Statutory accounting update

(1)

Statutory accounting update

(2)

Agenda

1)

Substantive revisions adopted

2)

Nonsubstantive revisions adopted

3)

Items currently open for exposure

4)

Updates to risk sharing provisions of

PPACA

5)

Questions

(3)

Substantive revisions

adopted

(4)

Substantive revisions

Underlying principle for qualifying

transactions:

>

Absolute control equivalent to direct ownership

SSAP No. 40R:

Wholly-Owned Single Property Real Estate in LLC

(5)

Substantive revisions (cont.)

Adopted conditions:

>

No other LLC transactions

– Except for transactions associated with managing real estate

>

Owns single-real estate supported by appraisal

– Multiple structures are contiguously located and managed

>

Solely controls real estate

– Controls access, and can sell as promptly as directly owned

SSAP No. 40R:

(6)

Substantive revisions (cont.)

Adopted conditions (cont.):

>

Solely possess all risks and rewards

– No constraints by LLC

– Clarification of whether a mortgage loan disqualifies is pending

>

Reporting entity is only member of LLC

– Does not allow any other members – even if other members of the LLC are affiliates; LLC comprised of affiliates is not allowed

– Restriction also applies to down-stream holding companies

SSAP No. 40R:

Wholly-Owned Single Property Real Estate in LLC

(7)

Substantive revisions (cont.)

Adopted conditions (cont.):

>

No apportionment of income or expenses

>

Ownership in LLC must be direct

SSAP No. 40R:

(8)

Nonsubstantive

revisions adopted

(9)

Nonsubstantive revisions

>

SSAP No. 1

– Going concern disclosures – Insurance-linked securities

>

SSAP No. 4

– Restricted asset guidelines

>

SSAP No. 11

– Disclosure requirements

>

SSAP No. 37 / 40R

– Foreclosed mortgage loans

>

SSAP No. 61R

– Disclosure to capture information regarding

reinsurance agreements with affiliated captive insurers

(10)

Nonsubstantive revisions (cont.)

>

SSAP No. 65 – Disclosure regarding aggregate unsecured high-deductible recoverables

>

SSAP No. 69

– Cash flow statements (non-cash items)

>

SSAP No. 86

– Derivatives reporting

>

SSAP No. 97

– SCA permitted or prescribed practices disclosure

– Disclosure of the reported value for SCAs and filing information

Key adopted nonsubstantive SAP revisions

(cont.)

(11)

Nonsubstantive revisions (cont.)

SSAP No. 1

Adopts ASU 2014-15 Going Concern Disclosures

>

Requires management evaluation about whether there are

conditions or events, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date the financial statements are issued

>

If substantial doubt, management shall evaluate whether its

plans to mitigate those concerns and events, when implemented, will alleviate the substantial doubt

(12)

Nonsubstantive revisions (cont.)

SSAP No. 1 (cont.)

Adopts ASU 2014-15 Going Concern Disclosures

>

If after considering management’s plans, substantial doubt

is alleviated, disclosures about the doubt, plans, etc. are required

>

If after considering management’s plans, substantial doubt

is NOT alleviated, entity shall include statement in the financials:

“There is substantial doubt about the entity’s ability to

continue as a going concern within one year after the date that the financial statements are issued.”

(13)

Nonsubstantive revisions (cont.)

SSAP Nos. 48, 68, and 97

Nonadmit Investments with Going Concern

>

SSAP No. 48 – Joint Ventures, Partnerships and LLCs

>

SSAP No. 97 – Investments in SCA’s

– The investment shall be nonadmitted if the audited financial statements include substantial doubt about the entity’s ability to continue as a going concern

– The investment shall be nonadmitted on the basis/contents of the audit opinion as detailed in paragraph 20 of SSAP No. 97. (This guidance is not new - includes qualified, disclaimer, and adverse opinions.)

(14)

Nonsubstantive revisions (cont.)

SSAP Nos. 48, 68, and 97 (cont.)

Nonadmit Investments with Going Concern

>

SSAP No. 68 – Joint Ventures, Partnerships, and LLCs

– All positive goodwill shall be nonadmitted when the underlying investment in the SCA or partnership, joint venture and limited liability company is nonadmitted

– Includes, but is not limited to:

» Situations in which the investment is nonadmitted as the audited financial statements for the SCA, joint venture, partnership or limited liability company includes substantial doubt on the entity’s ability to continue as a going concern, or on the basis/contents of the audit opinion pursuant to paragraph 20 of SSAP No. 97

(15)

Nonsubstantive revisions (cont.)

