Dictionary of Common Benefit Industry Terms

In this section, are a listing of common insurance industry words and phrases along with the definition of each. At the end of this webpage, are many useful weblinks to governmental and other sites.

BENEFIT INDUSTRY TERMINOLOGY
Terminology most frequently used in employee benefits are presented below:
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
A

Actual Claims
Claims that are incurred and paid.

Adjudication
Processing claims according to plan rules.

Advocacy
Activities done to help a person or group get something the person or group needs or wants.

Annual Enrollment Period
A period of time prior to the beginning of the plan year during which eligible employees may change their benefit elections.

Administrative Cost :
These are costs that are fixed during each month. You must pay them regardless of the volume of claims. They include, but not limited to: Claims Administration, Network, Re-Insurance Premiums, Utilization Review Services, Claims Re pricing, and Consulting fees.

Advanced Funding Option (AFO):
This extra re-insurance protects your company against aggregate costs per month, early in the year. Your aggregate insurance protects you for the end of the year, but the AFO funds, in advance of the end of the year. If you reach your aggregate in any month before the end of the year, your re-insurer advances the money ahead of time.

Aggregate:
This is the insurance level that protects the cumulative group, reimbursing the plan when annual eligible claims for all members exceed the Aggregate Attachment Point (AAP) in the calendar year. The Aggregate is the maximum cost exposure for the entire group.

Aggregate Attachment Point :
The Aggregate is the maximum amount that you can pay for claims in one year which accumulates for the entire group.The Aggregate Attachment Point is the amount of claims that is pre-determined by the carrier, and is actually the same as the Aggregate.

B

Brand Name Perscriptions :
These prescriptions are filled with the most expensive type of medicine. It is not Generic or Substituted, it is the original formula.

Beneficiary
The person(s) designated to inherit any proceeds or income from your account after your death.

Benefit
Amount payable by the health plan to a claimant, assignee, or beneficiary when the insured suffers a loss.

Customary & Reasonable (C&R):
The rate within an area that the insurance carrier determines as customary after reviewing and surveying providers within that area. Each carrier sets its C&R at a different percentile if fully insured, however, if Self-Funded, the policyholder is able to determine any percentile rate.

Catestrophic Coverage Plans: A limited benefits plan what has high deductible levels generally in the range of $2,000 or $5,000 before the first claim is paid by the insurance carrier. This is a lower cost option appropriate for a subscribesr that only want coverage against catestrophic level medical claims.

Contribution: Generally this refers to the monthly premium paid by a company medical plan subscriber.

Cafeteria
A benefits plan that allows employees to select from a pool of choices, some or all of which may be tax-advantaged. Potential choices include cash, retirement plan contributions, vacation days, and insurance.


Capitation
A set dollar limit that is paid regardless of the level or type of care provided.

Claim
A request by an individual (or his or her provider) to the health plan for payment or reimbursement for services obtained from a healthcare professional.

Coinsurance
The money that an individual is required to pay for a service, after a deductible has been paid. Coinsurance is often specified by a percentage.

Consolidated Omnibus Budget Reconciliation Act (COBRA)
A Federal legislation requiring employers to offer continued health insurance coverage to employees who have had their health insurance coverage terminated.

Consumer-Driven Healthcare (CDH)
A term that refers to health plans in which employees have a personal health account, such as a health savings account (HSA) and/or a health reimbursement arrangement (HRA), from which they pay medical expenses directly.

Consumer-Driven Health Plans (CDHP)
Consumer-directed health plans typically offer reduced premium costs, in exchange for a higher deductible. In addition, many provide incentives and tools to manage both healthcare decisions and the costs associated with them.

Coordination of Benefits (COB)
A system to eliminate duplication of benefits when a person is covered under more than one health plan; benefits under both plans are usually limited to no more than 100% of the claim.

Copay
The flat fee dollar amount of a charge that a covered person must pay for certain covered services.

Covered Services
Those medical procedures the health plan agrees to pay for.

Custodian
An agent, bank, trust company or other organization which holds and safeguards an individual's assets for them.

