UnitedHealthcare Level Funded discontinues IBNR calculation in plan reconciliations

Beginning with March 1, 2025, new business and renewal effective dates, there will no longer be an Incurred but not Reported (IBNR) calculation as part of the employer reconciliations at the end of a plan year in all states except Kentucky.* This change means IBNR will no longer be deducted, nor will any IBNR payments be made in the 60th month for groups with March 1, 2025, and beyond effective dates.

What’s changing?

For new business groups with March 1, 2025, effective dates, the following adjustments will take effect:

• No IBNR calculation: IBNR deductions and payouts in the 60th month will be eliminated.
• Reconciliation timing shift: Reconciliation will move from month 16 to the end of month 19.
• Extended active requirement: Employers must now remain active for six months after the renewal date (changing from 3 months after the renewal date) and all invoices paid.
• Deferred administrative fees: If a group terminates before month 19 and does not meet the required six-month runout, any remaining funds in the account will be treated as a deferred administrative fee.
• Plan year closure: Once reconciliation is complete, the plan year will officially close.

Where are these changes outlined in the Administrative Services Agreement?

To align with the change, IBNR references will be removed from the Administrative Services Agreement (ASA) in the following sections:

• Section 1 – Definitions: Customer IBNR Reserve definition removed; Surplus definition adjusted.
• Section 6.4 – Deferred Service Fees: IBNR reference removed.
• Section 7.4 and 7.5 – Reconciliations: IBNR references eliminated throughout.

The updates simplify the reconciliation process and ensure greater clarity for employers managing their plan year finances.