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

Administrative Services Only (ASO) - A type of contract with an insurance company or a third party administrator that provides an employer with administrative services. It does not provide coverage for risk or insurance protection. The usual expenses covered include claims processing, plan design advice and printing benefits booklets. These contracts are usually entered into by large employers who can afford the risk of providing insurance protection with their own money.

Administrator - A person who is designated to be responsible for the proper operation and administration of a plan. When the plan sponsor does not designate a person for this duty, then ERISA considers the plan sponsor to be plan administrator.

Adverse Selection - A tendency which occurs when a person makes a decision based on his/her diminished health condition or frequency of needed treatment and is, therefore, considered a poorer claims risk than most others in the group.

Accelerated benefit - A benefit of life insurance that allows an insured who is terminally ill or unable to perform two or more activities of daily living without substantial assistance to ask that a portion of his or her life insurance benefit be payable in advance to pay for required care. The life insurance benefit payable at death is reduced by the amount of the accelerated benefit that is paid.

Accidental Death and Dismemberment insurance - A form of health insurance that provides payment in the event of death or specific bodily losses resulting from an accident.

Account Balance - The account balance represents the participant's share of the total value of the plan.

Actively at Work - Plan provision that requires the employee to be performing the duties of his occupation where the employee normally works in order for coverage to commence. If the employee is absent due to illness or injury, the coverage does not commence until the employee returns. This rule does not include adding a newborn to health insurance (such as an employee on maternity leave) nor does it extend to absences for annual leave provided the employee was not ill on the last scheduled day before annual leave.

Actual Contribution Percentage (ACP) Test - The ACP test measures whether employer-matching contributions discriminate in favor of highly compensated employees.

Actual Deferral Percentage (ADP) Test - The ADP test measures whether salary deferrals discriminate in favor of highly compensated employees.

Actuary - A professional who mathematically analyzes and determines the price of the risk associated with providing insurance coverage. An actuary may also determine the anticipated cost of providing future benefits. Factors considered in the study include the projection of future claims experience, administrative expenses and anticipated investment return.

Agent - Licensed by the state, performs the functions for sole proprietors and small businesses that Human Resource Departments do for large businesses, gathers census data, prepares proposals, makes presentations to businesses, explains benefits to employers, does field underwriting when required, delivers policies and certificates, explains benefits to employees, assists in handling claims, services the business in any other related tasks required by the employer or sole proprietor.

Aggregate Amount (limit) - Maximum amount a plan sponsor (employer) is liable for any single loss or series of losses.

Affiliated Service Groups - Two or more organizations that have a service relationship and, in some cases, an ownership relationship, described in IRC section 414(m). The standards used to determine if a group of companies are part of an affiliated service group are complicated. Seek competent legal counsel.

Allowed Fees - Term used by some dental plans for their participating dentist fees and/or maximum payable for a non-participating dentist.

Annuity - An annuity is a contract that makes periodic payments of both principal and interest by systematic liquidation of a principal amount. An annuity may have a guaranteed death benefit and, in some cases, a minimum guaranteed investment return. Annuities usually offer a series of monthly or annual payments, generally for the life of the annuity owner.

Attachment Point - For aggregate stop-loss insurance, it is the point at which the stop-loss insurance carrier begins to reimburse the employer based upon the cumulative total of claims paid within a policy year.

Attribution - Attribution is the concept of treating a person as owning an interest in a business that is not actually owned by that person.

B

Balance Billing - Non-participating provider practice of billing the patient for any difference between the provider's billed charges and the patient's insurance plan maximum allowance (indemnity or PPO).

Beneficiary - The person whom the participant names as the owner of their account, in the event of their death. If the participant fails to name a beneficiary, the plan document may provide a default provision designating a certain person, such as the participant's spouse, as the beneficiary.

Benefit Period - A period of time during which benefits are payable under a plan or insurance contract.

Benefit schedules - A list showing how benefits are arranged for employees. For example: life insurance may be two times annual salary for in-office employees and two times commissioned earnings (excluding bonuses) for sales employees. It would also show any maximum benefit periods, elimination periods and any other variables along with premium amounts.

Benefits Plan Year - (Oct 1 - Sept 30) Plan year for Health, Dental, Life and Disability Insurance plans (for purposes of enrollment and limitations for annual maximum benefits/out-of-pocket expenses).

Billed Charge - The amount the provider bills for services rendered.