Dependent
A dependent, as defined from the viewpoint of a company medical plan, is a person who satisfies the minimum qualification criteria as defined by the company's Summary Plan Description (SPD). This generally defines specific relationship criteria or financial responsibility criteria. Meeting the qualifications for a dependent will permit the subscriber to claim the individual as a dependent under the offered medical plan.

Dependent Eligibility Audit (DEA)-LINK
The process of requesting official records from each subscriber, who claims dependents on your medical plan, that prove each dependent is eligible to the criteria defined in your company's Summary Plan Description (SPD) and other communications.

Dependent Eligibility (link)
5-15% of all dependents on medical plans in the US are ineligible for coverage. Examples are non-reported divorces and associated step-children, overaged children, and overaged students. The Dependent Eligibility Verification Process is being implemented by many companies to have these identified and removed from their benefits plans and realizing an ROI of 500-1000% in as little as three months

Dependent Eligibility Auditor (link)
A software and process licensed by Maggio Solutions, Inc. which permits individual companies to perform their own Dependent Eligibility Self-Audits, or TPAs in providing this new service to their existing clients or prospective new ones.

Date of Service
The day the services are received by a patient.

Deductible
The amount of covered expenses an individual (or family) must pay before benefits become payable by the health plan; often determined on a calendar year or plan year basis.

Denial of Claim
Refusal by the health plan to pay or reimburse a claim.

Emergencies:
A condition which jeopardizes the patient's life or causes serious impairment to the patient's bodily functions.

Exclusive Provider Organization (EPO):
This benefit option is usually patterned after the HMO benefits and is meant to exclusively provide benefits from the Network. This means that if you elect this option, you may only receive benefits from the Preferred Providers within that designated directory, except when an emergency occurs.

Employee Retirement Income Securities Act (ERISA):
Employee benefits plans are covered by provisions set up by ERISA, by federal and state laws dealing with employment discrimination. These regulations are the matrix of all benefits plans. ERISA defines the responsibility of the Company Fiduciary in maintaining a well managed benefits plan which includes having processes inplace to ensure that all dependents on the benefits plan are eligible. This is a personal liability of the Fiduciary! The Maggio Solutions, Inc. Dependent Eligibility Verification Process(link) enables companies or TPAs to perform this audit at a lower cost than out-sourcing to a specialty audit firm.

Expected Claims: The dollar amount which the re-insurer sets to be equal to 12 months of claims for that particular group of employees. ERISA: Employee Retirement Income Securities Act: Employee benefits plans are covered by provisions set up by ERISA, by federal and state laws dealing with employment discrimination. These regulations are the matrix of all benefits plans.

Effective Date
The date coverage begins for a covered person under the contract.

ERISA (link)

Electronic Funds Transfer (EFT )
Electronic funds transfer; also referred to as direct deposit.

Eligibility
A generic term applying to enrollment benefits, service reimbursement, (etc.), most commonly defined as the determination of whether a member qualifies for coverage.

Exclusions
Medical services that are not covered by the health plan.

Explanation of Benefits (EOB)
A formalized statement to a subscriber and/or provider showing action taken on a claim.

Fixed Costs
(Also see Administrative Costs) These are costs that must be paid each and every month, whether or not claims are incurred.

Fully Funded:
The insurance is developed, implemented, monitored, and controlled by one carrier/company. Premiums are paid at a maximum, whether or not claims are incurred. If claims are lower than expected, a reimbursement does not occur. The carrier pays all of the claims for both small and catastrophic claims.

Fiduciary-(link)

Fully Self-Funded:
A company that pays for both small and catastrophic claims without the aid of an insurance or reinsurance carrier. The employer should have more than 5,000 employees to be Fully Self-Insured.

