Average reserves for FMC are estimated as which of the following?

Average reserves for FMC are estimated as which of the following?

• A. Over a yearly basis for life expectancy
• B. Per month
• C. Per quarter
• D. Per incident

Answer: (A)

Reserves for future medical costs are a long‑term liability, tied to how long the claimant will need care. Actuaries project the expected future expenses across the claimant’s remaining life, and they present that obligation as a yearly amount. This yearly horizon lets you adjust for life expectancy, changes in medical costs, and discounting, while staying aligned with annual financial reporting. Viewing the reserve on a monthly, quarterly, or per‑incident basis would miss the ongoing nature of future medical care and understate or overstate the total obligation.

Reserves for future medical costs are a long‑term liability, tied to how long the claimant will need care. Actuaries project the expected future expenses across the claimant’s remaining life, and they present that obligation as a yearly amount. This yearly horizon lets you adjust for life expectancy, changes in medical costs, and discounting, while staying aligned with annual financial reporting. Viewing the reserve on a monthly, quarterly, or per‑incident basis would miss the ongoing nature of future medical care and understate or overstate the total obligation.