ASC 720 · ASC 450 · IAS 19 · IAS 37
IBNR estimated from your claims development pattern, stop-loss recoveries presented gross, the roll-forward an auditor asks for — and the entry posted to your ledger each month.
If you self-fund, the claims risk is on your balance sheet. The estimate should be yours too.
Self-insured health is the accrual most often carried on a percentage of premium equivalent, because building it properly means getting a lag triangle from the administrator and working out a completion pattern. The shortcut is an estimate of somebody else's claims experience, and it is the first number an auditor pushes on.
The second problem is presentation. Stop-loss recoveries get netted against the claims liability, which understates both the asset and the obligation. It is a simple error, it is common, and it is visible on the face of the balance sheet.
The third is that funding and expense drift apart. What went into the trust is not what was incurred, and when the schedule lives in a workbook maintained between two people, the difference is where the surprises accumulate.
Enter the terms once. The schedule builds itself, period by period, to the standard.
The estimate of claims incurred before period end but not yet reported or paid, built from your claims lag pattern rather than a flat percentage of premium equivalent.
Paid and reported claims arranged by incurral month and payment month, so the completion pattern that drives the estimate is visible and reproducible.
Tracked as a separate recovery asset rather than netted against the liability — the presentation error most commonly found in self-insured plans.
What was funded to the trust or the administrator kept distinct from what was incurred, so the balance sheet reflects the obligation rather than the cash movement.
ASC 720 and ASC 450 for GAAP, or IAS 19 and IAS 37 where an IFRS basis is required — selectable per plan.
Opening liability, claims incurred, claims paid, change in estimate, closing liability — the walk an auditor asks for first.
Approve once. Post a month at a time — straight into QuickBooks Online, Xero, or Dynamics 365 Business Central, with a document ID on every line and duplicate posting blocked.
Read-only by design. AccelClose never touches cash, vendors, or payments. It reads your ledger and writes journal entries you have already approved — nothing more.
Because it is not an estimate of your claims — it is an estimate of somebody's average. IBNR under ASC 450 is a loss contingency: recognized when it is probable a liability has been incurred and the amount is reasonably estimable. The support for that is your own lag pattern, not a rule of thumb, and a rule of thumb is what an auditor will challenge first.
Generally no. The recovery is a separate asset, recognized when realization is probable, and netting it against the claims liability understates both sides of the balance sheet. This is the most common presentation error in self-insured plan accounting.
Claims paid by incurral month and payment month — the lag triangle. Most third-party administrators produce this on request, and it is the only input that makes the estimate defensible.
Yes. The basis is selectable per plan: ASC 720 with ASC 450 for GAAP, or IAS 19 with IAS 37 where IFRS applies.
Any employer that self-funds its health plan and therefore carries the claims risk on its own balance sheet — commonly companies past a few hundred employees, where the IBNR accrual is material and almost always maintained in a spreadsheet.
Summarized for general information. The IBNR estimate, the completion pattern selected, and stop-loss realizability are judgments for you and your auditor — and for many plans, your actuary.
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