Federal Tax Deferred Plan-401k-The 401(k) plan is a type of employer-sponsored retirement plan in the United States and some other countries , named after a section of the U.S. Internal Revenue Code . A 401(k) plan allows a worker to save for retirement while deferring income taxes on the saved money and earnings until withdrawal. The employee elects to have a portion of his or her wage paid directly, or "deferred", into his or her 401(k) account. In participant-directed plans (the most common option), the employee can select from a number of investment options, usually an assortment of mutual funds that emphasize stocks , bonds , money market investments, or some mix of the above. Many companies' 401(k) plans also offer the option to purchase the company's stock. The employee can generally re-allocate money among these investment choices at any time. In the less common trustee-directed 401(k) plans, the employer appoints trustees who decide how the plan's assets will be invested.

All assets in 401(k) plans are tax deferred . Before the January 1, 2006 effective date of the designated Roth account provisions, all 401(k) contributions were on a pre-tax basis (i.e., no income tax is withheld on the income in the year it is contributed), and the contributions and growth on them are not taxed until the money is withdrawn. With the enactment of the Roth provisions, participants in 401(k) plans that have the proper amendments can allocate some or all of their contributions to a separate designated Roth account, commonly known as a Roth 401(k) . Qualified distributions from a designated Roth account are tax free, while contributions to them are on an after-tax basis (i.e., income tax is paid or withheld on the income in the year contributed). In addition to Roth and pre-tax contributions, some participants may have after-tax contributions in their 401(k) accounts. The after-tax contributions are treated as after-tax basis and may be withdrawn without tax. The growth on after-tax amounts not in a designated Roth account are taxed as ordinary income .

Federal Tax Deferred Plan-403b
A 403(b) plan is a tax advantaged retirement savings plan available for public education organizations , some non-profit employers (only US Tax Code 501(c)(3) organizations) and self-employed ministers in the United States . It has tax treatment extremely similar to a 401(k) plan, especially after the Economic Growth and Tax Relief Reconciliation Act of 2001 . Simply put, employee salary deferrals into a 403(b) plan are made before income tax is paid on it, and allowed to grow tax deferred until the money is taxed as income when taken out of the plan. Beginning in 2006, 403(b) and 401(k) plans may also include designated Roth contributions, i.e., after-tax contributions, which, if certain requirements are met, will allow tax-free withdrawals. Primarily the designated Roth contributions have to be in the plan for at least five taxable years.

Family Coverage
Any coverage specified for more than one individual (individual coverage).

Flexible Spending Account (FSA)
An employee benefit that allows you to have pre-tax dollars withheld from your paycheck to pay for un-reimbursed medical, dental, or dependent care expenses. You choose how much money you want to contribute to an FSA at the beginning of each plan year. FSA's cannot be used in conjunction with an HSA account.

First-dollar Coverage
Immediate reimbursement or no payment required for specific covered expenses, without meeting a deductible. Some preventative services may have first-dollar coverage under the terms of your health plan.

G

GateKeeper:
This pertains to HMO and/or EPR type benefits. There is usually a Primary Care Physician that takes primary care of the patient. You must be referred by this doctor in order to receive outside services from a specialist.

Generic Prrescriptions:
Generic drugs are used to substitute Brand Name drugs. Generics are of equivalent quality and less expensive.

Generic Drug
The identical or bioequivalent medicine to a brand name drug in dosage form, safety, strength, route of administration, quality, performance characteristics and intended use; although generic drugs are chemically identical to their branded counterparts, they are typically sold at substantial discounts from the branded price.

Health Maintenance Organization (HMO)
An organization set up and operated to provide health services under a pre-paid or Capitated arrangement; monthly fees to the HMO remain the same regardless of the types or levels of service provided.

High Deductible Health Plan (HDHP)
An HDHP is a health benefit plan that typically offers lower premiums in exchange for higher annual deductibles when compared to traditional health plans.

To be an HSA compatible or “qualified” HDHP, the plan must meet the requirements of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 for minimum deductibles and out-of-pocket maximums. High deductible plans may offer first-dollar coverage of preventive care and still remain qualified.