SSAP No. 1

Insurance-Linked Securities

>

Requires disclosure when reporting entities may receive

possible proceeds as the issuer, ceding insurer or counterparty of ILS

>

Narrative disclosure in 2015

>

Disclosure will be reviewed and revisited in 2016 for data

(16)

Nonsubstantive revisions (cont.)

SSAP No. 1 and SSAP No. 4

Restricted Assets Clarifications

>

Adopted revisions to clarify guidance and disclosures

related to admitted and restricted assets

>

“Admitted” and “Restricted” are not interchangeable

terms.

>

SSAP No. 4 Revisions:

– Asset restrictions may be a factor in determining admissibility

– However, determining that a restricted asset is an admitted asset does not eliminate the statutory requirements to document and identify the asset as restricted

(17)

Nonsubstantive revisions (cont.)

SSAP No. 1 and SSAP No. 4 (cont.)

Restricted / Admitted Assets

>

All assets pledged as collateral or otherwise restricted

(regardless if admitted) shall be reported in the SSAP No. 1 restricted asset disclosures, general interrogatories and in any other schedule or disclosure requesting

information on restricted assets

>

Referral to Capital Adequacy Task Force (Spring 2015):

– Requested Task Force to re-evaluate whether a separate

“restricted asset” RBC charge is needed for assets on deposit with states held for the benefit of all policyholders

(18)

Nonsubstantive revisions (cont.)

SSAP No. 11

Postemployment Benefits

>

In 2014, SSAP No. 11 was updated:

– Disclosures removed

– Driven from identification of adopted GAAP guidance not included in SSAP No. 92 (OPEBs)

– Ultimately resulted in revisions to clearly indicate the previously-adopted GAAP guidance

– Noted that SSAP No. 11 disclosures fit pension/OPEB plans, requested new project to review SSAP No. 11 disclosures

(19)

Nonsubstantive revisions (cont.)

SSAP No. 11 (cont.)

Postemployment Benefits

>

In Spring 2015, most SSAP No. 11 disclosures

were deleted

– Remaining disclosure:

(20)

Nonsubstantive revisions (cont.)

SSAP No. 37 and SSAP No. 40R

Foreclosed Mortgage Loans

>

Guidance when to derecognize foreclosed mortgage

loans and:

– Recognize real estate (property collateralizing loan)

» Lower of FV less costs to sell, or recorded investment

– Recognize other receivable (government guarantee)

» Amount from mortgage loan expected to be recovered » Gov’t receivable is admitted asset even if over 90 days

>

Guidance applied prospectively from adoption date

(March 2015)

– Adopts ASU 2014-14 (Government Guaranteed)

(21)

Nonsubstantive revisions (cont.)

SSAP No. 61R

Disclosures Related to Reinsurance

Agreements with Affiliated Captive Insurers

>

For reinsurance of variable annuity contracts with an

affiliated captive reinsurer:

– Type of benefits reinsured

– Description of the purpose of the transaction and significant terms of the reinsurance agreement

– Description of risks retroceded

– Whether reporting entity reinsurers variable annuities in a standalone captive

– Amount of reserves held by the captive reinsurer, reserve methodologies utilized

(22)

Nonsubstantive revisions (cont.)

SSAP No. 65

Disclosure Regarding High-Deductible

Recoverables

>

Revisions incorporate a disclosure to identify professional

employer organization’s aggregate unsecured high-deductible recoveries

(23)

Nonsubstantive revisions (cont.)

SSAP No. 69

Cash Flow Statement

>

Clarifies inclusion of non-cash items in the cash flow

statement

– For SSAP Purposes:

» Cash = Cash, Cash Equivalents & Short-Term Investments

>

Only items involving cash are in the Cash Flow Statement

>

New disclosures for non-cash items. Examples:

– Receiving non-cash assets from parent as a capital contribution – Settling reinsurance transactions with non-cash financial assets

>

A/S worksheets require modification to remove non-cash

(24)

Nonsubstantive revisions (cont.)

SSAP No. 86

Derivative Reporting

>

Guidance to agree derivatives on Schedule DB to the BS

– Derivatives reported on Schedule DB reported gross

– Derivatives reported on BS reported net (if right to offset)

>

Schedule DB-D-1 shows derivatives by counterparty

– Book adjusted carrying amount > 0 (derivative assets) – Book adjusted carrying amount < 0 (derivative liabilities)

>

New cross-check to agree to balance sheet!