Bonding (Fidelity Bond) - Every plan fiduciary and every person who handles funds must obtain a bond. The minimum bond amount is the greater of $1,000 or 10% of the funds handled. Anyone with discretionary authority over the plan's administration or funds must be bonded.

Break in Service - A 12-month computation period in which an employee is credited with no more than 500 hours of service.

C

Cafeteria Plan - A plan which offers a choice between two or more qualified benefits or a choice between cash and one or more qualified benefits and which complies with Section 125 of the Internal Revenue Code (also known as flexible benefit plans or flex plans).

Calendar Year - (Jan 1 - Dec 30) Tax Sheltered Annuity plan year (for purpose of maximum contributions); Flexible Speding Account plan year (for purpose of annual enrollment and reimbursement).

Capitation - A form of compensation used primarily by HMOs to pay providers a periodic fee (usually a per member, per month fee) in return for delivering as many necessary health care services as the insured may need.

Catch-Up Contributions - For plan years beginning after 2001, an individual who participates in a 401(k) plan, who has attained age 50 by the end of the plan year, and has already elected the maximum deferral available under the plan, may make an additional "catch-up contribution." The maximum catch-up contribution that an eligible individual may make for the taxable year is the lesser of:

The applicable dollar amount ($3,000 for 401(k) plans and $1,500 for Simple plans for 2004; $4,000 for 401(k) plans and $2,000 for Simple plans, for 2005), or

The individual's compensation for the year reduced by all of the individual's other elective contributions for the year to 401(k) plans, salary reduction SEPs, SIMPLE planS, TSAs, and Section 457 plans.

Claim - An insured’s request for reimbursement from an insurance company or plan for covered medical expenses.

Closed Panel - Refers to a health care program that requires the insured to use certain providers from a list provided by the plan. The primary care provider is responsible for all health care needs and refers to a specialty physician or hospitalization only when medically needed.

COBRA - The Consolidated Omnibus Budget Reconciliation Act of 1985 is the law that added requirements for health care continuation coverage.

CODA - A CODA is an arrangements that involves an election by an employee between receiving compensation in cash or having compensation deferred to a qualified plan. The CODA must satisfy the requirements of Section 401(k) for the deferred compensation to be nontaxable at the time of the deferral.

Co-insurance - An agreement between the insured and the insurance company where payment is shared for all claims covered by the policy. A typical arrangement is 80%/20% up to $5,000. The insurance company pays 80% of the first $5,000 and the insured pays 20%. Usually after 80% of $5,000, the insurance company then pays 100% of covered expenses during the remainder of the calendar year up to any limits of the policy.

Community Rating - A rating method that determines a single average premium based on the characteristics and claims experience of an entire membership such as an HMO or an insurance pool. Age, lifestyle, industry, health factors and gender are not used to determine rates. (See Adverse Selection.)

Compensation Definition - "Compensation" includes different components when it is applied to the various aspects of compliance testing. Generally, compensation has four basic definitions:

Total 415 Compensation generally includes all compensation that is includable in gross income.

Safe Harbor 415: Compensation includes only those items commonly considered to be includable in wages.

W-2 Wages: Compensation includes the wages that are reported in Box 1 of Form W-2.

3401 (a) Wages: Compensation includes all wages taken into account for federal income tax withholding purposes.

Compliance Tests - IRS-mandated tests that compare contribution levels and actual amounts made by different classifications of plan participants. The four most common tests 401k plans must pass each year are the ADP Test (Actual Deferral Percentage), ACP Test (Actual Contribution Percentage), Coverage Test and Top-heavy Test.

Controlled Group of Businesses - A controlled group of businesses may be comprised only of corporations, unincorporated businesses, or a combination of both. The controlled group definition is found in IRC Section 414(b) and 414(c). Seek legal counsel to make this determination.

Coverage Requirements - The plan must cover a minimum number of employees and benefit a sufficient percentage of nonhighly compensated employees to satisfy nondiscrimination requirements. The plan coverage rules are complex. If a plan fails to satisfy the coverage requirements, the law penalizes the highly compensated participants by requiring each highly compensated participant to include in gross income his entire vested account balance.

Conversion privilege - The right given to an insured person under a group insurance contract to change coverage, without evidence of medical insurability, to an individual policy upon termination of the group coverage.

Coordination of Benefits (COB) - A contractual provision to prevent an insured from receiving duplicate benefits from two or more group plans and profiting from over-insurance.

Co-payment - A small charge paid at the time a medical service is received. It does not accumulate toward a plan’s deductible or out-of-pocket maximum and is designed to discourage utilization.

