Blue Shield
Nonprofit corporation providing protection to its members against the cost
of surgery and other items of medical care in a limited
geographic area.
Cafeteria
Plan
As defined under Section 125 of the
IRS Code—A Cafeteria Plan is a flexible employee benefit plan
that enables employees to choose from a menu of fringe benefits
and pay for them with pre-taxed dollars. Cafeteria Plans offer
advantages to both employees and employers:
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Since employees are able to pay for benefits
with pre-taxed dollars, the employees’ gross pay is
reduced—resulting in reduced taxes. Additionally, a Cafeteria
Plan allows employees to choose the benefits they need—or
don’t need. Since benefit choices can be modified each year,
the employee has the flexibility to modify his/her benefit
choices to reflect any change in his/her household needs.
Employees reduce their taxable
income and use the tax-free money to pay for expenses that
otherwise would have been paid with after-tax dollars.
Calendar Year
January 1 through December 31 of the same year. Under major
medical plans, many deductible amount provisions are based on a
calendar year. Benefits under basic hospital surgical and
medical plans are based on an amount per calendar year.
Case
Management
Assessment of a person's long term care needs and followed by
appropriate recommendations for care, monitoring and follow-up
as applies to extent and quality of services to be provided.
Cash
Value (Cash Surrender Value)
The
amount available in cash when surrendering a permanent life
insurance policy before it becomes payable upon death or
maturity.
Catastrophic
Disability
The total, permanent and irrevocable loss of speech,
hearing in both ears, the sight of both eyes or the use of both
legs, both arms, or one leg and one arm, due solely to a
sickness or injury.
Change
of Life Status
Pertaining to Flexible Spending
Accounts: Events that enable an FSA participant to change his or
her annual FSA election. These include:Marriage, birth of a
child, adoption of a child, divorce, death of a spouse, death of
a child, change in employment status.
Chemical
Dependency Services
Services required for treatment and diagnosis of chemical
dependency, alcoholism, and drug dependency.
Claim
A request by an individual (or his or her health care
provider) to an individual’s insurance company for the
insurance company to pay for services obtained from a health
care professional.
COBRA
The Consolidated Omnibus Budge
Reconciliation Act of 1985 and mandates that organizations
with 20 or more employees must offer the continuation of group
health benefits to employees (and their covered dependants) upon
experiencing a “qualifying event,” such as termination,
reduction of hours, medicate entitlement or employee’s death.
If an employee continues coverage, he/she pays the monthly
premium plus a service charge (usually two percent).
Participants remain eligible for 18-36 months, depending upon
their qualifying even.
Cognitive
Impairment
Deficiency in ability to think, perceive, reason or remember.
Results in loss of ability to attend to one's daily living needs.
Co-Insurance
Refers to money that an individual is required to pay for
services, after a deductible has been paid. In some health
plans, coinsurance is called a "co-payment."
Co-insurance is often specified by a percentage. For example,
the employee pays 20% toward the charges for a service and the
employer or insurance company pays 80%.
Continuation
Terminated employees are allowed to continue their group
health insurance coverage under certain conditions.
Contract
Year
The period running from effective date to expiration date of
contract.
Convertible
Term Insurance
Term insurance that offers the policyholder the option of
exchanging it for a permanent plan of insurance without evidence
of insurability.
Co-Payment
Arrangement where covered person pays a specified amount for
specified services and health care provider pays remainder.
Covered person usually pays his or her share when service is
rendered. Unlike coinsurance which is a percentage, co-payment
is a dollar amount.
Covered
Expenses
Health care expenses incurred by covered person that qualify
for reimbursement under a policy contract.
Covered
Person
Person who pays premiums to the contract for benefits
provided and also meets eligibility requirements.
Cosmetic
Surgery
Also referred to a “elective” surgery—These
are surgical procedures that are not deemed to be necessary for
ones health or well-being; but rather for primarily esthetic
value.
Death
Benefit
The amount paid to the beneficiary or beneficiaries of a life
insurance policy if an insured dies.