(25)

Nonsubstantive revisions (cont.)

SSAP No. 86 (cont.)

Benchmark Interest Rate

>

Incorporates GAAP definition for “benchmark interest

rate”

– Widely recognized and quoted rate in active market

– Broadly indicative of interest rate for high-credit quality obligors – In theory, a risk-free rate (e.g., no risk of default)

– In US only the Treasury Rate, London interbank offered Rate (LIBOR), and Fed Funds Effective Rate are benchmark rates

>

Eliminates prior requirement to use the same benchmark

rate as the rate being hedged for similar hedges

(26)

Nonsubstantive revisions (cont.)

SSAP No. 97

SCA Permitted or Prescribed Practices

>

Incorporates a new disclosure for reporting entities that

have insurance SCAs for which audited statutory equity of the insurance SCA included permitted or prescribed practices

>

Disclosure from the SCA to be included in the reporting

entity

(27)

Nonsubstantive revisions (cont.)

SSAP No. 97 (cont.)

Filing Information

>

All SCA investments (except 8.b.i. entities) shall include

disclosure of the SCA balance sheet value (admitted and non-admitted) as well as information received from the NAIC in response to the SCA filing (e.g., date and type of filing, NAIC valuation amount, whether resubmission of filing is required).

>

Disclosure includes the aggregate total of all SCAs with

(28)

Items currently open

for exposure

(29)

Key substantive items open for exposure

Exposed items – substantive

>

Investment Classification Project (Ref #2013-36)

>

SSAP No. 41

(30)

Exposed items – substantive (cont.)

Investment Classification Project

>

Directed staff to continue working with issuers, vendors

and industry in addressing questions on the proposed measurement method for SVO bond-designated ETFs

(31)

Exposed items – substantive (cont.)

SSAP No. 41

Surplus Notes

>

Inclusion of impairment guidance

>

Expansion of amortized cost to include NAIC 2 surplus

notes

>

Removal of guidance duplicated in the P&P Manual

(32)

Key nonsubstantive items open for exposure

Exposed items – nonsubstantive

>

SSAP No. 1

– Quarterly disclosure of restricted assets (Ref #2015-19)

– Improve guidance and reporting of permitted and prescribed practices (Ref #2015-52)

>

SSAP No. 3

– Refiling of amended financial statements for corrections of errors (Ref #2015-46)

>

SSAP No. 55

(33)

Key nonsubstantive items open for exposure

(cont.)

Exposed items – nonsubstantive

(cont.)

>

SSAP No. 97

– Ownership of an ETF or mutual fund clarification (Ref #2015-49) – Accounting of non-insurance SCAs (Ref #2015-08)

(34)

Exposed items – nonsubstantive

(cont.)

SSAP No. 1

Quarterly Disclosure of Restricted Assets

>

Quarterly disclosure of restricted assets if significantly

different from the prior year-end financial statements

Guidance and Reporting of Permitted and

Prescribed Practices

>

Proposes to improve guidance and reporting of permitted

and prescribed practices

(35)

Exposed items – nonsubstantive

(cont.)

SSAP No. 3

Error Corrections

>

Clarifies that amended financial statements shall be filed

for material accounting errors unless otherwise direct by the domiciliary regulator, and for reporting discrepancies identified within a submitted annual financial statement

(36)

Exposed items – nonsubstantive

(cont.)

SSAP No. 55

Reporting of Subrogation Expenses

>

Clarifies that fees incurred for salvage and subrogation

recoveries shall be reported gross, regardless of whether the fees are paid to third parties or processed internally

>

IPs commented that this proposal was inconsistent with

current SAP

>

Re-exposed to solicit more comments on the issues prior

to developing a revised recommendation

(37)

Exposed items – nonsubstantive

(cont.)

SSAP No. 97

Ownership of an ETF or Mutual Fund

>

Clarifies that ownership or mutual fund does not

represent ownership in an underlying entity within the scope of SSAP No. 97, unless ownership of the ETF actually results in “control” of an underlying company.

(38)

Exposed items – nonsubstantive

(cont.)

SSAP No. 97 (cont.)

