Discussion:Accounting for Partially Self Insurred Plan under GAAP

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Discussion Forum Index --> Accounting Questions --> Accounting for Partially Self Insurred Plan under GAAP

Matt120974 (talk|edits) said:

21 June 2012
In a nutshell, the company has taken on some of the risk of health insurance. We have to pay $5,500, at most, for each employee’s/families member’s medical expenses over the course of a year. The $5,500 is over and above the regular premiums that we will pay.

How do I account for the $5,500 piece of it according to GAAP? The insurance specialist has told me that actuarially we are going to have three people hit $5,500.

How do I account for this potential liability?


EmpireCPA (talk|edits) said:

22 June 2012
Matt, This sounds like there is no unknown liability at year end. You would only accrue for billed reimbursements due and unpaid at year end, expense as paid during the year. See ASC 450-20-25-2 regarding accrual based on reasonably estimable and relate to current or prior periods.

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