HIPAA (link)
The Health Insurance Portability and Accountability Act ( HIPAA ) was enacted by the U.S. Congress in 1996 According to the Centers for Medicare and Medicaid Services (CMS) website, Title I of HIPAA protects health insurance coverage for workers and their families when they change or lose their jobs. Title II of HIPAA, the Administrative Simplification (AS) provisions, requires the establishment of national standards for electronic health care transactions and national identifiers for providers, health insurance plans, and employers. The AS provisions also address the security and privacy of health data. The standards are meant to improve the efficiency and effectiveness of the nation's health care system by encouraging the widespread use of electronic data interchange in the US health care system. Legislation that has several national, administrative, and financial provisions. Enacted in 1996, it addresses subjects including healthcare reform, medical savings accounts, COBRA revisions, and fraud and abuse. Health reform rules include rules pertaining to pre-existing conditions, crediting of prior coverage, and guaranteed renewability. The HIPAA Administrative Simplification section mandates specified electronic formats for claims and other transactions in addition to mandates for national identifiers, security and privacy.

Health Reimbursement Arrangement (HRA)
A tax-favored savings account employees can use to pay for healthcare expenses. It is employer-funded and lets employees build up savings for future needs. If the employee leaves employment, the remaining funds within the HRA revert to the employer. An HRA can be coupled with a standard or high deductible health plan (HDHP), or can be offered on its own.

Health Savings Account (HSA)
A tax-favored savings account you can use to pay for healthcare expenses. It is owned by the person, is 100% vested, and lets you build up savings for future needs. A requirement for opening an HSA is that it be coupled with a qualified high deductible health plan (HDHP) that covers catastrophic medical expenses after the deductible. Specifically, for 2007 the plan must have a deductible of at least $1,100 for individual coverage and $2,200 for family coverage.

Important Note: If you own an HSA and later become ineligible to make deposits, you can still receive distributions from your HSA. All that is limited is your ability to put additional contributions into an HSA.

HSA Saver
A term used to describe an HSA holder who chooses to save money in their HSA and use a line of credit to pay for health expenses. The member has the option to “save” money in the HSA and use a line of credit as the primary account for payment of qualified medical expenses.

HSA Spender
A term used to describe an HSA holder who chooses to spend money in their HSA rather than saving it. The member has the option to " spend" money from the HSA first and a line of credit can be used as overdraft protection.

High-Deductible Plans: x

HMO/Health Maintenance Organization: This type of insurance is federally mandated and fully insured. It is usually pre-paid on a capitated basis which means that each provider is paid a certain amount for each member, every month, whether services are rendered or not. Therefore, they must stay within a designated budget. They are strictly regulated by federal law.

Health Reimbursement Account (HRA): An HRA is a tax-exempt fund established by an employer for an employee that can be funded only by employer contributions, and not through a Section 125 cafeteria plan. The contributions to the fund are excludable from the employee's gross income, and are not subject to FICA or FUTA taxes, and the disbursements from the fund to pay for qualifying medical expenses are also excludable from the employee's gross income. The assets in the fund can be used only to pay the medical expenses of the employee, the employee's spouse, and the employee's dependents. To the extent amounts remain in the fund after an employee dies, the fund can be used to pay the medical expenses of a deceased employee's former spouse and dependents.

Internal Revenue Service Notice 2002-45 governs Health Reimbursement Accounts (HRAs). It defines an HRA as "an arrangement that:

1. is paid solely by the employer and not provided pursuant to salary reduction election or otherwise under a Section 125 cafeteria plan;

2. reimburses the employee for medical care expenses (as defined by Section 213(d) of the Internal Revenue Code) incurred by the employee and the employee's spouse and dependents (as defined in Section 152); and

3. provides reimbursements up to a maximum dollar amount for a coverage period and any unused portion of the maximum dollar amount for a coverage period is carried forward to increase the maximum reimbursement amount in subsequent coverage periods."

As explained, in Revenue Ruling 2002-41, as an employer provided health plan, amounts contributed by the employer to an HRA are generally excludable from an employee's gross income under Code Section 106(a) and medical reimbursements paid out of an HRA are generally excludable from an employee's gross income under Code Section 105(b). In order for the reimbursements to be excludable from the gross income of a highly compensated employee, the HRA must meet the nondiscrimination requirements of Code Section 105(h).