Non-insurance SCAs

>

Issue #1 – Transfer of nonadmitted assets into a

non-insurance SCA

– Incorporation of referenced to paragraph 16d of SSAP No. 25 directly into SSAP No. 97

>

Issue #2 – Permitted or prescribed practices of insurance

SCA

– Current exposure provides optionality as it relates to reporting

entities making adjustments for SCAs with permitted or prescribed practices

– Disclosure of permitted or prescribed practices in insurance SCAs

(39)

Exposed items – nonsubstantive

(cont.)

SSAP No. 97 (cont.)

Non-insurance SCAs (cont.)

>

Issue #3 – Valuation of non-insurance SCAs engaging in

insurance activities and foreign insurance entities

– Include guidance to clarify that non-insurance SCAs meeting the revenue and activity test shall reflect limited statutory revisions and complete a review of the adjustments detailed in paragraph 9 of SSAP No. 97

(40)

Exposed items – nonsubstantive

(cont.)

Quarterly Investment Schedules

>

NAIC proposed to require additional quarterly investment

reporting (almost a “light Schedule D”) to include:

– CUSIP – Par value

– Book/adjusted carrying value – Fair value

>

Re-exposed based upon opposition from IPs

(41)

Updates to risk

sharing provisions

of PPACA

(42)

What’s documented within

SSAP No. 107

42

SSAP

No. 107

December 12, 2014

Accounting treatment for risk corridor (Assets and Liability)

II

Accounting treatment for reinsurance (3 Products, 3 Assessments, Distributions)

I

Accounting treatment for risk

adjustments (Assets and Liability)

III

Financial Statement disclosure of risk sharing provision estimates.

(43)

Three risk sharing provisions of

PPACA

Section 1341 Section 1343

PPACA

Section 1342

(44)

Reinsurance

44

Program Administration

Operated within each state, either by the State or HHS.

Effective for years 2014 through 2016.

Assessments

Payment based on an annual national per-capita rate.

Used to provide reinsurance coverage and cover administrative costs.

Purpose

Compensate issuers who enroll high-risk individuals. Considered an Involuntary Pool.

Distributions

Made to issuers with medical costs of enrollees above a determined attachment point.

(45)

Risk corridor

Federal program operated by HHS. Effective for years 2014 through 2016.

Assessments

Liability of issuer when allowable costs are less than 97% of target amount.

Purpose

Protect against inaccurate rate setting through risk sharing of allowable costs between issuers and HHS.

Distributions

Receivable from HHS when allowable costs are greater than 103% of target amounts.

(46)

Risk adjustment

46

Established in each individual state. Permanent program effective in 2014

Assessments

Liability of issuer with average actuarial risk of members below the overall market.

Purpose

Protect against the risk of adverse selection. Transfers funds from issuers with lower risk members to plans with greater amounts of high risk members.

Distributions

Receivable of issuer with average actuarial risk of members in excess of the overall market.

(47)

Transitional reinsurance

Product groups subject to reinsurance:

> Subject Individual Insured Products – subject to ACA market reform

> Other Insured Health Products – not subject to ACA market reform (ex. individual grandfathered products)

> Self-Insured Health Products

Product Groups

Three assessments, one distribution:

> Assessments for Reinsurance

> Administrative Cost Assessments

> US Treasury Assessments

> Reinsurance Distributions

What’s Paid

(48)

Expense

Ceded Premium Ceded Premium

Ceded Premium

Claim Benefit Recovery Ceded Premium

Expense

Subject individual insured products

48 Payments Assessments for Reinsurance Administrative Cost Assessments U.S. Treasury Assessments Reinsurance Distributions Reasoning

Satisfy risk transfer and timely reimbursement

requirements

Traditional Reinsurance considers Admin.

Expenses

Taxes, Licenses and Fees Category

Reduction to the reported benefits paid

Add’l Guidance

SSAP No. 61R

SSAP No. 35R

SSAP No. 61R Par. 27

(49)

Other insured health products

Assessments

> Issuers not considered as “Participating”

> All Assessments reported as Expense.

Distributions

(50)

Self insured health products

Assessments

> Responsibility of the self-insured plan.

> Treated as Pass-through by the reporting entity.

Distributions

> Issuers not considered as “Participating”

> Not eligible for distribution.

(51)

Risk corridor and risk adjustment

Admissible based on criteria documented within SSAP No. 107.

ASSET

Meets the definition of a liability as outlined in SSAP No. 5R.