Cost Containment - Efforts or activities designed to reduce or slow down the cost increases of medical care services.

Cost Sharing - The sharing of costs between the payment of premium costs and medical expenses by the health care plan and its insured through employee contributions, deductible, co-insurance and co-payments.

Cost Shifting - The increased cost of medical care to other patients to make up for losses incurred in providing care to patients who are under-insured or who have no coverage.

Coverage - The different types of options selected and the benefits paid under a plan or insurance contract.

Coverage Expense(s) - An expense which will be reimbursed by the terms of the plan or insurance contract.

D

Deductible - The initial amount the patient must pay out of their pocket for covered services before benefits are payable by the insurance carrier in indemnity and PPO plans.

DOL - The Department of Labor, a federal executive department established in 1913 and charged with administering and enforcing statutes that promote the welfare of U.S. wage earners, improve their working conditions, and advance their opportunities for profitable employment.

Dual Choice - An arrangement where an employer will offer an alternative in addition to its original health plan.

Deductible - The amount of covered expenses that must be incurred and paid by the insured before benefits become payable by the insurer.

Defined Benefit Plan - A defined benefit plan defines the benefit formula and how benefits are accrued under that formula. A defined benefit plan does not maintain account balances to reflect the accrued benefits of the plan participants. Instead, the accrued benefit is determined by a formula stated in the plan.

Defined Contribution Plan - A plan which provides for an individual account for each participant and for benefits based solely on the value of that account. The account balance will reflect contributions, forfeitures, and investment earnings and losses allocated to the account during the period of participation. When the employee takes a distribution of his account balance, the amount paid to him will be based on the value of the account balance at that time. The account balance that will be available to provide benefits at retirement (or other distribution event) is not guaranteed. In some defined contribution plans, employees may direct their own investments within the choices offered by the plan. Contributions to a defined contribution plan grow tax deferred until distributed from the plan.

Dental indemnity - A dental insurance plan that pays benefits in a predetermined amount in the event of a covered loss.

Department of Labor - One of the federal government agencies responsible for the enforcement of ERISA.

Disability income insurance - A form of health insurance that provides periodic payments when the insured is unable to work as a result of illness or injury.

E

Elective Deferrals - If a plan permits employee elective deferrals, employees may make an election to reduce their salary and have the employer contribute the elective deferrals to the plan. The employer must remit the elective deferrals to the trustee as soon as reasonably possible following deferral, but no later than the 15th business day of the month following the deferral.

Eligible Expense(s) - The portion of the medical care provider’s services that is covered for payment under the terms of the health plan or insurance contract.

Elimination period - A specified number of days at the beginning of each period of disability during which no disability income benefits are paid.

Emergency - Defined by each plan in accordance with their standard definitions.

Employee Assistance Program (EAP) - Provides family support services that address a variety of concerns such as legal support, bereavement counseling, eldercare counseling and other issues.

ERISA (Employee Retirement Income Security Act of 1974) - A federal law which originally set minimum standards for funding, vesting and termination of employer-sponsored pension plans. ERISA also contains provisions to protect the interests of participants and beneficiaries in welfare plans. Welfare plans must be in written form, describe the benefits and name the persons responsible for the operation of the plan.

ESOP - Employee stock ownership plan.

Evidence of Insurability - A procedure used to review factors concerning a person’s physical condition and medical history. From this information, the plan or insurance company evaluates whether the risk of the individual will be accepted and if they will offer coverage.

Exclusion - Specific conditions or services that are not covered by the terms of the plan or insurance contract.

Exclusive Provider Organization (EPO) - A prepaid medical group plan that provides a predetermined medical care benefit package. EPO is the acronym used by a plan that is self insured.

Expected Claims - A dollar amount which represents the expected claims which will be paid during any plan or contract period.

Experience - Refers to the history of actual claims paid for the contract period (see Paid Claims) or can refer to the history of claims incurred during a contract period.

Explanation of Benefits (EOB) - A document sent to an insured when a claim is handled by the plan or insurance company. The document explains how reimbursement was made, or why the claim was not paid, and if any additional information is needed. The appeals procedure should be outlined to advise the insured of his/her rights if there is dissatisfaction with the decision.

Extended Benefits - Benefits which continue, or become payable, after the termination of coverage from a plan or insurance contract (for example, a hospitalization which continues after coverage would normally cease).

