Company: EHC
Filing Date: 2025-02-28
Form Type: 10-K
Source: 0000785161-25-000009
Chunk: 58

Company: Encompass Health Corp
Filing Date: 2025-02-28
Form: 10-K
Item: Item 16
Chunk 58
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 risks through a self-insured retention program (“SIR”) underwritten by our consolidated wholly owned offshore captive insurance subsidiary, HCS, Ltd., which we fund via regularly scheduled premium payments. HCS is an insurance company licensed by the Cayman Island Monetary Authority. We use HCS to fund the first $45 million for annual aggregate losses associated with general and professional liability risks. Workers’ compensation exposures are capped on a per claim basis. Risks in excess of specified limits per claim and in excess of our aggregate SIR amount are covered by unrelated commercial carriers.

F-33

Encompass Health Corporation and SubsidiariesNotes to Consolidated Financial Statements

The following table presents the changes in our self-insurance reserves (in millions):202420232022Balance at beginning of period, gross$184.5 $175.1 $169.4 Less: Reinsurance receivables(36.4)(32.3)(30.0)Balance at beginning of period, net148.1 142.8 139.4 Increase for the provision of current year claims59.1 54.7 50.5 Decrease for the provision of prior year claims(10.9)(10.5)(8.2)Payments related to current year claims(6.9)(8.1)(7.1)Payments related to prior year claims(32.2)(30.8)(31.8)Balance at end of period, net157.2 148.1 142.8 Add: Reinsurance receivables37.6 36.4 32.3 Balance at end of period, gross$194.8 $184.5 $175.1 As of December 31, 2024 and 2023, $56.2 million and $52.7 million, respectively, of these reserves are included in Other current liabilities in our consolidated balance sheets.Provisions for these risks are based primarily upon actuarially determined estimates. These reserves represent the unpaid portion of the estimated ultimate cost of all reported and unreported losses incurred through the respective consolidated balance sheet dates. The reserves are estimated using individual case-basis valuations and actuarial analyses. Those estimates are subject to the effects of trends in loss severity and frequency. The estimates are continually reviewed and adjustments are recorded as experience develops or new information becomes known. The changes to the estimated ultimate loss amounts are included in current operating results.The reserves for these self-insured risks cover approximately