Are medical-only claims included on the Annual Report?

• A. No
• B. No, unless there are probable future medical payment
• C. Yes
• D. Yes, but only for the reporting year of the annual report

Answer: (B)

Medical-only claims are included on the Annual Report only if there is probable future medical payment. The report reflects the plan’s estimated future obligations, so a medical-only claim is recognized as a liability only when there is a reasonable expectation of future medical costs tied to that claim. If there’s no anticipated future expense, it isn’t carried as a liability. When ongoing or anticipated medical costs are likely, they’re reserved and reported as part of the plan’s liabilities, even if there’s no indemnity payment involved.

That’s why the correct approach is to include medical-only claims only if probable future medical payments are expected. If a claim has no expected future costs, it’s not included; if there are expected future costs, it is included; and if only the current year’s costs are considered without future payments, that would be too restrictive.