Health Plan

Health Plan
Name
Institution

Health Plan
Q1
The accrual and cash basis accounting tools are employed to prepare financial statements in hospitals. The two approaches have got some differences. The significant difference between accrual and cash financial basis is recognized in the timing in which the revenue and expenses are acknowledged (Tennyson, Nirtaut, & McSweeney, 2010). The accrual method is got by both the cash at hand and those to be received in future while cash focuses on the immediate acknowledgment of what is there at present. In the cash basis, the income statement is only reported when money has been received at hand. It also only records the money not paid instantly after it has been paid out. On the other hand, accrual income is recorded immediately when it is earned. It directly records the revenue so long as the commodity has been delivered. The Accrual basis also records the expenses of all the products offered on credit. The accrual approach applies to health specifically on the health financial insurance schemes. People pay, for the treatment service in advance and they are reflected immediately even before they mature, so long as the confirmation message is availed (Harte, 2018). Cash basis applies on the outpatients, where the service is delivered after the cash is paid and entered in the records to be compiled by financial officers on a daily basis.
Q2
Incurred but not reported claim reserves is defined as the claim of money that were that were paid earlier but have become due because of the occurrence of the risks covered under the insurance policy but have not been recorded to the insurance company of the loss.

In this concept, the insurance company is aware of all the claims he has covered but not the number that has already occurred (Fronstin, 2018). Therefore, most of the insurance company’s do calculate the amount of money to be paid and set them aside in reserve. In conclusion, the insurance companies assume that in the IBNR losses have officially occurred but not reported.

References
Fronstin, P. (2018). Self-Insured Health Plans: Recent Trends by Firm Size, 1996-2016. EBRI Issue Brief, (442), 3–6.
Harte, T. (2018). Self-Funding Your Health Plan. Business NH Magazine, 35(5), 33.
Tennyson, D., Nirtaut, D., & McSweeney, M. H. (2010). Making a case for Consumer-Driven Health Plans. Scottsdale: WorldatWork