Deductibles
Amount that must be paid by the insured before benefits will
be paid by the insurer.
Denial
of a Claim
Refusal by an insurance company to
pay a claim submitted to them on behalf of an insured individual
by a health care provider.
Dependent
Coverage
Insurance coverage on the head of a family which is extended
to his or her dependents, including only the lawful spouse and
unmarried children who are not yet employed on a full-time
basis. "Children" may be step, foster, and adopted, as
well as natural. Certain age restrictions on children usually
apply.
Direct
Deposit
Transferring money directly into a
checking or savings account without needs of having to
physically go to the bank to make the transaction. Pertaining to
FSAs—this method of reimbursement of eligible expenses is
when, after the participant submits a reimbursement claim, the
reimbursement check is deposited directly into the
participant’s account.
Disability
A condition due to sickness or injury that curtails a
person's ability to carry on normal pursuits. A disability may
be partial or total, and temporary or permanent as verified by a
doctor.
Disability
Insurance
Coverage that protects one’s
income in case of a disabling accident or illness. Disability
coverage is available in Short Term and Long Term policies.
Dismemberment
Loss of, or loss of use of, specified members of the body
resulting from accidental bodily injury.
Dismemberment
Benefit
Benefits
payable for various types of dismemberment. See also Accidental
Death and Dismemberment and Multiple Indemnity.
Effective
date
Date when insurance coverage begins.
Elective
Benefits
Also known as “Voluntary”
benefits—These types of benefits are traditionally fully paid
for by the employee via the convenience and tax-saving method of
payroll deduction.
Eligibility
date
Date when a member of an insured group applies for insurance.
Eligible
Expenses (pertaining to an FSA)
These are expenses that can be paid
with Flexible Spending Account Dollars. Whether a service or
product is deemed as “eligible” is determined by the IRS.
Click here for a detailed list of
eligible and ineligible expenses.
Eligibility
period
Time following the eligibility date (usually 31 days) during
which a member of a group may apply for insurance without
evidence of insurability.
Elimination
period
Days at the beginning of a period of disability when no
benefits are paid.
Employee
Assistance Program (EAPs)
Mental health counseling services that are sometimes offered
by insurance companies or employers. Typically, individuals or
employers do not have to directly pay for services provided
through an employee assistance program.
Equity
Assets
Common stock, real estate, and all other miscellaneous
invested assets.
ERISA
The Employee Retirement Income Security Act of 1974 (ERISA)
is a federal law that affects pension and profit-sharing plans.
Among other provisions, this law specifies a published summary
plan must be distributed to participants within 120 days after
adoption of the plan and within 90 days after an employee
becomes a participant. The law requires that a summary plan
description be issued every 5 years.
Evidence
of Insurability
A statement or proof of physical condition and/or other
factual information affecting a person's eligibility for
insurance. In group insurance, evidence of insurability is
required only in specific situations: when a person fails to
enroll during the open enrollment period; when a person applies
for reinstatement after having previously withdrawn from the
plan when receiving an overall maximum benefit; or when a person
applies for excess amounts of group life or disability
insurance.
Exclusive
Provider Organizations (EPO)
Form
of managed care in which participants are reimbursed only for
care received from affiliated providers.
Flexible
Spending Accounts (FSAs)
Flexible
Spending Accounts are accounts that hold money that will be used
for the payment of uninsured Health and Dependent Care expenses,
such as co-pays/deductibles, daycare/dependent care costs,
prescription drugs and vision care.
Click
here for a detailed list of eligible expenses.
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Flexible Spending Accounts save employees money by
paying for common out-of-pocket health and dependent care
expenses with pre-taxed dollars. Since FSA contributions are
taken out of an employee’s check BEFORE taxes are applied, the
taxable income is reduced—resulting in the employee paying
less in taxes!
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Flexible
Spending Accounts are popular with employers since FICA and most
other payroll taxes not paid on FSA contributions!
Flex
Card
This
is a bank debit-like card that Flexible Spending Account
participants can use for the payment of eligible FSA expenses.