IRS Notice 2002-45 requires that each medical care expense under a HRA must be substantiated. An HRA cannot reimburse a medical expense that was deducted for federal income tax purposes in a prior taxable year, and it cannot reimburse an expense that is incurred before the date the HRA goes into existence or before the employee is first enrolled in the HRA.

An HRA is a group health plan subject to COBRA continuation requirements. It meets these requirements by proving for the continuation of the maximum reimbursement amount for an individual at the time of the qualifying event and by increasing that maximum amount at the same time and by the same increment that it is increased for similarly situated non-COBRA beneficiaries (and by decreasing it for claims reimbursed). If the other COBRA requirements relating to premiums are met, the COBRA premium requirements are met if the premium charged is the same regardless of the maximum reimbursement amount remaining for the COBRA beneficiary at the time of the qualifying event.

An HRA is ordinarily an employee welfare benefit plan under ERISA necessitating that ERISA reporting and disclosure rules are met. ERISA fiduciary duty rules may also apply to an HRA that is funded. Also, HIPAA privacy requirements apply to HRAs as they do to Section 125 Cafeteria Plan Health FSAs. Employer deduction limits under Code Sections 419 and 419A may also apply to an HRA that is funded and does not qualify for an exception to those limitations. Code Section 404(a)(5) and (b) employer deduction rules apply to an HRA that is not funded to generally make the deduction available at the time amounts are actually reimbursed to employees. If an HRA is funded Section 404(a)(5) requires that separate accounts be maintained for each employee for the employer to deduct the contributions when employees would have been taxed on the contributions if the amounts were not expressly excludable from compensation by Code Sections 106(a) and 105(b).

The advantage of an HRA to an employee is that since an employee has no election between excludable benefits and cash, it is not a cafeteria plan. Accordingly, it is not subject to the use-it-or-lost-it requirements of Code Section 125. However, it is less flexible than a cafeteria plan since health care benefits are the only excludable benefits that an HRA can provide.

I

Incentives: Usually promoted and created for the reward of a good deed. Most generally, incentives are paid for with money.

Incurred But Not Paid Claims: These claims are usually incurred, but not paid, meaning not processed and released for payment. Sometimes the Claims Administrator has a backlog or was notified of a potential large claims, but it has not been sent for processing.

Ineligible Dependent (Link) :
A dependent claimed by a medical plan subscriber who does not meet the minimum eligibility requirements as defined by the company's Summary Plan Description (SPF). Generally there are two major categories of criteria needed to define the eligbility standard. The first standard is "Proof of Relationship" and the second is "Proof of Financial Responsibility". Because claiming a dependent has historically been based on the "honor system" ,industry findings are that between 5-15% of all covered dependents are ineligibile which carries cost and financial risk consequences to the company

.
Imdemnity Insurance: First Definition:True Indemnity means that you can receive benefits by any provider, without restriction to a network. This option usually has a lower benefit since rates are not negotiated within the network. It can also be considered an out of network benefit. Second Definition: Individuals pay the deductible plus a pre-determined percentage of the cost of healthcare services, and the health plan pays the remaining portion; fees for services are defined by the providers and vary from physician to physician.

Individual Coverage
Coverage for only one individual.

Monthly Aggregate:
This (Partial Self-Funded) insurance protects maximum costs on a monthly basis. If the cost of claims exceed the monthly aggregate, the re insurer will reimburse until the year end aggregate is justified. This option is usually offered to small groups and is much like the Advanced Funding Option for larger groups.

Maximum out of pocket: The maximum annual cost that a subscriber may be required to pay during a plan benefit year. This include premiums and all the subscribers portion of the discounted claims.

Managed Care
Medical delivery system that attempts to manage the quality and cost of medical services that individuals receive; HMOs and PPOs are managed care plans.

Maximum Annual Contribution
The total amount the government allows an HSA holder to add to their account in a given calendar year.

