See list of Acronyms

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Accelerated Benefits – Sometimes called a critical-illness rider or living-benefit rider. With this rider on a life insurance policy, part or all of the policy face amount may be paid in advance on the diagnosis of certain dread diseases or in the event of circumstances significantly affecting the insured’s longevity and quality of life, such as a major organ transplant or entering a nursing home.  The amount that a company will advance will vary from company to company, usually between 70% – 90% of the death benefit.

Accidental Death and Dismemberment Insurance (AD&D) –Pays a principal sum for a death benefit and a capital sum for a dismemberment benefit.  The capital sum is usually ½ of the principal sum.   

Actively-at-Work – An eligibility provision for group benefit coverage, whereby an employee is not eligible for coverage if absent from work because of sickness, injury, or other reasons on the otherwise effective date of his or her coverage.

Activities of Daily Living (ADLs) – Bathing, dressing, transferring (which includes mobility), toileting, continence, and eating. 

Acute Impairment – A potentially life-threatening medical condition such as SARS or meningitis. Acute impairments have having rapid onset, severe symptoms and a short course. They are not chronic, but are conditions from which the patient may fully recover with proper medical attention.

Administrative Services Only (ASO) – A contractual arrangement under which an employer purchases specific administrative services from an insurance company or an independent third-party administrator.  These services usually include the administration of claims, but they may include a wide variety of other services.

Adult Day Care – Day care at centers specifically designed for the elderly who live at home, but whose spouses or families cannot stay home to care for them during the day.

Adverse Selection – Means that the people most likely to need insurance, those who are in poor health, will purchase insurance in greater numbers than those in good health.

Agent – Any person appointed by an insurer to solicit applications for insurance on its behalf, and (if authorized to do so) collect premiums on insurance so applied for or effectuated (put into force).  An agent can be an individual, partnership or corporation.

Alternative Medicine – Types of medical care that are alternatives to conventional treatments covered under medical expense plans.  Examples include acupuncture, hypnosis, herbal medicine, yoga, massage therapy, and chiropractic treatment.

American Accreditation HealthCare Commission (AAHC) – See Utilization Review Accreditation Commission.

Anniversary – Usually an annual date the group plan renews and rates and benefits may change. 

Any Occupation – The insured’s inability to perform any occupation for which the insured is reasonably suited by education, training or experience.  It is much more restrictive than the “Own Occupation” definitions.

Any Willing Provider Requirement– Requires HMOs and other networks of medical care providers to accept any provider who is willing to accept the medical expense plan’s basic terms and fees.

Attending Physician Statements, (APS’s) – Are used only when statements on the application reveal conditions, in the past or present, which affect the insured.  The consent of the insured is required.

Bed Reservation Benefit – A benefit under a long-term care insurance policy that continues to pay a long-term care facility for a limited time if a patient must temporarily leave because of hospitalization. Without a continuation of benefits, the bed might be rented to someone else and unavailable upon the patient’s release from the hospital.

Beneficiary – A person designated by a group benefit plan participant, or by the terms of the plan, who is or who may be entitled to a benefit under the plan.

Broker – Is licensed to represent the insured and find the best company and insurance for the insured, for a commission or fee.  Brokers do not have binding authority, and they must pass a separate broker’s exam.

Cafeteria Plan – A benefit program in which employees can design their own benefit packages by purchasing benefits with a prescribed amount of employer dollars from a number of available options.

Capitation – A set amount of money received or paid out; it is based on membership rather than on services delivered and usually is expressed in units of PM/PM (Per Member/Per Month).  May be varied by such factors as age and sex of the enrolled member.

Care Coordinator -  A trained professional in crisis intervention, home health care arrangements, Alzheimer’s and dementia care management, who establishes daily monitoring calls, nutrition and dietary management, medication management, coordination of alternative living arrangements and coordination of bill-paying services.

Carve Out – Refers to a set of medical services that are “carved out” of the basic arrangement; for example, mental health, maternity, and substance abuse.

Children’s Health Insurance Program (CHIP) – Also referred to as SCHIP for State Children’s Health Insurance Program.  A program created by the federal government to provide a “safety net” and preventive-care level of health coverage for children, funded through a combination of federal and state funds, and administered by the states in conformance with federal requirements.

