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Accident and Health (A & H)
This is a general term applying to all group coverages that pertain to illnesses and accidents of covered employees and dependents. The industry’s generic term is Health Insurance.
Actively at Work
A phrase used to define when coverage begins for an individual employee. Some contracts modify the definition by requiring a period of being actively on the job and on the premises before coverage begins.
A person who becomes insured subsequent to the effective date of the group policy.
Administration Manual
The manual of instructions provided to the policyholder by the insurance company which outlines and explains those duties required of the plan administrator to assure the successful operation of the policyholder’s group insurance program.
Administrative Services Only (ASO)
Services provided by an insurer when the insurer is not assuming any risk or “insurance” aspect for a group. The services may include actuarial, plan design, claim handling, benefit communications, financial advice, preparation of data for governmental reports, stop loss coverage, etc. The insurer provides these services for self-insured plans.
The person responsible for the administration of a group insurance plan. (Also called Plan Administrator.)
Affordable Care Act (ACA)
Health reform law passed in 2010. It seeks to change America’s health care system to increase access and affordability for more Americans.
Association Health Plans
This term is sometimes used loosely to refer to any health plan sponsored by an association. It also has a precise definition under the Health Insurance Portability and Accountability Act of 1996 that exempts from certain requirements insurers that sell insurance to small employers only through association health plans that meet the definition.

Base Plan
A basic plan providing limited hospital, surgical or medical benefits.
Basic Compensation
The base salary or wages paid to an employee upon which benefits and/or contributions are based. The term generally excludes overtime, bonuses and other additional compensation. The term will also define whether or not commission income is included.
The person or persons designated by the insured to receive the benefits of insurance at death.
Health care services covered by your insurance. Covered benefits are defined in your insurance plan coverage documents.
Many carriers distribute booklets to individuals insured under a master contract. In some instances this explains the certificate; in others, it is the certificate in booklet form. Depending on the size case, this booklet can be specially printed and can include the employer’s logotype.

Calendar Plan
Used in major medical to describe the operation of deductibles and/or benefit limits. In other words, a deductible may apply once within a calendar period, and the maximum benefit payable may be described in terms of a given sum within a particular calendar year. (See “Per Cause.”)
A system where the plan pays the doctor a fixed amount to care for a patient over a certain period of time.
The term is synonymous with “insurer.”
Census Data
Because each group is underwritten and rated on the basis of the people who make up the group, a rather complete census must be made. Most insurance companies have specific “census forms” that require the full name, date of birth, sex, dependents, and other pertinent information concerning all employees to be enrolled in the group plan.
Certificate Holder
The insured person under a group plan.
Certificate of Insurance
A document delivered to the insured which summarizes the benefits and principal provision of the group plan.
Certificate Rider
A document which amends and/or supplements the certificate of insurance.
Claim Manual
The manual supplied to the administrator of the group plan by the insurer which describes procedures to follow in processing a claim. It is usually a part of the administration manual.
Claim Reserves
A reserve established by the insurer to settle incurred but as yet unpaid claims. It may also include funds for possible claim fluctuation.
A system where the plan pays the doctor a fixed amount to care for a patient over a certain period of time.
The term is synonymous with “insurer.”
Census Data
Because each group is underwritten and rated on the basis of the people who make up the group, a rather complete census must be made. Most insurance companies have specific “census forms” that require the full name, date of birth, sex, dependents, and other pertinent information concerning all employees to be enrolled in the group plan.
Certificate Holder
The insured person under a group plan.
Certificate of Insurance
A document delivered to the insured which summarizes the benefits and principal provision of the group plan.
Certificate Rider
A document which amends and/or supplements the certificate of insurance.
Claim Manual
The manual supplied to the administrator of the group plan by the insurer which describes procedures to follow in processing a claim. It is usually a part of the administration manual.
Claim Reserves
A reserve established by the insurer to settle incurred but as yet unpaid claims. It may also include funds for possible claim fluctuation.
The percentage of a patient’s bill not reimbursed under the plan. As an example, with coinsurance of 80% of the first $5,000; the patient pays 20%, or $1,000. Any claim in excess of “the coinsurance limit” ($5,000) would be paid at 100% by the carrier, as long as it is considered Reasonable & Customary.
Comprehensive Major Medical Insurance
A form of major medical expense insurance written with a low initial deductible providing basic hospital, surgical, and medical benefits. May also be written with higher deductibles as a way to reduce costs.
Consolidated Omnibus Budget Reconciliation Act (COBRA)
Legislation that, among other provisions, prohibits medical plans from requiring Medicare to be the primary payer for participants over age 70; extends Medicare coverage to state and local government workers; and requires that every group health plan provide each participant and qualified beneficiary with an option to pay for continued coverage in situations where coverage would otherwise be discontinued.
Group people use “contributory” to designate those situations where the insured individual pays part of the premium. The alternative is “noncontributory,” meaning employer-pay-all.
Conventional Indemnity Plan
An indemnity that allows the participant the choice of any provider without effect on reimbursement. These plans reimburse the patient and/or provider as expenses are incurred.
Group life laws generally require that benefits lost upon termination be “convertible” into individual life insurance, without evidence of good health. Some medical care coverages have conversion features, and certain states have statutory requirements in this area.
A fixed dollar amount, usually $5-$25 that the patient must pay in lieu of a percentage of charges. An in-network office visit may have a “$10 copay” per visit. A prescription drug card usually has different copays for generic, brand name or non-formulary drugs.
This is a major medical term referring to the out-of-pocket deductible that some major medical plans require following the expiration of base plan benefits and before major medical benefits come into play.
An arrangement with an insurer where the policyholder pays actual claims to the insurer plus the insurer’s administrative costs. No claim reserve is generally established. This arrangement is usually used only with large groups.
Cost-Sharing Subsidies
Federal funds available to those who qualify to help decrease out-of-pocket expenses (i.e., deductibles, coinsurance or copayments). These are available on Silver plans.
Covered Medical Expense
Not all expenses incurred in connection with a sickness or an accident are reimbursable under major medical. Excluded items are stipulated in each contract. (e.g., eyeglasses, dentistry, and cosmetic surgery might be on such a list.)
Covered Person
The person (subscriber) to whom health insurance is issued, and any of the subscriber’s dependents who are covered under the policy.
Covered Service
A service that is covered under your health insurance.