Provided through the MasterCard™ network, the MBI Flex Card™
pays for these expenses at
the point-of-service; the amount
automatically deducted from the participant’s FSA account. This
direct access to FSA dollars rids participants from process of
having to pay for expenses out-of-pocket, submit a claim form
along with proof of payment to the plan administrator, and then
wait for the reimbursement check.
Click here to
learn more about the Flex Card.
Gross
Income
A
worker’s total income before taxes are applied.
Group
Life Insurance
Life
insurance that usually does not require medical examinations, on
a group of people under a master policy. It is typically issued
to an employer for the benefit of employees, or to members of an
association, for example, a professional membership group. The
individual members of the group hold certificates as evidence of
their insurance.
Guaranteed
Insurability
An
option that permits the policyholder to buy additional stated
amounts of life insurance at stated times in the future without
evidence of insurability.
Health
Maintenance Organization (HMO)
Prepaid
group health insurance plan that entitles members to services of
participating physicians, hospitals, and clinics. Emphasis is on
preventative medicine. Members of the HMO pay a flat periodic
fee (usually deducted from each paycheck.
HIPAA
The Health Insurance Portability and Accountability Act.
This guarantees that people who have continuous health
coverage—without a gap of more than 63 days—can’t be
denied insurance even if they have a pre-existing condition,
such as diabetes. So if you forgo COBRA and wind up with a
three-month gap in your coverage, you would lose your HIPAA
protection when you later decide to buy insurance. This could
lead to serious financial consequences.
Hospice
Care
provided to terminally ill patients and their families that
emphasizes emotional needs and coping with pain and death rather
than cure.
Ineligible
Expenses
Pertaining to FSAs—These are
expenses that cannot be paid with Flexible Spending Account
Dollars. Whether a service or product is deemed as
“ineligible” is determined by the IRS.
Click here for a detailed list of
eligible and ineligible expenses.
Insurability
Acceptability to the company of an applicant for insurance.
Insurance
Risk
management plan that, for a price, offers the insured an
opportunity to share the costs of possible financial loss
through an insurer.
Lapsed
Policy
A policy terminated at the end of the grace period because of
non-payment of premiums.
Liability
Liability involves the cause of damage to someone's property
and the bodily injury someone incurs as a result of the
negligence of another party. Liability insurance provides
coverage for either individuals or businesses.
Liquidity
Liquidity
is defined as "the ability of an individual or business to
quickly convert assets into cash without incurring a
considerable loss." There are two kinds of Liquidity: quick
and current . Quick liquidity refers to funds, cash, short-term
investments, and government bonds - possessions which can
immediately be converted into cash in the case of an emergency.
Current liquidity refers to current liquidity plus possessions
such as real estate which cannot be immediately liquidated, but
can be sold and converted into cash eventually. Quick liquidity
is a subset of Current Liquidity. Again, the importance of
Liquidity has to do with how fast and how much cash an insurance
company can get their hands on in case there is a disaster and
they need to pay off claims. This reflects the financial
stability of a company and thus their rating.
Long
Term Care
Insurance that provides people of
all ages coverage for ”Activities of Daily Living” (ADLs)
such as bathing, dressing, eating, toileting, continence and
transferring when assistance is needed due to illness, injury or
advance age.
Long
Term Disability (LTD) Insurance
Insurance
issued to an employer (group) or individual to provide a
reasonable replacement of a portion of an employee's earned
income lost through serious and prolonged illness or injury
during the normal work career.
Managed
Care
The system that HMOs, PPOs and
indemnity plan uses to provide quality health care while
controlling the costs of medical services that individuals
receive.
Maximum
A dollar limit that is applied to benefit payments. Some
programs have no maximum. Some maximums apply to the lifetime of
the benefit program; others apply to a particular period of time
(calendar year, benefit year, etc.) or particular services (such
as separate maximum for orthodontic benefits).