Chronic Impairment – A chronic impairment is a disease showing little change or slow progression and long continuance.  Opposite of acute.  Common examples are emphysema, arthritis, diabetes, heart disease and hypertension.

COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985) – Requires group health plans to allow employees and certain beneficiaries to elect their current health insurance coverage to be extended at group rates plus 2% for up to 18 months for employees, 29 months for disabled employees and 36 months following a qualifying event that results in the loss of coverage.  The COBRA provision is for employers with 20 or more employees.

Cognitive Impairment – Loss of mental capabilities; i.e., awareness with perception, reasoning, intuition, and memory; for example, Alzheimer’s disease or Senile Dementia.

Coinsurance – The percentage of covered expenses under a major medical plan that will be paid once a deductible is satisfied.

Community Rating – The practice of using the same rate structure for all subscribers to a medical expense plan, regardless of their past or potential loss experience and regardless of whether coverage is written on an individual or a group basis.

Consultants – Representatives of the buyers of insurance and employee benefits who owe allegiance to the buyers rather than to the organizations through which they place their clients’ coverage.  Consultants traditionally have been compensated on the basis of fees charged to clients.

Conversion – Conversion of a member covered under a group master contract to coverage under an individual contract.  This is offered to subscribers who lose their group coverage through job loss, death of a spouse, etc., and who are ineligible for coverage under another group contract.

Coordination of Benefits – Designates one insurer as “primary carrier” and the other insurer as “secondary”, when a two income family has two group plans covering the family.  With a husband and wife, the primary insurer is the one that covers the claimant as an employee.  The other spouses’ insurer will be secondary.  Basically gives an insured 100% coverage after the deductible.  Children of two-income families are covered by the plan of the parent whose birthday occurs first in the year.

Co-payment – A dollar amount that an insured must pay for a covered service under a medical plan.

Cost-Shifting – The attempt by employers to control benefit costs by shifting these costs to employees.  Examples include the requiring of larger employee contributions and increased deductibles.

Custodial Care – Provides help with the Activities of Daily Living, (ADLs).  Must be by doctor’s orders but does not need a skilled practitioner.  This is the type of care that is most needed by the elderly.

Deductible – That portion of a subscriber’s (or member’s) health care expenses that must be paid out of pocket before any insurance coverage applies. Commonly $100 to $300. Common in insurance plans and PPOs. Uncommon in HMOs.  May apply only to the out-of-network portion of a point-of-service plan. May also apply only to one portion of the plan coverage, but not for anything else.

Dental Health Maintenance Organization (DHMO) – A group of dental providers who provide dental care only.

Dependent – An employee’s spouse, who is not legally separated from the employee and any other unmarried dependent children, including legal stepchildren and adopted children.

Diagnostic-Related Group (DRG) – The Prospective Payment System (PPS) reimburses hospitals a flat fee per each generalized diagnosis, called a Diagnostic-Related Group (DRG) and determined by a set of complex medical criteria.

Direct Reimbursement – A self-funded dental insurance plan, under which the employee selects the provider of dental services, pays any charges incurred and submits the bills to the employer for reimbursement.

Disability Income Insurance – Purpose is to replace income when a disability prevents an individual from working to earn an income.  The ability to work and earn an income is a person’s greatest asset.  The maximum coverage is usually 2/3 of the insured’s gross income, because disability income benefits are tax free (if the insured is paying his/herown premiums after tax).

Effective Date – Important because it is when coverage begins, contestability period begins, the suicide clause begins, and the day proper “consideration” was received.

Eligibility Period – Is 31 days following the end of the probation or waiting period in which the employee is entitled to enroll in the group plan.

Employee Assistance Program – An employer-provided program to help employees with certain personal problems.  Benefits may include treatment for alcohol or drug abuse, counseling or mental and marital problems, and referrals for child care or eldercare, and crisis intervention.

Environmental Assistance – Helps interact with everyday activities, such as housekeeping, shopping and going to the doctor’s office.

ERISA (Employee Retirement Income Security Act – A federal act to protect the interests of participants in employee benefit plans and participants; beneficiaries.  Sections of the act affecting group benefit s are those dealing with fiduciary responsibility and reporting and disclosure.