Member
Often used to refer to the contract holder, policy holder, or subscriber in a health plan; also known as employee, covered person, enrollee, or insured.

Minimum Available Balance
Balance required in the HSA account before an initial or subsequent investment trades can be made.

N

Negotiated Rate:
This is the rate of payment for services the providers accept through negotiated contracts. They write off the rest of their usual charge and accept a lower rate, in turn for a greater volume of business. This results in a lower out of pocket for the employee and less claim dollars paid by the employer group.

Network:
First Defintion: The providers that are used within the plan specifications. They can be almost any type of health care service. Providers are designated by negotiated contracts within the directory. Second Definition: A group of doctors, hospitals and other healthcare providers contracted to provide services to insurance company customers for less than their usual fees.

O

Open Enrollment
The period of time during which a person is first eligible to enroll under the contract, starting on the date of the person's initial date of eligibility and ending several weeks later, also used to refer to the annual enrollment period.

Out-of-Pocket Maximum
The total amount of the calendar year deductible plus the amount of any coinsurance and/or copays a covered person must pay each calendar year for covered services before benefits will be paid at 100%; some services may not apply to the out-of-pocket maximum.

Overdraft
When the HSA has insufficient funds required for payment, the difference is paid out of a third party line of credit (subject to credit approval).

P

Point of Service:
A benefit level is set up to keep services within a certain network. In addition to this, however, a small outside option is also permitted.
A. Point of Service Plan (Inside of the Network ):$10 Co-Pay for Office Visits & 100%
In-Patient Hospital
B. Point of Service (Out of Network Option ): $5,000 Benefit/$250 Deductible & 80/20%
In-Patient Hospital

Preferred Provider Organization (PPO)
First Definition: A network, set up within the plan that negotiates contracted rates with providers. These rates are lower than Customary & Reasonable rates. This means that overall claims will cost less if the plan members go to these providers and stay within the network. Second definition: Type of health insurance program where a limited group of physicians and hospitals provide a broad range of medical care for a predetermined fee; individuals who do not use the preferred providers for care usually have to pay a higher portion of their medical expenses.

Profit:
This is the amount of money that is saved after Maggio & Associates creates your Partially Self-Funded Plan.

Partial Self-Funding: The Employer group is protected on two levels: The Employer pays for expected claims up to a Specific Amount for each member of the plan. If that level is exceeded, the Re-Insurance Company pays the remainder of the catastrophic claims for that member. The Employer is also protected on a group level, which protects up to an Aggregate maximum for the group. This is done on an accumulative basis throughout the year. After the Aggregate is met, which is the maximum exposure for the company, for the remainder of the year, the employer is reimbursed for that amount which exceeds the Aggregate.

PayBack Period
Payback is similar to ROI but expresses the result of a financial investment in the amount of time (months or years) that it will take to recover the cost of the investment. An example would be that if an investment in a cost savings ideas cost $10,000, which results in an annual savings to your company of $20,000, the payback period would be 6-months.

Plan Year
Twelve month period between health plan renewals.

Premiums
The amount paid by the customer on a periodic basis for coverage under the health plan.

Prescription Drug List
A list of drugs covered by the health plan often listed as 1st tier (generic), 2nd tier (brand name preferred), or 3rd tier (brand name non-preferred).

Preventive Care
Healthcare services intended to prevent a medical condition from occurring, or to detect the onset of a condition early so that it can be more effectively treated. Preventive care includes regular medical check-ups, screening tests, vaccination, and the encouragement of a healthy lifestyle.

Pre-existing Condition
A health problem that existed before the date a person's health plan became effective.

Primary Care Doctor (PCP)
Usually the first contact for healthcare, often a family physician or internist; the PCP monitors an individual's health and treats minor health problems, and refers out to specialists if further care is needed.

Provider
Any person (doctor, nurse, dentist, therapist) or institution (hospital, clinic) that provides medical care.


