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thank you, come again!
Froogle 1.1.1.7
Froogled By:
Elias Makere, FSA, MAAA
Last Froogled:

ACTUARIAL SOUNDNESS

1. professionally-determined financial adequacy

2. a status in which projected revenue/assets will be enough to satisfy all liabilities

For example, an employer’s health benefit plan premium rates are “actuarially sound” if:
(a) its projected premiums (including:
(i) reinsurance cash flows;

(ii) governmental-risk adjustment cash flows; and

(iii) investment income))
are adequate to cover
(b) all of its expected costs (including:
(i) health benefits;

(ii) settlement expenses;

(iii) marketing expenses;

(iv) administrative expenses; and

(v) cost of capital)
As another example, Medicaid capitation rates are “actuarially sound” if:
(a) the projected capitation rates (and other revenue sources)
provide for:
(b) all reasonable/appropriate/attainable costs.
Congratulations! You're now Froogled Up™ on what "Actuarial Soundness" means!

Feel free to use it throughout your financial/insurance life.

Sincerely,



www.FroogleMe.com
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