(52)

Asset admissibility – risk corridor

Criteria for risk corridor asset admission:

52

Assumptions used for these retrospective premium adjustments must be consistent with similar assets and liabilities with impact on underwriting results. Related expenses must be reported in the same period as the effect on premium.

Estimate Assumptions

Effects of premiums (additions or reductions) are recognized over the entire period. Methods used for estimates must be reasonable and consistent each period. Being conservative, experience to

date, and sufficient data must be used, as well as consideration of the impact of other

risk-sharing programs.

Receivables are not reported as non-admitted based solely on aging greater than 90 days. Receivables are considered admitted assets until impairment or payment denial is received from the governmental entity.

Collectability shall be evaluated each reporting period. (SSAP No. 5R)

Aging Impairment Collectability Effects on Premiums



(53)

Asset admissibility – risk adjustment

Criteria for risk adjustment asset admission:

Estimates are based on experience to date and the method used must be applied consistently between reporting periods. The SSAP notes issuer be aware of significant uncertainty,

conservative, and have sufficient data. Estimate

Assumptions

Estimates are determined for the expired portion of the policy period as an immediate adjustment to premiums.

Receivables are not reported as non-admitted based solely on aging greater than 90 days. Receivables are considered admitted assets until impairment or payment denial is received from the governmental entity.

Collectability shall be evaluated each reporting period. (SSAP No. 5R)

Aging Impairment Collectability Effects on Premiums



(54)

SSAP No. 107: Disclosure

Includes assets, liabilities, and revenue elements and whether policies were

written.

Beginning Year End 2014

Example of disclosure

within SSAP No. 107, Par. 57

(55)

(56)

2015 developments

June 17, 2015 CMS letter:

>

CMS increases coinsurance rate increased from 80% to

100% for reinsurance program

>

Refer to CMS memo at:

https://www.cms.gov/CCIIO/Programs- and-Initiatives/Premium-Stabilization-Programs/The-Transitional- Reinsurance-Program/Downloads/RI-Payments-National-Proration-Memo-With-Numbers-6-17-15.pdf

(57)

2015 developments (cont’d)

June 30, 2015 CMS report:

>

CMS issues summary report on reinsurance and risk

adjustment programs

– $7.9 billion reinsurance payments made to 437 issuers

“Our preliminary analysis of the transitional reinsurance program for the 2014 benefit year shows that the reinsurance program is working as intended – by providing protection to issuers

(58)

2015 developments (cont’d)

June 30, 2015 CMS report (cont.):

>

CMS issues summary report on reinsurance and risk

adjustment programs

– Various observations related to risk adjustment program

“Our preliminary analysis of the risk adjustment transfers for the 2014 benefit year shows that the risk adjustment methodology is working as intended – by compensating issuers that

enrolled higher risk individuals and protecting against adverse selection within a market within a state.”

– Refer to CMS report at:

https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium- Stabilization-Programs/Downloads/RI-RA-Report-Draft-6-30-15.pdf

(59)

2015 developments (cont’d)

June 30, 2015 CMS report (cont.):

Table 1: Reinsurance Summary Data

SUMMARY DATA ELEMENT TOTALS

Number of Issuers with Enrollment in Reinsurance-Eligible Individual Market Plans, Nationwide

484 Number of Issuers Receiving Reinsurance Payments,

Nationwide5

437 Dollar Value of 2014 Benefit Year Reinsurance Payment

Requests

Approximately $7.9 billion Total 2014 Benefit Year Reinsurance Contributions

Collected to Date

Approximately $8.7 billion Estimated 2014 Benefit Year Reinsurance Contributions to

be Collected by or before November 15, 2015 for Use in Subsequent Years

Approximately $1 billion Uniform Payment Parameters for 2014 $45,000 attachment point,

$250,000 reinsurance cap and 100 percent coinsurance rate

(60)

2015 developments (cont’d)

June 30, 2015 CMS report (cont.):

60 Table 2: HHS Risk Adjustment Program Summary Data7

HHS RISK ADJUSTMENT TRANSFER CATEGORY NUMBER OF ISSUERS WITH

RISK ADJUSTMENT

COVERED PLANS IN HHS RISK ADJUSTMENT

Total Number of Issuers Participating in HHS Risk Adjustment Transfers

758 Number of Issuers with Individual

Non- Catastrophic Plans

468

Number of Issuers with Individual Catastrophic Plans

291

Number of Issuers with Small Group Plans 628 Number of Issuers in a Merged Market

(Individual and Small Group)

(61)

2015 developments (cont’d)

July 16, 2015 CMS letter to DOI:

“Although CMS will use all appropriate debt collection processes available to the federal government to enforce the collection of risk adjustment charges, in rare circumstances it is possible that an issuer may be unable to make full payment for its risk adjustment charges due to insolvency. To the extent CMS is not able to fully collect 2014 risk adjustment charges in a risk pool in a market in a state, 2014 risk adjustment payments for that risk pool will be adjusted on a pro rata basis to reflect the under collection.