The amount of covered expenses which must be incurred by the insured before benefits become payable by the insurer.
An insured’s spouse (wife or husband), not legally separated from the insured, and unmarried children who meet certain eligibility requirements, and who are not otherwise insured under the same group policy. The precise definition of a dependent varies by insurer.
Deposit Premium
The premium deposit paid by a prospective policyholder when an application is made for a group insurance policy. It is usually equal, at least, to the first month’s estimated premium and is applied toward the actual premium when billed.
Diagnostic Related Groupings (DRGs)
A method of classifying patients’ illnesses according to the principal diagnosis and treatment requirements. Under Medicare, each DRG has its own price which a hospital is paid regardless of the actual cost of treatment.

Effective Date
The date on which insurance coverage goes into effect. May refer to a case, a group contract, a coverage, a benefit, or an insured.
Employee Census
Data, such as age, sex, occupation, earnings, and dependency status, relating to the insured persons under a group policy.
Employer Responsibility
This is a new provision under the ACA. Starting in 2014, if an employer with at least 50 full-time employees doesn’t provide affordable health insurance—and an employee uses a tax credit to help pay for insurance through a health insurance exchange—the employer is required to pay a fee to help cover the cost of tax credits.
The process of explaining the proposed group insurance plan to the eligible persons and assisting them in the proper completion of their application for coverage.
Evidence of Insurability
Any statement or proof of a person’s physical condition and/or other factual information about a person’s health affecting acceptability for insurance.
Essential Health Benefits
This ACA provision requires insurance plans to cover certain essential benefits necessary for overall good health. These benefits will be covered by both health insurance exchanges and insurance companies.
A standard feature of insurance contracts issued is the list of items not covered. These should be pointed out to the buyer in the delivery interview. Typical exclusions in group medical policies include eyeglasses, dental care, cosmetic surgery, etc.
Exclusive Provider Organization (EPO)
Similar to an HMO, an in-network only plan that allows access to contracted physicians. Typically, EPOs do not require members to have referrals from Primary Care Physicians to see in-network Specialists.
Extended Benefit
The continued entitlement of an insured, under certain conditions, to receive benefits after the termination of insurance.
Extended Care
Medical care reimbursement may or may not be offered for care that extends beyond hospital confinement. The modern tendency is to arrange for such care, which is far less expensive than customary hospital care.

Flat Schedule
A schedule of insurance under which everyone is insured for the same benefits regardless of salary, position or other circumstances.
Flexible Benefit Program
A plan that allows employees to choose from a selection of benefits that best suit their individual needs. Also known as a “cafeteria” or “flex” plan. Permitted by IRC Section 125.
Flexible Spending Account (FSA)
A cafeteria plan created to reimburse qualified medical expenses, health insurance premiums for premium-only accounts, or dependent care expenses.
A listing of preferred medications selected by each insurance carrier. Most generic, and many brand name drugs appear on formularies. Drugs not on a formulary listing are subject to a higher member cost share than drugs on the formulary.
Fully Insured Plan
A plan where the employer contracts with another organization to assume financial responsibility for the enrollees’ medical claims and for all incurred administrative costs.

