Board approves reduced IBNR and contingency reserves for SFHSS self‑funded and flex‑funded plans

The Health Service Board voted unanimously to accept actuarial recommendations for the SFHSS incurred‑but‑not‑reported (IBNR) reserves and to set contingency reserves at the 90.5th percentile confidence level for the self‑funded and flex‑funded medical and prescription drug plans as of June 30, 2024.

Aon lead actuary Mike Clark presented the analysis and the rationale. Clark said IBNR for medical and the self‑funded dental PPO decreased between 06/30/2023 and 06/30/2024 largely because claim processing speeds returned toward pre‑pandemic levels. He also recommended continuing the contingency reserve calculation at the 90.5th percentile (the board had moved from the previously used 99th percentile down to the 90.5th in March 2024 to moderate reserves), noting contingency reserves protect the trust from funding shortfalls if actual claims exceed projections.

The motion to approve the IBNR and the 90.5th percentile contingency reserve amounts as presented carried unanimously on roll‑call. The roll call recorded “Aye” votes from President Howe, Vice President Zavansky, Commissioner Kremen, Commissioner Sass and Commissioner Wilson.

Board members had no substantive revisions to the actuarial recommendations during the meeting; there was a brief public comment period with no callers raising objections. SFHSS CFO Iftikhar Hussain confirmed the contingency reserves are fully funded and that the change in contingency levels will feed into the December 31, 2024 stabilization reserve calculations to be presented in early 2025.

Ending: The board’s action formalizes the 06/30/2024 actuarial liabilities and contingency targets for SFHSS self‑funded and flex‑funded plans, and staff will incorporate the changes into the system’s audited financials and the forthcoming stabilization reserve report.