Actuarial modelling of post-retirement private medical insurance case study:Armed forces medical insurance scheme
Abstract
In health care insurance the main question is 'how much? It may require information that
is relatively simple and straightforward like the financing provisions of existing schemes.
At the other end of the spectrum, it may be complex analyses - for example, regarding
possible future scenarios. Some typical questions from policy makers include:
1. What would be the aggregate yearly inflation of medical expenses for aging
individuals of a certain country or geographical area?
2. What techniques are involved in coming up with a model the will produce a
sustainable health insurance product to effectively reallocate the financial burden?
3. How much should one contribute presently to a medical insurance scheme to cover
for the future costs of medical claims after retirement?
This work considers taking into account how the medical expenses of a salaried person
from an arbitrary age of 45 years expected to retire at age 60 and live up to an age of
100 years. It has come up with a workable model for projection of individual medical
expenses after retirement till death and those of his dependants where the dependants
are limited to four. The conclusion of this work brings in a mathematical estimation of
the contribution rate as a percentage of the salary of the individual during the
employment which will work towards covering the medical costs after retirement without
having to pay any contribution to the scheme after retirement.
Sponsorhip
University of NairobiPublisher
School of mathematics