Total Incurred Definition Has Two Variables
The Total Incurred definition is the funds that have already been paid out + the Reserves on the file.
The E-Mod is calculated using Total Incurred as one of the main items. The Paid part can rarely be adjusted. The Reserves, however, can be negotiated.
Update – This is an older article. Leakage audits on concerning the accuracy of the file payments can now be analyzed. We have partnered with two different firms that can provide leakage audit services.
The two parts of the Total Incurred are
- Indemnity Payments/Reserves
- Medical Payments/Reserves
If you look at your NCCI or Rating Bureau Sheets, you will only see one loss figure. The Total Incurred is the total of the above two bullets.
Insurance carriers and Third Party Administrators sometimes have different labels on the Paid, Reserve, and Total columns. They can be confusing. If you have any questions on your loss runs, you should call your insurance carrier or TPA and ask any questions about your loss run.
There is no standard loss run. No state insurance department or rating bureau requires a certain form for the losses to be reported to the employer.
One of the most important things to remember is that on the loss runs the total incurred is the sum of the Indemnity, Medical, and Expense figures. However, you have to subtract out the expense figure to match it to the Rating Bureau Worksheets.
I wanted to start with the Total Incurred, as I wanted to talk more about the Reserves part of the figure in the next post.
Next Up – Reserves – The Secret Budget Buster