Unpaid Claims
 3 Months Ended 12 Months Ended
Mar. 31, 2021
Dec. 31, 2020
Roll Forward In Liability For Unpaid Claims And Claims Adjustment Expense [Abstract]    
Unpaid Claims
8. Unpaid claims
Activity in the liability for unpaid claims, including claims adjustment expenses, for the three months ended March 31, 2021 and 2020, is summarized as follows:
 
Three Months Ended March 31,
  
2021
   
2020
 
   
(in thousands)
 
Beginning of period balance - gross and net
  $103,976   $77,886 
Incurred related to:
    
Current year
   213,147    146,440 
Prior years
   1,285    (112) 
  
 
 
   
 
 
 
Total incurred
   214,432    146,328 
Paid related to:
    
Current year
   130,459    74,502 
Prior years
   70,367    59,359 
  
 
 
   
 
 
 
Total paid
   200,826    133,861 
  
 
 
   
 
 
 
End of period balance - gross and net
  $117,582   $90,353 
  
 
 
   
 
 
 
Unpaid claims as of March 31, 2021 were $117.6 million. During the three months ended March 31, 2021, $70.4 million was paid for incurred claims attributable to insured events of prior years. An unfavorable development of $1.3 million was recognized during the three months ended March 31, 2021, resulting from the Corporation’s actual experience with claims developing differently as compared to the Corporation’s estimates as of December 31, 2020. Original estimates are increased or decreased, as additional information becomes known regarding individual claims. The ratio of current year medical claims paid as a percentage of current year net medical claims incurred was 61.2% for the three months ended March 31, 2021 and 50.9% for three months ended March 31, 2020. This ratio serves as an indicator of claims processing speed, indicating that claims were processed at a faster rate during the three months ended March 31, 2021 than during the three months ended March 31, 2020.
The Corporation uses a variety of standard actuarial techniques to establish unpaid claims reserves. Management estimates are supported by the Corporation’s annual actuarial analysis. The Corporation utilizes an actuary to review the adequacy of unpaid claim and unpaid claim adjustment expense. The estimation of claim costs is inherently difficult and requires significant judgement. The estimation has considerable inherent variability and can vary significantly depending upon several factors, including medical cost trends and claim payment patterns, general economic conditions and regulatory changes. The time value of money is not taken into account for the purposes of calculating the liability for unpaid claims. Management believes that the current reserves are adequate based on currently available information.
11. Unpaid claims
Activity in the liability for unpaid claims, including claims adjustment expenses, is summarized as follows:
 
Year ended December 31,
  
2020
   
2019
 
   (in thousands) 
Gross balance
, beginning of year
  $77,886   $54,004 
Less: reinsurance recoverable, beginning of year
   —      (12,344) 
  
 
 
   
 
 
 
Net balance,
beginning of year
   77,886    41,660 
Incurred related to:
    
Current year
   604,183    453,423 
Prior years
   (13,715)    (2,778) 
  
 
 
   
 
 
 
Total incurred
   590,468    450,645 
  
 
 
   
 
 
 
Paid related to:
    
Current year
   501,339    376,677 
Prior years
   63,039    37,742 
  
 
 
   
 
 
 
Total paid
   564,378    414,419 
  
 
 
   
 
 
 
Net balance,
end of year
   103,976    77,886 
  
 
 
   
 
 
 
Plus: reinsurance recoverable, end of year
   —      —   
  
 
 
   
 
 
 
Gross balance
, end of year
  $103,976   $77,886 
  
 
 
   
 
 
 
Unpaid claims as of December 31, 2020 were $104.0 million. As of December 31, 2020, $63.0 million has been paid for incurred claims and claims adjustment expenses attributable to insured events of prior years. The favorable development recognized in 2020 resulted from the actual experience developing differently from estimates as of December 31, 2019, partially attributable to the deferral of healthcare services as a result of the
stay-at-home
orders and closure of certain provider facilities throughout the year due to
COVID-19
restrictions. Original estimates are increased or decreased, as additional information becomes known regarding individual claims. The ratio of current year medical claims paid as a percent of current year net medical claims incurred was 83.0% for 2020 and 83.1% for 2019.
The Corporation did not have any significant changes in methodologies or assumptions used in the calculation of the liability for unpaid claims or claims adjustment expenses.
The Corporation uses a variety of standard actuarial techniques to establish unpaid claims reserves. Management estimates are supported by the Corporation’s annual actuarial analysis. The Corporation utilized an
in-house
actuary to review the adequacy of unpaid claim and unpaid claim adjustment expense. Management believes that the reserves are adequate based on the available information. The estimation of claim costs is inherently difficult and requires significant judgement. The estimation has considerable inherent variability can vary significantly depending upon several factors, including medical cost trends and claim payment patterns, general economic conditions, regulatory changes, and known outbreaks of disease, including
COVID-19.
Only time and the eventual resolution of each claim will determine whether the claim reserves will ultimately prove to be adequate.
 
The following is information about incurred and paid claims development for medical claims, as well as cumulative claim frequency and the total of incurred but not reported liabilities as of December 31, 2020, respectively.
 
Cumulative incurred claims for the years ended December 31,
 
(in thousands)   
(in thousands, except for number
of reported claims)
 
Incurred year
  2018*   2019*   2020   Total IBNR   Number of
reported claims		 
2018 and prior
  $552,456   $549,678   $549,649   $2    1,737,684 
2019
     412,695    399,009    1,130    1,188,472 
2020
       604,183    102,844    1,433,049 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  $552,456   $962,373   $1,552,841   $103,976    4,359,205 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
Cumulative net paid claims through December 31,
 
(in thousands) 
Paid year
  2018*   2019*   2020 
Incurred year
      
2018 and prior
  $511,459   $550,974   $549,647 
2019
     343,903    397,879 
2020
       501,339 
  
 
 
   
 
 
   
 
 
 
Total
  $511,459   $894,877   $1,448,865 
  
 
 
   
 
 
   
 
 
 
 
*
Unaudited supplemental information
The reconciliation of net incurred and paid claims development tables to unpaid claims and claims adjustment expenses on the Consolidated Balance Sheets is as follows:
 
December 31, 2020
    
   (in thousands) 
Cumulative incurred claims, net
  $1,552,841 
Less: cumulative paid claims, net
   1,448,865 
  
 
 
 
Net unpaid claims, including claims adjustment expenses
  $103,976 
  
 
 
 
The time value of money is not taken into account for the purposes of calculating the liability for unpaid claims.
The Corporation counts a claim when either a claim or claim adjustment expense amount has been paid, or at any period end, when the Corporation has recorded a medical unpaid claim reserve. The cumulative number of reported claims for each claim year has been developed using historical data captured by claim systems. As such, the cumulative number of reported claims may not be comparable to similar measures reported by other companies.