GMHBA AnnuAL RepoRt 2010 - GMHBA Health Insurance

GMHBA Limited ABN 98 004 417 092
GMHBA Limited ABN 98 004 417 092
Notes to the Financial Statements for the year ended 30 June 2010 (continued)
1. Summary of significant accounting policies (continued)
(l) Employee benefits
Salaries and wages and annual leave
Liabilities for salaries and wages and annual leave are recognised, and are measured as the
amount unpaid at the reporting date based on remuneration rates expected to apply when
the obligation is settled, including on-costs, in respect of employees’ services up to that date.
Long service leave
A liability for long service leave is recognised, and is measured as the present value of
expected future payments to be made in respect of services provided by employees up to the
reporting date. Consideration is given to the expected future wage and salary levels,
experience of employee departures and periods of services. Expected future payments are
discounted using interest rates on national government guaranteed securities with terms to
maturity that match, as closely as possible, the estimated future cash flows.
(m) Health benefits risk equalisation trust fund
Under the provisions of the Private Health Insurance Risk Equalisation Policy Rules 2007,
hospital benefits are submitted to the Risk Equalisation Trust Fund and shared amongst all
health benefit funds in the following circumstances:
Where a fund has directly paid these benefits, which are proportionally less than the average
of other funds in the State, it is required to pay to the Risk Equalisation Trust Fund an
amount equivalent to the shortfall. Conversely, where the direct payment is proportionally
greater than the average, the difference is paid to the Company from the Risk Equalisation
Trust Fund. Eligible claims are assessed on a quarterly basis.
(n) Claims outstanding
Claims that have been incurred by Fund members, but not yet presented to the Company for
reimbursement, are estimated based on the claims experience in previous accounting
periods. Outstanding claims are not discounted as they are usually settled within six months
of the reporting date. The provision is calculated in accordance with the principles of the
chain ladder method which can be used under the prudential regulations of the Private
Health Insurance Industry.
AASB 1023 requires a risk margin be applied to allow for the inherent uncertainty in the
central estimate. GMHBA adopted a risk margin of 6% giving in excess of 90% probability of
adequacy. The risk margin has been based on an analysis of the past experience of the
Company by our Appointed Actuary on the adequacy of the provision over the prior years.
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