A
ADA (Americans with Disabilities Act)ADA is a broad-based law that prohibits discriminatory practices in employment based on disabilities. In relation to medical plans,
ADA prohibits the use of differing benefits, which discriminate based on a disabling condition.
ADEA (Age Discrimination in Employment Act)ADEA is a broad-based law that prohibits discriminatory practices in employment based on age. In relation to benefit plans,
ADEA requires that active employees who are over the age of 65 be treated in the same manner as other active employees under the plan.
Administration The broad aspect of handling all functions of a group benefit plan once it has been sold. Service and
claim functions may or may not be included.
Advanced Funding of Specific Claims Several of our
stop-loss carriers offer a cash flow enhancement often referred to as "pre-funding" or "advance funding". If a large
claim reaches a specific level during a policy year, the plan is required to fund the
claim only up to that level. The remaining
claim is submitted to the
stop-loss carrier for payment, which provides our clients with extra cash flow protection.
Adverse SelectionAlso known as anti-selection, this is the tendency of persons to choose health options that are financially most beneficial to them (and least beneficial to the health plan) in light of their known physical conditions. Those with known health problems elect more insurance and healthy persons elect less or no coverage.
Agent of RecordThe agent designated by the group. The
agent of record controls the group plan and authorizes group information.
Aggregate DeductibleThe amount of the self-funded health plan's covered expenses, which are retained by the
employer before as aggregates
claim may be made. At the beginning of the contract year, the deductible is determined as a projection of
claim costs for the contract year. The limit is frequently expressed as 125% of expected claims and is determined on the basis of the number of individuals in the plan, their age, and sex, the industry of the
employer,
claim frequency and average size of
claim. The actual
aggregate deductible is determined by aggregating the 12 contract monthly deductibles. The monthly deductible is the sum of the monthly factors times their respective employee counts. The
aggregate deductible is also referred to as the aggregate
attachment point.
Amendment A formal document signed by the
employer, which changes the provisions of the plan.
Annual Report (Form 5500)An annual information return that the
employer must file with the IRS and DOL regarding the qualification, financial condition and operations of the benefit plan.
ASO (Administrative Services Only)A contract between an insurer or
TPA to provide certain administrative services and no insurance protection to a self-funded
employer.
Attachment PointSee
Aggregate Deductible.
Audit A retrospective review of the provider's services and charges to see that all billed services were actually provided, that the charges for these services were accurate and that the fees were reasonable. Typically performed on large hospital claims.
B
Benefit BookletThe summary plan description for self-funded plan or the insurance certificate for a
fully insured plan.
Broker/Agent An authorized representative of the group who solicits insurance contracts and services on the group's behalf even though he may be paid commissions by the insurance company.
C
Cafeteria Plan/Section 125A
flexible benefit plan, which generally complies with the requirements of IRC
Section 125 and offers a choice of two or more benefits or a choice between cash and one more benefit.
Carrier The insurer to a self-funded plan who agrees to underwrite (carry the risk) and provide certain types of coverage and service. The
stop-loss carrier.
Claim A demand to the plan by a covered person for payment of certain benefits provided by the plan.
Claim Adjudication To properly adjust or adjudicate a
claim based on eligibility, fee schedules, usual and customary amounts, and benefit coverage.
Claim AdministratorThe firm that performs the administrative functions for a group plan. The relationship with the group is brought about through an administrative services only (
ASO) agreement or a claims services only (CSO) agreement. The administrator provides such services as actuarial, benefit design,
claim processing, employee communication, governmental reporting, securing of insurance, etc.
Claim LagThe time interval between the date the
claim is incurred, received, processed and paid.
COBRA (Consolidated Omnibus Budget Reconciliation Act)COBRA as it refers to benefits plans requires that coverage under the plan be continued for up to 18 months, at the employee's cost, when coverage under the plan is lost due to certain events. Continuation is also required for up to 36 months for dependents who lose coverage under the plan due to certain events.
COBRA continuation applies to medical, dental, Flex, vision, prescription drug and all other health type coverage. It does not apply to disability of life coverage.
Cost ContainmentActivities like pre-certification, case management, mandatory second opinions and benefit incentives aimed at holding down the cost of medical care or reducing its rate of increase.
E
Employee Benefit PlanA plan established or maintained by an
employer or employee organization or both. The purpose is to provide employees with a certain benefit such as medical insurance.
Employer Any person acting directly as an
employer or indirectly in the interest of an
employer in relation to an
employee benefit plan. The term may also include a group or association of employers.
Enrollment The process of explaining the plan to the eligible employee and assisting them in properly completing their application for coverage.