Medicaid
Simply put, Medicaid is health insurance for the poor. It was
created in 1965 as a joint federal/state public assistance
program for those too poor to afford health care. Since the
program is administered by the individual states under federal
guidelines, the benefits offered and eligibility requirements
vary widely. About 36 million people around the U.S., including
children, the elderly, the blind and the disabled, are currently
covered by Medicaid. Usually, Medicaid recipients pay no part of
costs for covered medical expenses, although a co-payment is
sometimes required.
Medicare
Medicare is a federal insurance program which primarily
serves those over 65 years old and younger, disabled people and
dialysis patients. It currently covers about 37 million
Americans. Medicare is divided into Part A, which covers
inpatient hospital services, nursing home care, home health care
and hospice care; and Part B, which helps pay the cost of
doctors' services, outpatient hospital services, medical
equipment and supplies, and other health services and supplies.
Recipients pay some part of the costs through deductibles. Since
Medicare doesn't cover all expenses, recipients often supplement
their coverage.
Medically
Necessary
Many insurance policies will pay only for treatment that is
deemed "medically necessary" to restore a persons
health. For instance, many policies will not cover routine
physical exams or plastic surgery for cosmetic purposes.
Net
Income
A worker’s total after-tax
earnings. Also referred to as "Take Home Pay."
Online
Account Access
The ability to view a Flexible
Spending Account’s balance, transactions, etc. from a computer
via the World Wide Web.
OBRA =
Omnibus Reconciliation Act (1993)
Under this act, the cap on the amount of income that can be
used for calculating pension benefits for an individual was
lowered from $235,840 to $150,000 (now $170,000). This has
caused an increased reliance on non-qualified benefit plans.
Out-of-Network
A term used to describe the non-PPO option; when PPO
participants obtain health services from a non-contracted
provider that is outside of the PPO network .
Out-of-Pocket
Costs
Any
amount you are responsible for paying, such as co-payments,
deductibles and costs above your annual maximum.
Out-Of-Pocket
Maximum
A
predetermined limited amount of money that an individual must
pay out of pocket, before an insurance company will pay 100% for
an individual’s health care expenses.
Payout
Period
The period during which you receive the income from your
annuity contract.
Permanent
and Total Disability
Total disability from which the insured does not recover.
Permanent
Life Insurance
A
type of life insurance that includes both a death benefit and a
cash value component.
Permanent
Partial Disability
Condition where the injured party's earning capacity has
impaired for life, but he can work at reduced efficiency.
Permanent
Total Disability
Condition where the injured party is unable to work at any
gainful employment for balance of his lifetime.
PLR (Private Letter Ruling)
An opinion ruling by the IRS on a
particular issue for a particular
taxpayer. It is non-binding on the IRS and must not be
considered anything
other than an unofficial opinion.
Policy
The
printed document issued to the policyholder by a company stating
the terms of the insurance contract.
Pre-existing
Condition
Physical condition existing prior to the effective date of a
policy. In many policies not covered until after a stated period
of time has elapsed.
Pre-Admission
Certification
Also called pre-certificate review, or pre-admission review.
This is approval by a case manager or insurance company
representative for a person to be admitted to a hospital or
in-patient facility in advance of their admission. Usually, the
patient’s physician requests that this process be completed.
The goal of pre-admission certification is to ensure that
individuals are not hospitalized for unnecessary surgical
procedures or services that are not medically necessary.
Pre-Tax
Dollars
Money income that is exempt from
income taxes (F.I.C.A., Social Security, etc.). In the Benefits
industry, this usually refers to benefit payments or
contributions (such as with FSAs) where the amount is taken out
of the participants gross income thereby reducing the amount of
taxes he/she ends up paying.
Pre-Existing
Conditions
Specific conditions that may affect
your eligibility for benefit coverage. This is any injury, illness, or condition for which
the covered person received diagnosis, treatment, consultation,
drugs, medicine or other services during the three (3) months
preceding the effective date of coverage.
Preferred
Provider Organization (PPOs)
This is a group of health care providers who have agreed by
contract to furnish medical services to members of a health plan
at discounted rates.
Premium
The periodic payments made to an
insurance carrier in exchange for insurance coverage.