F

Fee for Service Reimbursement - The traditional reimbursement system where the providers of medical care receive a benefit payment calculated on the basis of their billed charge. Under this arrangement Plans or insurers have not established contracted or capitulated rates of payment with providers prior to the insured’s claim occurrence.

Fidelity Bond - Every plan fiduciary and every person who handles funds must obtain a bond. The minimum bond amount is the greater of $1,000 or 10% of the funds handled. Anyone with discretionary authority over the plan's administration or funds must be bonded.

Fiduciary - Generally, the term fiduciary is broadly defined under ERISA to encompass any person or entity that:

Exercises any discretionary authority or control with respect to management of an employee benefit plan or exercises any authority or control with respect to the management or disposition of its assets;

Renders investment advice as to the plan's assets for a fee or other direct or indirect compensation or has any authority or responsibility to do so; or

Has any discretionary authority or responsibility in the administration of the plan.

Fiduciary Responsibility - The trustee, the employer, the committee and the plan administrator must administer the plan for the exclusive benefit of the participants.

Fiscal Year - (July 1 - June 30) Retirement plan year for purposes of maximum contributions and possible changes to established contribution rates.

Fixed Costs - Refers to those costs which are payable monthly and which do not relate to actual claims paid or incurred (for example, premium and administration costs).

Flexible Spending Accounts - Special accounts typically funded by an employee’s salary reduction to help pay for certain expenses not covered by the employer’s plan or insurance contract. The advantage of these accounts is that after-tax dollars are converted to before-tax dollars, thereby reducing the actual cost of expenses.

Form 1099-DIV - A required statement from your broker, or a company whose stock you own, that summarizes the dividends paid to you during the year.

Form 1099-INT - The statement you receive from payers of interest income, such as banks and savings institutions, that summarizes the interest income paid to you during the year.

Form 5500 - The plan administrator of every qualified plan must file an annual report (Form 5500 series) with the Internal Revenue Service. The Form 5500 series filing date is the last day of the seventh month following the close of the plan year.

Fully Insured Plan - The employer pays all of the premium and, in return, transfers all of the risk and responsibility for claims payment to the insurance company.

G

Gatekeeper Question - A qualifying question asked by an insurance company at the time of application to help identify risk(s). Example: “Have you ever been treated for a heart attack or heart condition?”

Gatekeeper (Primary Care Physician) - A health professional within a managed-care environment who determines the patient’s access to treatment. The primary care physician treats the patient and determines access to further treatment and specialists.

Grace Period - Time period that follows the premium due date when the coverage and policy remain in force.

Group Life Insurance - Life insurance usually obtained by an employer for employees. The premiums for the first $50,000 of life insurance per employee are deductible by the employer. Premiums are also nontaxable to the employee.

GUST - GUST is a combined reference to four pieces of legislation passed since 1994:GATT, USERRA, SBJPA, and TRA '97.

Guaranteed acceptance - A provision allowing employees to be accepted for the group insurance generally without having to provide medical evidence of insurability.

Guaranteed Issue Underwriting - The applicant is guaranteed coverage up to an agreed amount or level without evidence of insurability (see Evidence of Insurability).

Guaranteed Renewable - The insured’s right to continue an in-force policy by the timely payment of premiums. The insurance company cannot charge the coverage or refuse to renew the coverage for other than non-payment of premiums (includes health conditions and/or marital or employment status).

H

Health Alliances - Health Alliance or Health Insurance Purchasing Cooperatives (HIPCs) are groups or entities whose primary purpose is to negotiate with health plans to provide coverage at competitive prices to members of the alliance.

Health Insurance Purchasing Cooperatives (HIPCS) - See Health Alliances.

Health Maintenance Organization (HMO) - An organization that provides a wide range of health services for a fixed, pre-paid premium. The HMO may provide all services or may contract with other sources for additional services. HMOs fall into four categories:

1. Group Model

2. Individual Practice Association (IPA)

3. Staff Model

4. Network Model

Highly-Compensated Employee - An employee who, during either the determination year or look-back year was a more than 5% owner of the employer or earned in excess of $90,000 (dollar limit for 2003).

Hospital indemnity - A form of health insurance that provides a stipulated daily, weekly or monthly payment to an insured during hospital confinement, without regard to the actual expenses of the confinement.

Hours of Service Records - An employee's completion of a certain number of hours of service may be a condition to eligibility for plan benefits. The employer must maintain adequate records to support hours of service worked by each employee.

I

IBNR - Incurred But Not Reported claims are those which have been incurred by the insured but have not been submitted to the plan or insurance company for reimbursement (also known as lagged claims).