Enrollment FormA document signed by the employee as a notice of their desire to participate in the benefits of the plan. It may include health questions and questions relating to dependents who are being enrolled for coverage with the employee.
EOB (Explanation of Benefits)A document that accompanies a
claim check and summarizes how reimbursement was determined and among other things, explains the
claim appeal process. If a check is not issued, the
EOB summarizes how the
claim was adjudicated (i.e. to deductible, denied as duplicate, etc.).
ERISA (Employee Retirement Income Security Act)ERISA is a broad set of laws providing uniform regulation of pensions and welfare benefit plans.
ERISA is written in very general terms, which has led to much of its interpretation and impact being determined in case law from court verdicts. As it relates to benefit plans,
ERISA provides a general framework for the set up and operation of a self-funded plan.
ERISA was written with a pre-exemption of state law included, which means groups that can declare
ERISA exemption do not have to comply with state mandates regarding benefits provided under a benefit plan.
Evidence of Good HealthA personal description that lists factors regarding a person's physical condition, medical history and other information on which an underwriting decision can be made.
Expected Paid ClaimsAn estimate of the dollar value of claims to be paid in the year ahead for the group.
F
Fee for ServicePayment of provided services as rendered.
Fiduciary Any person who has discretion over plan assets, benefit levels, accounting and record keeping, investments or benefit/eligibility decisions. A
fiduciary has a duty under federal law to operate the plan in a prudent (conservative) manner and in the exclusive interest of the persons covered under the plan. A
TPA is not a
fiduciary.
Flexible Benefit Plans/Section 125Offers a choice of pre-tax benefits funded by employee contributions only (premium payment, medical reimbursement account, dependent care reimbursement account).
FMLA (Family and Medical Leave Act) Federal LawThe
FMLA, as it relates to benefit plans, requires an
employer with 50 or more employees within a 75 mile radius to provide up to 12 weeks of unpaid leave per 12 months in certain situations, during which the employee must continue to be treated as an active employee under the benefit plan. In addition, upon return from
FMLA leave all eligibility periods and exclusions will be waived unless such provisions would have applied had the person not gone on
FMLA leave.
Form 5500Annual filing form for
ERISA plans.
Fully Insured PlanA benefit plan, which is purchased by the
employer for fixed monthly premiums paid to the insurance company who bears the risk.
Funding The providing of money for payment of claims incurred under a self-funded plan.
H
HIPAA Health Insurance Portability and Accountability Act
HMO (Health Maintenance Organization)A form of insurance, which provides benefits through specified providers who are under contract only. HMO's control costs by paying providers on a capitated rate regardless of the actual services provided.
I
ID Card (Identification Card)A pocket size printed card issued to the employees who are covered under the plan.
Incurred and Paid 12/12 Contract This contract is used when moving an employee from another fully insured 12/12 contract. It covers eligible claims that have been incurred and paid during the twelve-month policy period. Claims paid prior to the effective date will not count toward the 12/12 contract.
M
Managed CareAn approach to controlling utilization, quality and cost of medical care using a variety of
cost containment methods focused on incentives to choose less costly care and disincentives for choosing more costly care.
Mandated BenefitsA specific coverage that an insurer or non-ERISA plan is required to offer by state law.
Mandated benefits vary from state to state according to the insurance laws of the particular state.
Medicare Medicare, as it relates to benefits plans, outlines the order in which plans will pay benefits when
Medicare also covers the person.
MEWA (Multiple Employer Welfare Arrangement)An arrangement between or among two or more unrelated employers, that is not maintained pursuant to a collective bargaining agreement, to provide benefits to their employees. MEWA's are not considered legal in Wisconsin.
N
Negligence The failure, through omission of act, to perform as a reasonable, ordinary and prudent person would perform. Consideration is given to the specific situation, circumstances and knowledge of the parties involved.
Non-Discrimination The general requirement that plans not provide significantly greater benefits to highly compensated or key employees, and not provide benefits on a case-by-case basis.
O
OBRA 93 (Omnibus Budget Reconciliation Act)OBRA 93 contained provisions that relate to benefit plans coverage of adopted children, handling of qualified medical child support orders (QMCSO's), and immunization benefits.
P
Paid ClaimsThe dollar value of all claims paid under the plan during the plan year.
Paid ContractThis contract covers employees for all eligible claims incurred prior to the effective date and paid during the policy year, regardless of when the
claim was incurred. The
paid contract gives employees the most protection during the policy year and is recommended for
renewal purposes.
Party in InterestA party to the plan who is not a
fiduciary, but has knowledge of and interest in the plan. A
TPA is a
party in interest.