Experience Rating – The practice by which the actual prior utilization experience of a particular group is a factor in determining the premium offered for the next year, or by a new insurance company asked to bid.

Family Deductible – The deductible amount assessed to a family versus an individual member. Usually 2 times or 3 times the individual member deductible.

First Dollar Coverage – Coverage without deductible or percentage participation.

Flexible Benefit Plan – When an employer allows employees to choose a variety of options in benefits up to a certain total amount.  Employees then can tailor their benefits package between health coverage, life insurance, child care, and so forth to optimize benefits for their particular needs.

Flexible Spending Account (FSA) – A provision in a cafeteria plan that allows an employee to fund certain benefits on a before-tax basis. This plan is funded entirely by the employee and there is a “use it or lose it” clause.  If the employee does not use all the money they put into the FSA, they lose it.  It does not carry forward to the next plan year.

Free Look – Gives the insured time to look at the policy from the date the policy is delivered to the insured.  This law gives the insured a chance to return the policy for a full refund.

Gatekeeper PPO – A point-of-service plan that requires a participant to select a primary care physician in the manner of an HMO subscriber.  However, at the time medical service is needed, the participant can elect to go outside the PPO network.

Grace Period – A period specified in a group insurance contract (usually 31 days) during which a policy owner may pay any overdue premium without interest.

Guaranteed Insurability – Guarantees the insured the opportunity to purchase additional permanent insurance.  This option may be taken at specified ages without proof of insurability.

Guaranteed Renewal – Restricts an insurer from canceling or non-renewing a policy except for non-payment of premium.

HEDIS Health Plan Employer Data Information Set – Developed by NCQA with considerable input from the employer community and the managed care community. HEDIS is an ever-evolving set of data reporting standards.  HEDIS is designed to provide some standardization in performance reporting for financial, utilization, membership, and clinical data so that employers and others can compare performance between plans.

Health Insurance Portability and Accountability Act (HIPAA) –A small employer as defined in the HIPAA Act of 1996 who does not otherwise qualify in their state as a Small Employer and who; employed at least two (2) and no more than fifty (50) part-time and full-time employees on business days during the preceding calendar year; and employed at least two (2) employees on the first day of the plan year.

Health Insurance Purchasing Cooperative (HIPC) – An entity that acts as a broker between the purchasers and the providers of medical expense coverage.

Health Maintenance Organization (HMO) – A managed system of health care that provides comprehensive benefits on a prepaid basis to members enrolled within a service area.  HMOs can both finance health care and deliver services: i.e., Kaiser Permanente.  There is an emphasis on preventive care as well as cost-control.

Health Plan Employer and Data Information Set (HEDIA) – Performance measures developed by the NCQA to enable purchasers and consumers to have information to reliably compare the performance of managed care plans.

Health Reimbursement Account (HRA) – This is a program completely funded by the employer.  Every month the employer sets up the amount he will fund.  This fund can be set up to cover any out-of-pocket medical expenses the employee has. Or, the employer may set the plan up to cover deductibles and co-payments only.  There is a roll-over feature at the end of the year.  The employer decides how much they will roll over to the employee for the next year.  Unlike a Flexible Spending Account, if you do not use the fund, you do not lose it.  The HRA is usually combined with a high deductible health plan.

HIV Disclosure Form – State Regulations require that if tested for HIV, the insured must sign an HIV disclosure form.  The consent form will explain the confidential treatment of test results.

High Deductible Health Plan (HDHP) – A health plan that has a high deductible.  These plans may qualify for a Medical Savings Account (MSA).  For a HDHP to qualify for a MSA it must meet the defined deductible amount, which is set and updated annually by the IRS.  There is a defined minimum and maximum limits on the annual out-of-pocket medical expenses paid for covered expenses.  Family coverage amounts are aggregate, meaning the family deductible and annual maximum must be met by the family before any family member receives benefits.

Home Care Services – Provides for non-medical (custodial) services in the patient’s home; i.e., cooking, cleaning, and shopping.

Home Health Care – Skilled and intermediate care, but can be performed in the patient’s home rather than in a nursing home.