Incontestability - Provision in a policy which provides that an insurance company cannot contest the validity of a claim after the policy has been in force for a certain period, usually two or three years.

Indemnity Plan - A medical or dental plan which allows you to choose any licensed provider to provide health care. Members are reimbursed for eligible medical or dental expenses according to the benefit schedule in effect, including deductibles and coinsurance.

In-Network - Services provided by a contracted provider in accordance with all plan requirements.

Individual Practice Association (IPA) - A type of HMO which contracts with a physician-controlled entity, usually on a capitulated or discounted fee for service basis to compensate physicians for their medical services. IPAs may also serve non-HMO patients.

Individual Retirement Arrangement (IRA) - Also known as Individual Retirement Account. A type of savings account for retirement.

Deductible Traditional IRAs: Special tax rules allow you to reduce your taxable income by your qualified contributions to your IRA. You pay tax when you make withdrawals from your IRA. Deductible contributions are subject to income limitations.

Nondeductible Traditional IRAs: Although you cannot reduce your income by the amount of your current nondeductible contributions, you do not pay tax on the earnings of your account until you make withdrawals.

Roth IRA: You cannot deduct contributions to a Roth IRA, but when you make withdrawals from your account, you will not be taxed on the withdrawals (subject to certain limitations).

Insurability - The health status of an insurance applicant which makes him/her acceptable to an insurance company (i.e., health, financial conditional, occupation).

Internal Revenue Service (IRS) - The agency of the U.S. Treasury Department that enforces the tax laws made by Congress.

IRS - The Internal Revenue Service, a division of the U.S. Treasury Dept. that is responsible for the assessment and collection of most federal taxes, except those relating to alcohol, tobacco, firearms, and explosives. Established in 1862, the IRS derives most of its revenues from the collection of corporate and individual income tax.

IRC - Internal Revenue Code.

J

K

Keogh - A pension or profit-sharing plan available to self-employed individuals and their employees.

Key Employee - A key employee is an employee who, at any time during the plan year containing the determination date, or any of the four preceding plan years, is (or was):

An officer having annual compensation in excess of 50 percent of the annual dollar limitation for defined benefit plans in effect for such plan year;

One of the ten largest owners of the employer having annual compensation in excess of the annual addition limitation in effect for such plan year ;

A 5 percent owner; or

A 1 percent owner whose annual compensation exceeds $150,000.

All dollar limits are for 2003 and may be adjusted for cost-of-living increases on an annual basis.

L

Lagged Claims - The time between when a service is incurred and when it is submitted and processed for payment.

Lapse - Termination of insurance coverage for failure to pay premiums.

Lifetime Aggregate or Maximum - The maximum benefit payment provided under a plan or insurance contract.

Limitation on Annual Additions and Benefits - In the case of a defined contribution plan, the IRC Section 415 limits the total of the annual addition to a participant's account(s) for any limitation year (generally the plan year) to the lesser of $41,000 for 2004 and $42,000 for 2005, or 100% of compensation from the employer for that year. The term "annual additions" includes employer contributions made on behalf of the participant (including 401(k) deferrals), forfeitures allocated to the participant's account and participant contributions.

Long-term Care - The services required over a lengthy period of time due to an insured’s chronic illness or disability. It may include skilled nursing care and custodial care, or adult day care or house care servers.

Lump Sum Distribution - A type of distribution from a pension plan, in which you receive the entire balance within one tax year because of an event such as retirement. A lump-sum distribution can be rolled over into another plan or may be eligible for favorable 5- or 10-year averaging methods.

M

Managed Care - A health care system which imposes controls on the utilization of medical services and on the providers who render the care. Managed care is provided through managed indemnity plans; Preferred Provider Organizations (PPOs), Exclusive Provider Organizations (EPOs), Health Maintenance Organizations (HMOs), or any other cost management environment.

Managed Competition - Proposed system in which the government restricts the consumer to purchasing insurance from government-approved carriers.

Mandate - A specific procedure or coverage that a plan or insurance contract must offer, dictated by state or federal law.

Matching Contributions - Matching contributions are a type of employer contribution typically in 401(k) plans. Employers typically match employee elective deferrals to encourage participation in the plan. Matching contributions may be discretionary and contributed at the end of the plan year based upon the whether the employee completed a requisite number of hours (not to exceed 1,000) and/or whether the employee was employed on the last day of the plan year. Or, matching contributions can be deposited at the same time employee Elective Deferrals are deposited.