PDA (Pregnancy Discrimination Act)PDA prohibits discrimination in employment based on pregnancy. As it relates to benefit plans,
PDA requires that if medical benefits are offered to employees, those benefits will treat pregnancy in the same manner and subject to the same provisions as any other sickness.
Plan AdministratorThe person or entity named to administer the day-to-day operations of a plan. Typically the
employer.
Plan DocumentA comprehensive and detailed description of all provisions of the plan. The
plan document is generally written in technical language.
Plan SponsorThe entity that sets up the plan and is responsible for its
funding and operation. Typically the
employer. However, it may be an association or union in the case of groups that are not single employers.
Preemption of State LawThe regulatory portion of
ERISA which provides that all state laws as they apply to an
ERISA plan are superseded by
ERISA and not applicable.
POS (Point of Service) GatekeeperA form of insurance which utilizes a primary care provider to control access to medical services but, as opposed to an
HMO or
PSO, provides an out of network benefit.
PPO (Preferred Provider Organization)An organization which contracts with providers of medical services (physicians and hospitals) to render services at discounted or pre-set fees to members of the
PPO, in exchange for prompt payments and increased patient volume. The
PPO then sells access to its network of providers to insurance companies and self-funded plans.
PSO (Provider Service Organization)An
HMO which is owned and operated by the providers rather than an insurance company.
Q
Quote Also called a Proposal. The offer to a current or prospective case to underwrite specified risks and provide specified services at a quoted price. Quotes may be firm or subject to recalculation based on additional information.
R
Reimbursement PlanA plan that provides reimbursement of expenses that have been paid as distinguished from an indemnity plan, which provides for the payment of expenses.
Reinsurance A contractual arrangement whereby a reinsurer agrees to assume a portion of the risk underwritten by a
stop-loss carrier or insurance company. Insurance for the insurance company.
Stop-loss coverage is not
reinsurance because
stop-loss coverage is issued to an
employer group and not a
stop-loss carrier or insurance company.
Renewal The continuing of services to a plan who has been with the
TPA or insurer during the past year.
Run-in (15/12, 18/12) ContractThis option is normally used when changing an employee from one
carrier to another or when switching TPAs. The 15/12 contract covers eligible claims incurred three months prior to the effective date of the plan and paid during the 12 months following the effective date. Some of our carriers also offer an 18/12 or 24/12 contract to give employees more protection.
S
Self-Funding An arrangement under which some or all of the risk associated with a benefit plan is not covered by an insurance contract. The
plan sponsor is responsible for that portion of the risk that is not insured.
Shock LossA large loss that significantly affects the true claims experience of a group. Typically defined as any
claim which exceeds the greater of $10,000 or the specific deductible of the
stop-loss contract.
Stop-Loss Also called Excess Coverage Insurance. A contract between a self-funded plan and an insurance company that if claims exceed a specified dollar amount during a set period of time, the insurance company will reimburse the self-funded plan for the excess amount.
Subrogation The right of the plan to recover benefits paid to a covered person through legal suit, if the expenses incurred by the covered person and paid by the employer's plan are the fault of another party or individual. Also the right of the plan to be substituted in legal action against any party the covered person may recover from.
SPD (Summary Plan Description)A comprehensive description of plan benefits, eligibility provisions and all limiting factors, which is written in a manner that will be easily understood by the average employee.
T
Terminal RiderThe
Terminal Rider allows for an extension of
stop-loss insurance upon termination of a self-funded program. It is available to your employees on both specific and aggregate
stop-loss coverage. Normally, it extends coverage for three months to pay claims incurred during the past policy year. There is an additional charge if you choose the extended coverage for your employees.
TPA (Third Party Administrator)An outside company who provides professional services to the plan and
employer such as collection of premiums, payment of claims, maintenance of eligibility records and other clerical services. A
TPA operates on a service only basis and does not accept any risk under the plan.
U
UR (Utilization Review)A cost control mechanism, which evaluates health care on the basis of appropriateness, necessity and quality. It may include pre-admission certification, concurrent review during hospital confinement, discharge planning, retrospective review of confinements and large case management.
URAC Utilization Review Accreditation Commission
USERRA (Uniformed Services Employment and Re-employment Rights Act)As it relates to benefit plans,
USERRA requires a plan up to 18 months of
COBRA continuation to an employee who takes a leave of absence from work to serve in the armed forces of the U.S. In addition, upon re-employment after military leave all eligible periods and exclusions will be waived unless such provisions would have applied had the person not gone on military leave.
W
Welfare PlanA plan of employee fringe benefits that is declared and operated under the provisions of
ERISA.