Primary
Care Provider (PCP)
A health
care professional who is responsible for monitoring an
individual’s overall health care needs. Typically, a PCP
serves as a "gatekeeper" for an individual’s
medical care, referring the individual to specialists and
admitting them to hospitals when needed.
Proof
of Expense
A receipt or other acceptable
documentation that verifies the purchase of an expense. This is
usually used in terms of Flexible Spending Accounts where, in
order for a paid or pending claim to be accepted, the Proof of
Expense must be faxed to the plan administrator.
Provider
A physician, specialist, laboratory, hospital, pharmacy or
other medical practitioner providing health care services.
Qualified
annuity
An annuity that is sold as part of a tax-qualified Keogh plan
or company pension plan.
Qualifying
Event
Occurrence
(i.e. death, termination of employment, divorce, etc.)
triggering insured's protection under COBRA, that requires
continuation of benefits under group insurance plans for former
employees and their families who would otherwise lose coverage.
Reasonable
and Customary Charges
Charge for medical services referring to amount approved by
the Medicare Carrier for payment. Customary charges are defined
as those most often made by a provider for services rendered in
that particular area.
Reimbursement
Request
A form that a FSA participant will
submit, via fax or mail, to their plan administrator that
requests reimbursement for an eligible FSA expense.
Renewable
Term Insurance
A type of term insurance which includes a renewal provision that gives
the policy owner the right to renew the insurance coverage at
the end of the specified term without submitting evidence of
insurability.
Rider
An
amendment to an insurance policy that modifies the policy by
expanding or restricting its benefits or excluding certain
conditions from coverage.
Rollover
In the United States, the
tax-free transfer of account balances to an individual
retirement account from a qualified retirement plan or another
individual retirement account.
Self-Insurance
A program financed entirely by the employer for insuring
employees instead of purchasing coverage from a commercial
carrier.
Single-Premium
Whole Life Insurance
A whole life policy that provides protection for the duration
of the insured's life in exchange for the payment of the total
premium in one lump sum at the time of application.
Short
Term Disability
Group or individual policy written to cover disabilities of
13 or 26 weeks duration. However coverage for as long as two
years is not uncommon.
Short-term
Disability Income Insurance
Short-term
Disability Income Insurance is designed to provide benefits for
a temporary period of time, usually 3 - 6 months. As a result
this type of policy usually has an elimination period of 10
days.
TAM (Technical Advise Memorandum)
A non-binding interpretive information
issued by the IRS to clarify a
position.
Term
Life Insurance
Insurance that covers the insured for a certain period of time known as the
"term." The policy pays death benefits only if the
insured dies during the term. Temporary insurance that pays only a death benefit
(i.e., it does not have cash value).
Tertiary
Care
Services provided by providers such as thoracic surgeons,
intensive care units, neurosurgeons, etc.
Third
Party Administrator
Firm which administers group insurance policies for employers
and other associations. In addition to being the liaison between
the employer and the insurer, the TPA is involved with
certifying eligibility, preparing reports required by the state
and processing claims. Use of TPA's has increased with the
growth of employer self-funded plans.
Total
Disability
The
inability to perform the duties of a previous occupation, or any
other occupation, due solely to sickness or injury.
Universal
Life
Insurance
Unlike
traditional cash-value policies (known as "whole
life"), universal life policy returns were freed from
long-term, fixed-rate contracts and replaced with policies whose
returns were tied to short-term interest rates and periodically
adjusted. In addition, premiums and death benefits can be
changed by the policyholder.
Vested
Benefit
A
benefit that is non-forfeitable (i.e., it will be paid to you
even if you leave the company).
Voluntary
Benefits
These types of benefits are
traditionally paid for by the employee via the convenience and
tax-saving method of payroll deduction. Common examples include
Vision Care, Long Term Care Coverage, Life Insurance and
Disability policies.
Waiting
Period
Period of time between beginning of a disability and start of
Disability Insurance benefits. Also known as the Elimination
Period.
Whole
Life Insurance
A
policy in which premiums are payable for life, and cash values
are determined by the carrier. Underlying investments are
usually conservative and typically do not earn high rates of
return.