Maximum benefit period - The maximum length of time for which benefits are payable during any one period of disability.

Medicaid - A medical benefits plan available for low income persons, paid by federal and state government but administered by the state.

Medicare - A federal program of medical care benefits designed for those permanently disabled or over age 65.

Money Purchase Pension Plan - A defined contribution retirement plan in which the employer has a fixed obligation to make annual contributions to the plan on behalf of employees, usually based on a percentage of pay.

Multiple Employer Trust (MET) - A trust established by a sponsor that allows small employers in the same or related industries to provide medical insurance under a trust arrangement.

Multiple Employer Welfare Arrangement (MEWA) - An employee welfare arrangement designed to provide benefits to employees of two or more employers.

N

National Association of Insurance Commissioners (NAIC) - An organization that assists state insurance departments and helps draft model laws.

Network - Contracted providers of health care (physicians, hospitals, testing centers, rehabilitation centers, etc.) that have negotiated discount fees for their services in return for higher patient volume. This can apply to HMO, PPO, POS and EPO organizations.

Non-participating Provider - A provider with no contractual limitation on what he may bill and thus may practice balance-billing, as well as require payment at the time services are rendered.

Nonresident Alien - A person who is not a permanent resident or a citizen of the United States, and who is generally taxed on income from U.S. sources.

O

Open Panel - A right included in an HMO which allows the covered person to obtain non-emergency covered services from a specialist without a referral from the primary care physician or gate keeper.

Out-of Pocket Maximum - The maximum amount that an insured is required to pay under a plan or insurance contract.

P

Paid Claims - The total claims payment made by the plan or insurance company. It does not include any employee cost sharing or provider discounts.

Participant Direction of Investment - The participant selects his investments from a broad range of investments made available to all participants.

Participant Loans - If the plan document includes a provision to allow plan loans, a plan may make a loan to a plan participant if loans are available to all participants under the plan on a reasonably equivalent basis and the plan charges a reasonable rate of interest. In addition, the plan should have a loan policy.

Participant Termination/Mandatory Distributions - When a participant terminates employment with the employer for any reason other than death, the timing of a plan distribution depends in general on whether the participant's vested account balance exceeds $5,000. If the participant's vested account balance does not exceed $5,000, the plan normally designates a mandatory distribution date and the participant must receive distribution in lump sum payment. If a terminated participant's vested interest in the plan exceeds $5,000, the plan prescribes specific distribution options available to the participant. The plan may not require, without the participant's written consent, the distribution of a vested account balance exceeding $5,000 prior to the participant's normal retirement age or later.

Participating Provider - A provider who has agreed to contract with a managed care program to provide eligible services to covered persons.

Payroll deduction - Relating to group insurance, the employee's share of premiums deducted from his or her payroll earnings and then paid to the insurance company by the employer.

Point of Service Plan (POS) - Each time health care services are needed, the patient can choose from different types of provider systems (indemnity plan, PPO or HMO); each choice may provide different benefit payments.

Pool(ing) - Used by insurance companies to combine all premiums, claims and expenses in order to spread the risk of insurance coverage. This process ensures that small employers will not be singled out and unfairly assessed with a large rate increase due to unanticipated medical catastrophic claims of its insured employee(s).

Portability - A provision of voluntary coverages that allows a terminating employee (other than for reason of retirement or disability) to continue coverage at the same or reduced benefit amount to a stipulated age, depending on the coverage.

Precertification - Review processes that verifies the medical necessity and appropriateness of proposed services or supplies.

Pre-existing Condition - A condition or diagnosis which existed (or for which treatment was received) before coverage began under a current plan or insurance contract and for which benefits are not available or are limited.

Pre-existing Condition Clause - A clause in an insurance contract or plan which specifies if benefits will or will not be paid for a pre-existing condition. (Example: “The insured must be covered by the plan for a certain period of time or have gone a certain amount of time without any treatment.”) Additionally, the clause may limit the benefit payable for treatment of pre-existing conditions until a certain time period of coverage has elapsed, usually six months to a year.

Preferred Provider - A provider who has signed an agreement with the insurance carrier not to charge that carrier's members more than the insurer's allowed fees.

Preferred Provider Organization (PPO) Plan - A plan that provides benefits in an indemnity fashion, but pays a higher percentage of the cost of services if patients use a PPO-network provider than if they use non-PPO providers.