Hospice – A health care facility or service providing benefits to terminally ill persons.  The emphasis is on easing the physical and psychological pain associated with death rather than on curing a medical condition.

Impairment – Types Related to Long-Term Care – Cognitive impairment, chronic impairment, and acute impairment.

Indemnity Benefits – Benefits expressed in terms of dollar maximums.

Insurance – A formal social device for reducing risk by transferring the risk to an insurer.  The insurer agrees, for a consideration, to assume the losses suffered by the insured.

Intermediate Care – Similar to skilled care, but required only occasionally, by a medical practitioner and by doctor’s orders.

Joint Commission on Accreditation of Healthcare Organizations (JCAHO) – The primary organization that accredits hospitals and other types of medical care facilities.  JCAHO also accredits certain types of health care networks.

Key Person – An essential employee who can also be the owner.

Long-Term Care – Can be therapeutic, rehabilitative, or personal care delivered at home, in a community-based setting, or in a facility.

Managed Care – A process to deliver cost-effective health care without sacrificing quality or access.  Common characteristics include controlled access to providers.  Comprehensive case management, preventive care, risk sharing, and high-quality care.

Major Medical Insurance – A medical insurance plan designed to provide substantial protection against catastrophic medical expenses.  There are few exclusions and limitations, but deductibles and coinsurance are commonly used.

Medicaid – A government-sponsored health care program for the medically needy who are age 65 and older, under age 21, blind or disabled, or families with dependent children.  It covers the costs not covered by Medicare and helps pay for Nursing Home care.  Medicaid is funded by State and Federal monies, but administered by the states.

Medical Information Bureau (MIB) – A non-profit agency supported by hundreds of insurance companies.  They maintain files of information that applicants have submitted to other insurance companies and that physicians and others have submitted regarding a proposed insured.  By sharing this information with other companies to whom an applicant has applied for coverage, information can be cross-checked and applicant fraud can be detected.  Applicant’s authorization must be obtained in order to run a credit check.  Also, the applicant must be able to obtain a copy of the report.

Medical Savings Account (MSAs) – A personal tax exempt trust or custodial savings account established for the purpose of paying unreimbursed medical expenses, including; deductibles, percentage participation, and co-payments.  It is used with a high-deductible medical expense policy.

Medicare – Entirely under federal control.  Responsible for developing guidelines for federal-state cost sharing resides with the Department of Health and Human Services (DHHS), which is also responsible for overall supervision of state and provider participation.  An entitlement program covering most Americans over age 65 and those who have qualified for Social Security disability benefits for at least two years.

Mental Health Parity Act – Federal legislation that requires annual and lifetime dollar limits on mental health benefits to be on a par with limits that apply to other medical conditions.  The act applies to employers with more than 50 employees.

Multiple Employer Trust (METs) – Are composed of several employers forming a trust to combine their workers for group insurance.  The usual number of enrollees needed is 100-200.  (METs) may be sponsored by Life companies or by independent administrators, and they may be insured or self-insured.

Multiple Employer Welfare Associations (MEWAS) – Are not controlled by all of the state regulations. MEWAs sell group health benefit plans to small businesses.  A small business owner would join the “Association” and then would be eligible for the Association’s health insurance plans.

National Association of Insurance Commissioners (NAIC) – An independent nonprofit organization that accredits managed care organizations and has established a quality measurement program to help consumers evaluate the quality of care provided by managed care plans.

No-Gag Rule – Legislation that prevents managed care organizations from including provisions in contracts with doctors that prevent them from discussing with patients treatment options that may not be covered under their plans or from referring extremely ill patients for specialized care outside their plans.

Nondiscrimination Rules – Rules that deny favorable treatment to employee benefit plans that do not provide equitable benefits to a large cross section of employees.  Not all plans are subject to nondiscrimination rules, and different rules may apply to different types of benefits.

Non-Skilled Nursing Homes – These facilities are not licensed by Medicare.  They provide what is commonly called intermediate (mentally retarded) and custodial care.  Care is termed intermediate if it is provided daily but not round-the-clock, is supervised by registered nurses and ordered by a physician.  Custodial care is daily assistance with ADLs. 

