This SOP establishes reserve monitoring standards and actuarial trigger rules for the Unity Care Member Plan Master Trust. The Trust must maintain adequate liquid reserves to fund claims on a timely basis. This SOP defines the target reserve level, monthly monitoring process, escalation triggers at multiple threshold levels, actuarial review triggers, and the annual reserve adequacy review process.
This SOP applies to: Operations, Finance, Trust administration, and any party responsible for trust funding. Actuarial reporting responsibilities are coordinated through SRS (Stop-loss and Reserve Services) and Davies Actuarial.
| Term | Definition |
|---|---|
| Trust Reserve | The liquid balance held in the Unity Care Member Plan Master Trust bank account designated for claims funding. |
| Projected Weekly Claims | Estimated weekly claims cost = (Allied trailing 3-month average monthly claims) ÷ 4.33 weeks per month. |
| 8-Week Projected Claims | Target reserve level = Projected Weekly Claims × 8. Represents approximately two months of claims funding buffer. |
| PMPM | Per Member Per Month — total claims cost divided by total covered member-months. Key actuarial benchmark. |
| Actuarial Trigger | A condition that requires Davies Actuarial to perform a rate or reserve adequacy review. |
| SRS | Stop-loss and Reserve Services — coordinates reserve reporting to the reinsurance carrier (HLRA). |
| Davies Actuarial | Unity Care's contracted actuarial firm for reserve adequacy reviews and rate analyses. |
| Claims Funding Suspension | An emergency protocol suspending new claims payments when reserves fall below the 2-week threshold, pending emergency funding. |
The 8-week target is reviewed annually by Davies Actuarial and may be adjusted based on group size, claims volatility, and reinsurance recovery timing.
Operations and Finance perform a monthly reserve check within the first 5 business days of each month. The check compares the actual Trust bank balance against the 8-week projected claims threshold.
| Reserve Level | Required Actions | Escalation To | Timeframe |
|---|---|---|---|
| Below 6 Weeks (Warning Threshold) |
Operations alerts Leadership and Finance immediately. Begin employer premium collection review to identify any past-due premiums. Monitor weekly until reserve returns above 6-week level. | Operations → Leadership + Finance | Same business day |
| Below 4 Weeks (Critical Threshold) |
Emergency employer premium collection initiated — all employer groups notified of urgent funding requirement. Davies Actuarial review requested immediately to assess reserve adequacy and recommend corrective action. Weekly reserve checks replace monthly cadence until resolved. | Operations → Leadership + Finance + Davies Actuarial | Same business day |
| Below 2 Weeks (Emergency Threshold) |
Claims funding suspension protocol activated. Operations notifies Allied Benefit Systems to hold new claims payments pending emergency funding. Leadership authorizes emergency stop-gap funding action. Davies Actuarial and Legal Counsel notified. Document all actions in writing. | Operations → Allied + Leadership + Davies + Legal Counsel | Immediately upon identification |
In addition to reserve-level triggers, the following actuarial performance triggers require a Davies rate review:
| Trigger Condition | Required Action | Owner |
|---|---|---|
| Actual PMPM exceeds 85% of projected PMPM for 2 consecutive months | Davies rate review required. Operations provides Allied trailing claims data to Davies. Davies evaluates whether current employer premium rates are adequate and whether a rate adjustment or plan design change is warranted. | Operations → Davies Actuarial |
| Single catastrophic claim approaching $350K HLRA attach point | Notify Jason Strain (Brown & Brown / HLRA) immediately. Coordinate reinsurance notification per reinsurance agreement terms. Davies may be engaged for individual claimant projection update. | Operations → Jason Strain + Davies |
| Aggregate claims for any group exceed 110% of projected annual claims | Group-level actuarial review requested from Davies. Consider rate adjustment at next renewal. Document in group file. | Operations → Davies Actuarial |
Davies Actuarial performs an annual reserve adequacy review of the Unity Care Member Plan Master Trust. The review evaluates:
Operations provides Davies with the full year's claims data (from Allied), enrollment data, and reserve history. The Davies annual reserve report is filed with the Trust records and retained for a minimum of 6 years.
Operations maintains a monthly Reserve Monitoring Log in Acumatica. Each monthly entry must document:
| Field | Description |
|---|---|
| Reporting Month | Calendar month and year for which the reserve check applies |
| Trust Bank Balance (Actual) | Confirmed bank balance as of measurement date |
| 3-Month Trailing Avg Monthly Claims | Average monthly claims paid per Allied data |
| 8-Week Projected Claims (Target) | Calculated target reserve floor (3-month avg × 2) |
| Weeks of Coverage | Actual balance ÷ projected weekly claims |
| Threshold Breached? | None / 6-week warning / 4-week critical / 2-week emergency |
| Escalation Actions Taken | Description of any escalation steps taken this month |
| Completed By | Operations/Finance team member and date |
| Role | Responsibilities in This SOP |
|---|---|
| Operations Director | Owns this process; reviews and signs off monthly reserve log; executes escalation protocol when thresholds are breached |
| Finance (Acumatica) | Pulls Trust bank balance; calculates reserve metrics; documents monthly reserve log entries |
| Allied Benefit Systems | Provides trailing 3-month claims payment summary; receives claims suspension notifications when 2-week threshold is reached |
| Davies Actuarial | Performs annual reserve adequacy review; rate reviews triggered by PMPM or reserve triggers |
| SRS | Coordinates reserve reporting to HLRA reinsurance carrier per reinsurance agreement |
| Jason Strain (Brown & Brown / HLRA) | Receives notification of catastrophic claims approaching $350K attach point; reinsurance coordination |
| Legal Counsel (Dickinson Wright) | Advises on participant communication obligations when claims suspension is activated |
| Leadership | Receives immediate alerts at 6-week and 4-week thresholds; authorizes emergency actions at 2-week threshold |