Preferred Provider Organization (PPO) - An organization of participating providers that have agreed to provide their services at negotiated discount fees in exchange for prompt payment and increased patient volume.

Prepaid Group Practice - A type of HMO plan where participating providers render specific services to the insured in exchange for an advance fixed payment.

Preventive care - A term often relating to dental insurance that includes benefits for treatments such as regular exams and cleanings designed to help prevent more serious conditions such as gum disease.

Primary Care - Routine office medical care provided by a family physician.

Primary Care Physician (PCP) - The physician responsible in an HMO for directing all patient care including referrals to specialists and obtaining necessary precertifications. This physician is usually a General Practice, Family Practice, Pediatric or Internal Medicine specialist. In some plays, women may choose an OB/GYN as their primary care physician.

Profit Sharing Plan - A profit-sharing plan is a defined contribution retirement plan funded by an employer with discretionary employer contributions. The employer need not have profits to make a profit sharing contribution.

Prohibited Transactions - If a plan engages in a prohibited transaction, the law imposes an excise tax. In general, prohibited transactions relate to any direct or indirect dealings between the plan and disqualified persons. A "disqualified person" includes the employer, a fiduciary, officers and directors, substantial owners of the employer and certain highly compensated employees. A loan to a disqualified person is a prohibited transaction unless the loan satisfies specific conditions for exemption. Furthermore, a loan from the plan to any business or entity in which a disqualified person has an interest generally is a prohibited transaction.

Prototype Plan - A retirement plan document that is made available for adoption by employers who elect to use the plan. A prototype plan includes an adoption agreement under which an employer may select the plan provisions that will apply.

Provider - A physician, hospital, skilled nursing facility, intensive care facility, health care professional or other entity which provides health care services.

Q

QDRO - Qualified Domestic Relations Order.

QJSA - Qualified Joint and Survivor Annuity.

QNEC - Qualified nonelective contributions (made by an employer to help pass the ADP test or ACP test).

QPSA - Qualified Preretirement survivor annuity.

QSLOB - Qualified separate line of business.

Qualified Retirement Plan - A retirement plan approved by the IRS that allows for tax-deferred accumulation of investment income. Individual Retirement Accounts (IRA), Keogh plans, and pensions are examples of qualified retirement plans.

R

Reasonable and Customary - The maximum amount a plan or insurance contract will consider eligible for reimbursement, based upon prevailing fees in a geographic area.

Rehabilitation - Usually physical therapy, speech therapy and/or occupational therapy.

Reinsurance - The transfer of part of the insurance risk to another insurer or insurers. Self-funded plans generally buy specific and/or aggregate stop-loss coverage to cover losses in excess of certain limits (also known as stop loss). (See Attachment Point.)

Reserves - A specific amount of money pre-funded and set aside to assure adequate funds to cover future claims. Both insurance companies and self-insured employers must “reserve” in order to preserve cash-flow and protect solvency.

Retention - The portion of the insurance premium which is allocated for expenses, administration, commissions, risk charges and profit.

(Exclusion) Rider - An amendment to an insurance contract limiting, or excluding, an existing coverage for certain conditions (for example, a rider to a policy may exclude coverage for treatment to an applicant’s knee)

Rollover - The tax-free reinvestment of a distribution from one qualified retirement plan or IRA, into another, within 60 days.

Roth IRA - A new type of IRA effective in 1998. Although contributions to a Roth IRA are not deductible, if you meet the qualifications, your withdrawals - including interest - will be completely tax free.

S

SARSEP - SEP with a salary reduction feature.

SBJPA - Small Business Job Protection Act of 1996 (sometimes referred to as SBA or SBA '96) P.L. 104-188.

Seat belt benefit - A provision in accidental death insurance that increases the accidental death benefit if an insured suffers loss of life in a vehicle accident and was wearing a seat belt at the time of the accident.

Section 457 Plan - A deferred compensation plan set up by state and local governments and tax-exempt organizations that allows tax deferrals of salary.

Self-fund - When an employer provides a qualified group health plan, manages the payments to the plan and pays claims from the fund of employer and employee payments.

Self-funding - An arrangement under which all or some of the risk associated with providing coverage is not covered by an insurance contract.

Service Area - A geographic area of operation for a managed care entity.

SEP - Simplified employee pension plan.

SEP-IRA - An IRA that accepts SEP contributions.

SERP - Supplemental Executive Retirement Plan.