Q

Qualified Medical Expense (QME)
Internal Revenue Code Section 213(d) defines qualified expenses, in part, as “medical care” amounts paid for insurance or “for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body…” To be eligible, these expenses must be to alleviate or prevent a physical defect or illness. Expenses solely for cosmetic reasons generally are not considered expenses for medical care. Examples include facelifts, hair transplants and hair removal (electrolysis). Expenses that are merely beneficial to your general health (e.g., vacations) are not expenses for medical care. One fact or circumstance that often, but not always, indicates that medical care involves the treatment or prevention of disease is whether the care is prescribed by a physician. A mere suggestion by a physician probably is not enough. In addition, there should be a doctor-patient relationship between you and the physician prescribing the care.

Quarterly Executive Reports:
A summary of statistics and resolutions of our plan that Maggio & Associates offers to its clients the reports and gives statistics on the results of the previous quarter. This report keeps the top level executives informed. It shows month to month progress and also reduces the chance of errors and confusion. With this report the plan is fine tuned and problems are resolved and the future is planned within the quarter. The renewal, at the end of the year is made easy!

Re-Insurance
This is the protection that you pay the re insurer for the Specific and Aggregate levels of insurance.

Referral
A form provided by a member's doctor authorizing services from other network providers if the attention of a specialist is required.

Return on Investment (ROI)
A financial method for estimating the financial outcome of an investment. It is calculated by dividing all cost associated with the investment by the savings realized over a period of time in months or years. A ROI of 100% implys that all money spent on the investment will be returned in savings. An ROI of 300% will imply that for each $1 invested, will result in a $3 return (a very good situation).

Summary Plan Description (SPD):
This is the summary that is mandatory, by law, which explains benefits, terms of the plan and also outlines exclusions, etc. in legal ERISA language.

Stop Loss Coverage:
This is another name for Partial Self-Funding. Directly relating to the Specific Level of Coverage.

Stop Loss:
This is the specific amount in a plan of benefits (fully or partially self-funded) that permits a member to collect 100% of their benefits, after the amount has been paid in claims. (Most generally paid at 100% after $5,000 has been paid in claims.)

Specific Level: This term is related to the subject of "Stop-Loss Insurance" and is the dollar level maximum that the company required to pay for a specific medical event of a subscriber. Once the claims exceed the "specific level" (Spec Level) the stop-loss insurance company is responsible for all claims. As an example, if a large case had $125,000 in claims and the specific level was purchased at $50,000, the company will pay for the total $125,000 in claims but will receive a reimbursement check for $75,000.
T

Third Party Administrator (TPA) (Link):
This is the claims administrator that acts on your behalf, paying claims, verifying membership and eligibility, and authorizes benefits. In a Self-Funded plan, it replaces the insurance carrier's customer service and works along the lines of the carrier.                                                                                                           return to top

Tax-Free Contributions
When enrollees participate in a payroll deduction program through their employer, deductions may be taken from payroll before calculating the member's taxable Federal income, social security and (for most states) taxable state income.

U

Utilization Review (UR):
This is a servicing company that is employed by the employer group to act as a “Watchdog” over the plan. The UR Company check hospital claims normalcy. When a member is to receive in-patient hospital care, they must call for Pre-Authorization. This means that services are approved or denied and monitored throughout the hospital stay. They also offer Cost Containment Services which helps to keep costs down and offers alternate methods of care. If a large claims is incurred, the UR Company will step in and offer Case Management to the member. This is a “helping hand” method of monitoring high claims for the employer group, as well as the member. A set of formal techniques designed to monitor the use of, or evaluate the clinical necessity, appropriateness, efficacy, or efficiency of healthcare services, procedure or settings.

Usual, Customary and Reasonable (UCR)
The amount customarily charged for a service or supply; most plans will only cover services up to UCR and individuals may be required to pay the full cost of the difference.

V - No Terms Under "V"

Waiting Period
The waiting period is the length of time an employee must continuously work for the employer before he is eligible to enroll for coverage under the contract

X - No Terms Under "X"

Y - No Terms Under "Y"

Z - No Terms Under "Z"