# ASC 720-954-05: Other Expenses — Health Care Entities — 05 Overview and Background

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/720/954/#05-overview-and-background)

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## ASC 720-954-05: 05 Overview and Background

[Read section](https://asc.understandingaccounting.org/asc/720/954/#05-overview-and-background)

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##### [720-954-05-1](https://asc.understandingaccounting.org/asc/720/954/#720-954-05-1)

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This Subtopic provides guidance on accounting for other expenses for health care entities within the scope of this Topic.

#### Prepaid Health Care Services

##### [720-954-05-2](https://asc.understandingaccounting.org/asc/720/954/#720-954-05-2)

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Many prepaid health care providers incur costs that vary with, and are primarily related to, the marketing of subscriber contracts and member enrollment. These costs, sometimes referred to as acquisition costs, consist mainly of commissions paid to agents or brokers and incentive compensation based on new enrollments. Commissions and incentive compensation may be paid when the contracts are written, at later dates, or over the terms of the contracts as premiums are received. Some providers incur additional costs directly related to the acquisition of specific contracts, such as the costs of specialized brochures, marketing, and advertising. Providers also incur costs that are related to the acquisition of new members but that do not relate to specific contracts and are not considered acquisition costs. These costs include salaries of the marketing director and staff, general marketing brochures, and general advertising and promotion expenses.

#### Stop-Loss Insurance

##### [720-954-05-3](https://asc.understandingaccounting.org/asc/720/954/#720-954-05-3)

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In [stop-loss insurance](https://asc.understandingaccounting.org/glossary/s/#stop-loss-insurance "A contract in which an entity agrees to indemnify providers for certain health care costs incurred by members."), prepaid health care providers or associated entities transfer portions of their financial risks to other entities. A provider typically contracts to recover health care costs in excess of stated amounts during the contract periods.