SIMPLE - Savings Incentive Match Plan for Employees. A retirement plan that allows employees of small (100 or fewer employees) businesses and self-employed individuals to make salary-reduction contributions to an IRA. SIMPLE plan contributions cannot exceed $8,000 per year (2003 limit), and the contributions must be a percentage of the participant's earnings.

SIMPLE-401(k) Plan - A 401(k) plan that is subject to the SIMPLE contribution limit.

SIMPLE-IRA Plan - A SIMPLE plan that is funded with SIMPLE-IRAs.

SIMPLE-IRA - An IRA that accepts SIMPLE plan contributions.

Social Security Benefits - The monthly benefits paid by the Social Security Administration to recipients. If you receive social security benefits, some or all of your benefits may be taxable depending on your income level.

Spousal Consent to an Alternate Beneficiary - Participants wishing to name someone other than their spouse as a beneficiary must obtain Spousal Consent.

Staff Model HMO - An HMO that employs physicians to provide health care services to its members. Staff Models usually operate their own health center or facilities.

Stand-Alone - Refers to an insurance plan being sold by itself and not being bundled with another product. For example: Selling life insurance on its own would be "stand-alone." Requiring life insurance to be sold with medical insurance would be a "bundled coverage."

Summary Plan Description - A summary of the plan document, designed to provide a participant or beneficiary with a comprehensive, understandable overview of how the plan operates. The plan administrator should deliver a copy of the SPD to each participant in the plan. When an employee becomes a participant, the plan administrator must furnish the employee a copy of the SPD within 90 days of his/her entry into the plan. The plan administrator must furnish an updated SPD to all participants every five years if the employer has made any material change to the plan and the employer must furnish and updated SPD every ten years without regard to whether the employer has changed the plan.

T

Third-party Administrator (TPA) - An organization, unrelated to the sponsoring employer, that provides specific administrative duties (including premium accounting, claims review and payment, arranging for utilization review and stop-loss coverage).

Top-Heavy Plan - A qualified retirement plan in which more than 60% of total plan assets are in the accounts of key employees. Top-heavy plans must provide accelerated vesting and minimum benefits or contributions for non-key employees for plan years in which a key employee receives a contribution.

Tort Reform - The purpose of reform is to eliminate unnecessary practices and testing which are performed defensively by a physician with little or no value to the person seeking treatment. It may also include reasonable limits placed on non-economic damages paid to a patient or beneficiary.

Trend Factor - The percentage of increase used by an insurance company or plan to reflect the projected rise in health care costs. Calculation factors also include inflation, utilization, technology and geographic area.

Triple Option Plan - A plan which usually offers an insured an opportunity to choose between an indemnity plan, HMO and PPO.

Trustees - The parties named in a trust document that have responsibility to hold assets for the participants in trust.

U

Unbundling - To increase the reimbursement paid by a plan or insurance contract, each medical procedure is billed under a separate code as a separate item, instead of part of one overall procedure.

Utilization - The number of times a health care service is obtained by an insured during a specific period of time.

Utilization Review - A program designed to help reduce unnecessary medical expenses (usually hospital stays) by using preliminary evaluations and patient discharge practices.

V

Vesting - Vesting refers to the non-forfeitable ownership of employees to the assets in their accounts.

W

Waiting period - A specified number of days that the insured must wait before becoming eligible for coverage. It could also apply to the time an insured is required to wait before becoming eligible for a certain type of benefits. For example, a new insured may have to be continuously insured for 12 months before becoming eligible for benefits for major services under voluntary dental insurance.

Waiver of Premium - A provision in a plan or insurance contract which relieves the insured of paying the premiums while totally disabled.

Wellness - Programs or benefits which are introduced to encourage fitness, preventive care and early detection of illness to help reduce the costs of future health care (also known as Preventive Care).

Worker’s Compensation Coverage - Programs mandated by the states which require employers to provide coverage to compensate employees for work-related injuries or disabilities.

X

Y

Z

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401(a)(4) - A section of the Internal Revenue Code which governs the non-discrimination testing of retirement plans.

401(k) Plan - A qualified deferred compensation plan set up by an employer. A portion of your earnings is deducted and placed in a qualified retirement plan. Your employer may match a percentage of the amount you have withheld. You are not taxed on either the amount deducted from your pay or your employer's matching amount until you receive distributions. The maximum amount that an employee may contribute to a 401(k) plan is $13,000 for 2004 and $14,000 for 2005.

401(a) - The general tax code reference to the rules prescribed for "qualified plans."

401(a)(9) - Tax code section that imposed minimum distribution requirements after age 70-1/2.