Gatekeeper or Primary Care Physician
Usually, this is a family practitioner, an internist, or a pediatrician who provides your care, arranges for tests or hospitalization, and who refers you to a specialist.
Health plans that were in place when the ACA was signed into law on March 23, 2010 are exempt from some of its requirements.
Group Contract
A contract of insurance made with an employer or other entity that covers a group of persons by reference to their relationship to the entity.
Group Permanent
Describes a variation from the standard yearly renewable term life insurance. In group permanent, the insured worker has permanent, portable cash-value life insurance for a contribution; the employer pays for additional term to reach the face amount of the certificate.
Group Plan
People covered under the same policy through their employer.
Group Specialist
The GA’s resident authority on group insurance. The group specialist can work with you and your clients in all group insurance areas, providing the expertise needed in this complex market. While your primary activity with a group case will involve prospecting, fact-finding and relationship building, the specialist can assist you in: developing and soliciting prospects; researching the market (this includes keeping current with products, pricing, and the ever-changing governmental regulations); closing the sale (with you if desired); case submission and underwriting follow-up; enrolling and installing the group plan; providing ongoing service; and performing the renewal process each year for the client’s group program.
Guaranteed Coverage
The ACA mandates that insurance carriers allow individuals to enroll in some form of insurance regardless of health status, age, gender or other factors.

Health Insurance Marketplace/Exchanges
The federal and state online platforms created under the ACA and launched in 2013 for people to shop for, compare and buy health insurance. Plans are offered at various coverage and price levels.
Health Maintenance Organization (HMO)
A prepaid group practice where participating physicians are generally paid by salary rather than the traditional “fee-for-service.” The membership charge is based on a per capita prorata share of the projected annual operating budget. It stresses preventive care, early diagnosis, and outpatient treatment, and it provides a broad range of services in return for a fixed, periodic payment.
Health Reimbursement Arrangement (HRA)
An employer funded account used to reimburse employees for qualified medical expenses.
Health Savings Account (HSA)
Tax-exempt trust or custodial account created to pay for qualified medical expenses of the account holder and his/her spouse/dependents.
Home Health Care
The concept of administering health care services in patients’ homes using nurses or health aids.
A multi-disciplinary approach to treating patients with a life expectancy of six months or less. Refers to a physical facility or hospital ward.

Group insurance has two sorts of claims: paid and incurred. Paid claims afford specific known data, since cashed checks or drafts have to come back to the carrier to match reimbursement payments. However, there are always some claims that have occurred but on which the carrier has no record because they have not been reported or because certain papers are missing, etc. This is more often the case under major medical, where an underlying base plan and a deductible intervene between the onset of the disability and the receipt of all the bills and proof of loss.
As opposed to reimbursement, a contract that indemnifies pays the amount specified when the certain conditions are met. Thus, life insurance, accidental death and dismemberment, and weekly indemnity are “indemnity” rather than reimbursement benefits. There are certain hospital plans that indemnify, i.e., pay $10 per day for each day for which a room-and-board charge is made.
Individual Mandate
The ACA requires most Americans to enroll in and maintain health insurance that meets basic minimum standards. If you don’t enroll, you may have to pay a penalty on your annual income tax return.

Lifetime Limit
Before the ACA, insurance carriers could place a cap on the total lifetime benefits you receive from your insurance plan, whether it be on all coverage or for certain conditions. Beginning in January 2014, the ACA requires that lifetime limits no longer be allowed in most cases.
As is true of exclusions, limitations or restrictions are part of most contracts and help to define the limits of coverage. As they tend to prevent abuses, they serve to keep the premium from escalating. Limitations should be understood by all of the parties.