If CMS calculates such an adjustment prior to the deadline for 2014 risk corridors and Medical Loss Ratio (MLR)

reporting (July 31, 2015), CMS will provide affected

issuers (that is, issuers in that risk pool who will receive risk adjustment payments) with instructions to reflect the adjusted payment amount in their 2014 benefit year

(62)

2015 developments (cont’d)

July 16, 2015 CMS letter to DOI (cont.):

“…For any difference between risk adjustment payments as stated in the June 30 report and risk adjustment payments actually received for which CMS does not provide an adjustment for 2014 risk adjustment payments prior to the July 31, 2015 deadline for 2014 risk corridors and MLR reports, including for example an adjustment due to a successful appeal by an issuer in the risk pool, affected issuers will reflect that

difference in their 2015 benefit year risk corridors and MLR submission (which occurs in July 2016).”

(63)

2015 developments (cont’d)

August 7, 2015 CMS letter:

>

CMS postpones publishing of preliminary estimates of

risk corridors program

“While conducting quality assurance of the risk corridors data, we have identified a significant number of discrepancies in the data, which makes it necessary to conduct additional data validation. “

>

Refer to CMS memo at: https://www.cms.gov/CCIIO/Resources/Regulations-

(64)

2015 developments (cont’d)

October 1, 2015 CMS letter:

>

Based on data available at time of letter, issuers will pay

$362 million in risk corridors charges and have submitted for $2.87 billion in payments for 2014

“At this time, assuming full collections of risk corridors charges, this will result in a proration rate of 12.6 percent.”

>

Refer to CMS memo at:

https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/RiskCorridorsPaymentProrationRatefor2014.pdf

(65)

2015 developments (cont’d)

SAPWG/EAIWG risk corridor concerns

Impairment

>

Will 2015 and 2016 program collections be sufficient to

fund shortfall of 2014 program results?

Nonadmittance

>

Even though it may be reasonable to expect 2015 and

2016 program collections to cover some portion of 2014 benefit year shortfall, is it appropriate to admit anything above the 12.6%?

(66)

2015 developments (cont’d)

SAPWG/EAIWG risk corridor concerns

(cont.)

Timing of impairment or nonadmittance

>

With indications of program shortfalls going back as far

as 2014, should impairment be reflected in September 30 financials?

2015 and 2016 program receivables

>

Should future program year receivables continue to be

accrued given significance of 2014 shortfall?

(67)

2015 developments (cont’d)

INT 15-01

>

Issued November 5, 2015

Impairment

>

Amounts in excess of the proration amount of 12.6%

must be evaluated for impairment by management each reporting period

(68)

2015 developments (cont’d)

INT 15-01 (cont.)

Nonadmittance

>

2014 amounts in excess of the 12.6% proration amount

which have not been written off for impairment, and have a reasonable expectation of delayed recover shall be

nonadmitted

>

Amounts in excess of the proration amount which are

nonadmitted shall remain nonadmitted until additional proration amounts are confirmed by HHS or other

information of a sufficient nature supports that collectibility is probably and reasonable

(69)

2015 developments (cont’d)

INT 15-01 (cont.)

Timing

>

Type I subsequent event reflected in September 30

(70)

2015 developments (cont’d)

INT 15-01 (cont.)

2015 and 2016 program receivables

>

Any receivables accrued for 2015 and 2016 shall be

nonadmitted until 1) the prior benefit year is paid in full

and 2) additional proration amounts are confirmed by HHS or other information of a sufficient nature supports that

collectibility is probable and reasonable

>

Conservatism shall be applied when estimating amounts

based on sufficient information

>

Estimates shall not assume the availability of federal funds

unless such federal funds are appropriated by Congress

(71)

Disclosure

The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought.

Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended

recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.