also provides a reasonable estimate of the claim reserve as of the end of such current plan year.

  7. Claim Reserves
    Many practitioners will find it expedient to deliver frequent claim reserve computations; requests for such are often  from the auditors or regulators.  In response thereto, inputted lag data by the practitioner or the end-user is both possible and practical.