Medical Claims Liability

9 Months Ended

Sep. 30, 2025

The following table summarizes the change in medical claims liability for the nine months ended September 30, 2025 ($ in millions):


	Medicaid		Medicare		Commercial		Other		Consolidated Total
Balance, January 1, 2025	$	10,299	$	3,358	$	4,463	$	188	$	18,308
Less: Reinsurance recoverable	18		—		47		—		65
Balance, January 1, 2025, net	10,281		3,358		4,416		188		18,243

Incurred related to:
Current year	64,181		25,306		27,111		1,597		118,195
Prior years	(1,143)		(501)		(504)		(24)		(2,172)
Total incurred	63,038		24,805		26,607		1,573		116,023
Paid related to:
Current year	53,764		21,544		22,201		1,426		98,935
Prior years	8,229		2,461		3,250		161		14,101
Total paid	61,993		24,005		25,451		1,587		113,036
Plus: Premium deficiency reserve	—		190		—		—		190
Balance, September 30, 2025, net	11,326		4,348		5,572		174		21,420
Plus: Reinsurance recoverable	17		—		56		—		73
Balance, September 30, 2025	$	11,343	$	4,348	$	5,628	$	174	$	21,493

The following table summarizes the change in medical claims liability for the nine months ended September 30, 2024 ($ in millions):


	Medicaid		Medicare		Commercial		Other		Consolidated Total
Balance, January 1, 2024	$	10,814	$	3,612	$	3,460	$	114	$	18,000
Less: Reinsurance recoverable	5		—		44		—		49
Balance, January 1, 2024, net	10,809		3,612		3,416		114		17,951

Incurred related to:
Current year	59,327		16,134		19,211		1,216		95,888
Prior years	(1,247)		(439)		(306)		7		(1,985)
Total incurred	58,080		15,695		18,905		1,223		93,903
Paid related to:
Current year	50,198		13,006		15,773		1,040		80,017
Prior years	8,543		2,713		2,523		120		13,899
Total paid	58,741		15,719		18,296		1,160		93,916
Plus: Premium deficiency reserve	—		(5)		—		—		(5)
Balance, September 30, 2024, net	10,148		3,583		4,025		177		17,933
Plus: Reinsurance recoverable	20		—		42		—		62
Balance, September 30, 2024	$	10,168	$	3,583	$	4,067	$	177	$	17,995

Reinsurance recoverables related to medical claims are included in premium and trade receivables. Changes in estimates of incurred claims for prior years are primarily attributable to reserving under moderately adverse conditions. Additionally, as a result of development within "Incurred related to: Prior years," the Company recorded $86 million and $236 million as a reduction to premium revenue in the nine months ended September 30, 2025 and 2024, respectively, for minimum medical loss ratio (MLR) and other return of premium programs.

Incurred but not reported (IBNR) plus expected development on reported claims as of September 30, 2025 was $13,947 million. Total IBNR plus expected development on reported claims represents estimates for claims incurred but not reported, development on reported claims and estimates for the costs necessary to process unpaid claims at the end of each period. The Company estimates its liability using actuarial methods that are commonly used by health insurance actuaries and meet Actuarial Standards of Practice. These actuarial methods consider factors such as historical data for payment patterns, cost trends, product mix, seasonality, utilization of healthcare services and other relevant factors.

The Company reviews actual and anticipated experience compared to the assumptions used to establish medical costs. The Company establishes premium deficiency reserves if actual and anticipated experience indicates that existing policy liabilities together with the present value of future gross premiums will not be sufficient to cover the present value of future benefits, settlement and maintenance costs. For purposes of determining premium deficiencies, contracts are grouped in a manner consistent with the method of acquiring, servicing and measuring the profitability of such contracts and expected investment income is excluded. In December 2024, the Company recorded a premium deficiency reserve of $92 million related to the 2025 Medicare Advantage contract year. The premium deficiency reserve was increased to $270 million in the first quarter of 2025, to $389 million in the second quarter of 2025 and decreased by $107 million to $282 million in the third quarter of 2025 based on the progression of earnings during the year (with higher earnings at the beginning of the year and lower at the end of the year, given cost sharing progression), including anticipated impacts of the Inflation Reduction Act to the Part D benefit within the Company's Medicare Advantage business. In December 2023, the Company recorded a premium deficiency reserve of $250 million related to the 2024 Medicare Advantage contract year, which was increased to $300 million in the first quarter of 2024, to $335 million in the second quarter of 2024 and decreased by $90 million to $245 million in the third quarter of 2024 consistent with the progression of earnings during the year.

- Definition

The entire disclosure for the types of coverages and products sold, and the assets, obligations, recorded liabilities, revenues and expenses arising therefrom, and the amounts of and methodologies and assumptions used in determining the amounts of such items.

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CENTENE CORP 10-Q