Quarterly report pursuant to Section 13 or 15(d)

Medical Claims Liability

v3.21.1
Medical Claims Liability
3 Months Ended
Mar. 31, 2021
Insurance [Abstract]  
Medical Claims Liability Medical Claims Liability
The following table summarizes the change in medical claims liability ($ in millions):
Three Months Ended March 31,
2021 2020
Balance, January 1 $ 12,438  $ 7,473 
Less: Reinsurance recoverable 23  20 
Balance, January 1, net 12,415  7,453 
Acquisitions and divestitures —  3,697 
Incurred related to:
          Current year 24,255  20,866 
          Prior years (864) (446)
         Total incurred 23,391  20,420 
Paid related to:
          Current year 15,161  15,147 
          Prior years 7,828  5,031 
         Total paid 22,989  20,178 
Balance at March 31, net
12,817  11,392 
Plus: Reinsurance recoverable 25  21 
Balance, March 31
$ 12,842  $ 11,413 

Reinsurance recoverables related to medical claims are included in premium and trade receivables. Changes in estimates of incurred claims for prior years are primarily attributable to reserving under moderately adverse conditions. Additionally, as a result of minimum health benefits ratio (HBR) and other return of premium programs, the Company recorded $202 million and $31 million as a reduction to premium revenue in the three months ended March 31, 2021 and 2020, respectively.

Incurred but not reported (IBNR) plus expected development on reported claims as of March 31, 2021 was $8,630 million. Total IBNR plus expected development on reported claims represents estimates for claims incurred but not reported, development on reported claims, and estimates for the costs necessary to process unpaid claims at the end of each period. The Company estimates its liability using actuarial methods that are commonly used by health insurance actuaries and meet Actuarial Standards of Practice. These actuarial methods consider factors such as historical data for payment patterns, cost trends, product mix, seasonality, utilization of healthcare services and other relevant factors.