Open Enrollment – Usually refers to HMO plans.  An employer must provide for a group enrollment period of at least ten working days each year in which eligible employees may transfer between any available health insurance plans without the application of waiting periods, exclusions, or limitations based on health states.  Employees, who have been enrolled without their dependents, may use the open enrollment period to enroll their spouse, and/or dependents.  This is usually during the month prior to the group’s anniversary, or renewal.

Own Occupation – The insured’s inability to perform the duties of his/her own occupation, aka “own occ.”.

Partial Disability – An insured cannot perform some or all of the duties of his/her own occupation due to a covered disability. 

Point-of-Service (POS) Plan – A hybrid arrangement that combines aspects of a traditional medical expense plan with an HMO or a PPO.  At the time of medical treatment, a participant can elect whether to receive treatment within the plan’s network or outside the network.

Portability – The ability to continue employer-provided or employer-sponsored benefits after termination of employment – under HIPAA, the concept of allowing an employee to use evidence of prior medical expense coverage to eliminate or reduce the length of any preexisting conditions provision when the employee moves to another medical expense plan.

Preadmission Certification – A requirement under many medical expense plans that a covered person or his or her physician obtain prior authorization for any nonemergency hospitalization.

Pre-Existing Conditions – Any medical condition you have been seen for prior to submitting an insurance application. The carrier may go back one year in the insured’s medical history and exclude pre-existing conditions for only six months.

Preferred Provider Organizations (PPOs) – Groups of health care providers within a certain area who agree to provide services for less money than they might charge otherwise.  They make up for the low charges by increasing their volume of patients.  For the pre-set fees all of the insureds in a group plan are given the names of the PPOs and doctors and hospitals.

Premium – The total price that a group insurance policy owner pays for the entire amount of coverage purchased.

Premium-Conversion Plan – A provision in a cafeteria plan under which an employee can elect a before-tax salary reduction to pay his or her premium contribution to an employer-sponsored health or other welfare benefit plan.

Probationary Period, aka Waiting Period – A period of time established by the employer, often 90 days, before an employee is eligible for coverage under the group benefit plan.

Qualified Long-Term Care Insurance Contract – A long-term care contract that meets specified standards and qualifies for favorable tax treatment under the Health Insurance Portability and Accountability Act.

Reasonable-and-Customary Charge – A charge that falls within the range of fees normally charged for a given procedure by physicians with similar training and experience in a geographic region.  It is usually based on some percentile of the range of charges for specific medical procedures.

Reinsurance – Is an agreement between insurance companies under which one accepts all or part of the risk of loss of the other.

Respite Care – Temporary institutional or home care, to allow the regular caregiver to have a vacation.

Retention – Is the amount of liability assumed by the writing insurance company and not reinsured.

Self-Funding – A method by which an employer can finance the cost of an employee benefit plan.  In the method’s purest sense, the employer pays benefits from current revenue, administers all aspects of the plan, and bears the risk that benefit payments will exceed those expected.

Service Representative – An individual other than an officer, manager, or general agent of an insurer, who is employed on a salary basis by an insurer or general agent to work with and assist agents.

Single-Payer Plan – An approach to national health insurance under which everyone is automatically covered by a single program run by the government.

Skilled Nursing Facility (SNF) – Care is required daily and must be performed by a skilled medical practitioner.  A Registered Nurse must be on duty 24 hours a day.  Must be certified as SNF facility in order to qualify for Medicare reimbursement. 

Small Employer Health Insurance Availability Model Act (SEHI) – An NAIC model act designed to promote medical expense coverage for small employers.  Most states have adopted some form of the act.  An Oregon Small Employer (SEHI) is any person, firm, corporation, partnership or association actively engaged in business that, on at least 50 percent (50%) of its working days during the preceding year employed no more than 25 eligible employees (those with a normal work week of 17.5 or more hours) and no fewer than two (2) eligible employees; and the majority of whom are employed within the state of Oregon; and a bona fide partnership, independent contractor or employer-employee relationship exists.

Sub acute-Care Facilities – This is a newer type of facility, and Medicare will pay only for treatment of acute medical conditions.  When the acute medical condition is stable, the patient will be moved to another facility. 

