This plan has unpredictable fluctuations in claims paid from year to year, so premiums are set based on claims over a 10-year period. The number of LTC claims is still very low and unpredictable. Because the risk of claims increases with age while premiums do not, reserves are being set aside by the carrier for future potential claims. The plan experienced a small loss. Carrier fees Administrative and operating expenses of each carrier for the past plan year.
Expenses are salaries, rent, office supplies and company profit.
The fee can be an amount per employee or a percentage of claims. Expenses include any charges that do not fall into the above categories, including money set aside in a reserve fund to pay for incomplete claims at the end of the plan year, the cost of keeping a level amount in the reserve fund for years when claims exceed premiums, etc. When premiums paid in are greater than the claims paid out, the excess money goes into a reserve fund. Later, during years when claim amounts are greater than premiums paid, claims are paid with money taken from the reserve fund. The figures shown here indicate the amounts deposited in or taken from the reserve funds for each plan during the plan year.