Summary Plan Description – A detailed report about an employee benefit plan that ERISA requires a plan administrator to give plan participants within 120 days after the plan’s adoption and the Department of Labor upon request.  It must also be given to new participants within 90 days of first becoming eligible to participate and be updated at specified times.

Surcharge – Means an additional percentage of the original premium will be charged for the risk.  For example, if an insured is overweight, instead of the insured paying $1,000 for a life policy, a surcharge of 25% will be added to the premium due.  The new premium will be $1,250.

Tax Equity and Fiscal Responsibility Act (TEFRA) – One key provision of this Act prohibits employers and health plans from requiring full-time employees between the ages of 65 and 69 to use Medicare rather than the group health plan.  Another key provision codified Medicare risk contracts for HMOs and competitive medical plans.

Term Insurance – The least expensive of all life protection contracts.  It provides protection for a limited number of years, the face amount being payable upon the death of the insured, nothing in case of survival.

Third Party Administrator (TPA) – A person or organization hired to provide certain administrative services to employee benefit plans.

TRICARE – The Department of Defense’s worldwide managed health care program.  TRICARE was initiated in 1995, integrating health care services provided in the direct care system of military hospitals and clinics with services purchased under CHAMPUS.

Triple Option – The offering of an HMO, a PPO, and a traditional insurance plan by one carrier.

24-Hour Coverage – A single benefit plan that responds to injuries whether they occur on or off the job.  In effect, this arrangement combines medical expense coverage, disability income coverage, and workers’ compensation benefits into a single plan.

Unbundling – The practice of a provider billing for multiple components of service that were previously included in a single fee.

Underwriting – This refers to bearing the risk for something.  It is also an analysis of a group that is done to determine rates and benefits or to determine whether the group should be offered coverage at all.  The process by which an insurance applicant is evaluated, decisions are made on the applicant’s acceptability for insurance, and a rating basis is established.

Utilization Review Accreditation Commission (URAC) – A not-for-profit organization that performs reviews on external utilization review agencies.  Its primary focus is managed indemnity and PPOs, although they have expanded their accreditation activities.  States often require certification by URAC for a utilization management organization to operate.  URAC is also known as the American Accreditation HealthCare Commission (AAHC).

Usual, Customary and Reasonable (UCR) – See Usual, Reasonable and Customary.

Vision Care Expense Benefits – Benefits for vision care expenses that are not usually covered under other medical expense plans.  Benefits are provided for the cost of eye examinations and eyeglasses or contact lenses.

Voluntary Benefits – A plan offered to employees under which they may purchase individual insurance coverage with premiums paid through payroll deductions by the employer.

Waiting Period – A period of time that an employee must be disabled, or otherwise wait, before benefits commence under certain employee benefit plans.

Waiver vs. Estoppel – “Waiver” is the voluntary relinquishment of a known right.  “Estoppel” is the legal principle that anyone whose words or actions have caused a waiver of a right cannot later reclaim the waived right if the other party has relied upon it.  For example, if an insured informs the agent that he has had heart problems and the application has been properly completed with no misrepresentation, and the insurer issues a policy, then the insurer is “estopped” from trying to cancel or void coverage at a later date due to the heart condition.

Waiver of Premium –   Life insurance: provides that in the event the insured becomes totally and permanently disabled before age 60 or 65, premiums on the contract will be waived during the continuance of disability beyond a specified waiting period. Long-Term Care insurance: provides that in the event you go on claim with the qualifying number of ADLs, your premium stops while you are on claim.

Wellness Program – An employer-provided program to promote the well-being of employees and sometimes their dependents. 

Whole Life Insurance – Builds Cash Value.  The policy owner pays a level premium until he dies or reaches age 100.  The policy lasts for an insured’s whole life.

Women’s Health and Cancer Rights Act – A federal act that requires medical expense plans which provide benefits for mastectomy to also cover breast reconstruction, surgery on the other breast to produce a symmetrical appearance, and prostheses.

Workers’ Compensation Laws – Laws enacted in all states under which employers are required to provide benefits to employees for losses resulting from work-related accidents or diseases.  Benefits include medical care, disability income, income for survivors, and rehabilitative services.

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