Managed Care Plans
Managed care plans generally provide comprehensive health services to their members, and offer financial incentives for patients to use the providers who belong to the plan.
Managed Care Provisions
Features within health plans that provide insurers with a way to manage the cost, use and quality of health care services received by group members.
Manual Rate
The premium rate developed for a group coverage from the insurer’s standard rate tables, usually contained in its rate or underwriting manual.
Master Application
The request for group insurance coverage signed by the prospective policyholder which initiates the procedures necessary to put the plan into effect.
Maximum Benefit
This is the maximum benefit any one individual may be eligible for under the group coverage.
Maximum Out-of-Pocket Expense
The maximum dollar amount a group member is required to pay out of pocket during a year. Until this maximum is met, the plan and group member shares in the cost of covered expenses. After the maximum is reached, the insurance carrier pays all covered expenses, often up to a lifetime maximum.
Medical Savings Accounts
A tax-preferred “account” used in conjunction with a high deductible plan. The moneys in this account are to be used for medical expenses.
Minimum Premium Plan
A plan where the employer and the insurer agree that the employer will be responsible for paying all claims up to an agreed-upon aggregate level, with the insurer responsible for the excess.The insurer usually is also responsible for processing claims and administrative services.
Multiple Employer Group
A group involving the employees of two or more employers, but one master contract.
Multiple Employer Trust (MET)
As defined earlier, these trusts enable employer units that cannot meet statutory definitions for group coverage to combine and purchase equivalent plans.

Negotiated Plan
Applies to the fringe benefits determined under a bargaining agreement for members of a labor union. These plans are referred to as “Taft-Hartley.” (See Taft-Hartley.)
A term used to describe a group insurance plan under which the employer pays the entire cost.

Open Enrollment Period
This is a time when employees who had previously been eligible for, but declined, coverage under an existing contributory group plan may enroll without presenting evidence of insurability.
Out-of-Pocket Expense
Expenses for medical care which the insured must pay and for which no reimbursement is made. These would include the deductible, coinsurance and expenses not covered under the group contract.

To market group insurance to smaller firms, many carriers use the “package” approach. In other words, there are certain fixed combinations of benefits for which they can apply. This eases the preparation of contracts, enrollment material, billing, and claim settlement. Each carrier has its own set of packages, so a Financial Representative should be familiar with what is offered in the area.
Package Plan
A plan comprised of several coverages with some options. However, the options must be selected by the employer, not the individual participant.
The number of insureds covered under the group plan in relation to the total number eligible to be covered, usually expressed as a percentage. Not to be confused with “percentage participation.”
Per Cause
Another major medical term that usually refers to the basis on which a deductible is accumulated or how the benefit maximum is applied. As contrasted with the calendar approach, each separate cause could require a separate deductible, and could run to a separate maximum benefit, regardless of the period in which incurred.
Physician-hospital organization (PHO)
Alliances between physicians and hospitals to help providers attain market share, improve bargaining power and reduce administrative costs. These entities sell their services to managed care organizations or directly to employers.
Point of Service (POS)
This type of plan marries the traditional indemnity plan and an HMO style plan. POS plans allow the employee the option of obtaining medical service from participating network physicians or non-participating physicians at the point that they require medical care (the “Point of Service”). If you use the network providers, most services are covered with a nominal copayment – no deductible, no coinsurance.
Pre-Existing Condition
A physical or mental condition that existed prior to the effective date of the person’s insurance.
Preferred Carrier
Carriers with which the Home Office has formed national marketing agreements to distribute their group insurance products. The preferred carriers were chosen for their quality, stability and long-term commitment to the group market place. More information on the preferred carriers is listed in the text.
Preferred Provider Organizations (PPO)
Groups of hospitals and physicians which contract on a fee-for-service basis with employers, insurance carriers or third-party administrators to provide comprehensive medical services to subscribers (insureds). In a PPO, subscribers have free choice of providers but have incentives to voluntarily limit choice to PPO participants. Providers usually are not at financial risk.
Agreed upon fees paid for coverage of medical benefits for a defined benefit period. Premiums can be paid by employers,unions, employees, or shared by both the insured individual and the plan sponsor.
Preventative Services
Routine services such as screenings and exams to prevent or detect illnesses, diseases or other health conditions.
Primary Care Physician (PCP)
A physician who serves as a group member’s primary contact within the health plan. In a managed care plan, the primary care physician provides basic medical services, coordinates and, if required by the plan, authorizes referrals to specialists and hospitals.
Probationary Period
The length of time a person must wait from the date of his entry into an eligible class or application for coverage to the date insurance is effective. Also sometimes referred to as the service period or waiting period.
A quotation submitted to a prospective group insurance policyholder. This quotation outlines benefits and costs under the plan being proposed.

Qualified Health Plan (QHP)
An insurance plan certified by the Marketplace that meets requirements such as providing essential health benefits.

Most medical care insurance is on a reimbursement basis; that is, benefits are based on actual charges made, and no more. In many instances this rules out treatment in governmental facilities that do not require that the patient pay for care.
Many major medical contracts provide that portions of the magnum benefit exhausted in prior claims will be reinstated following a specified period during which no benefits are payable.
Renewal Underwriting
The review of the financial experience of a group case and establishment of the renewal premium rates and terms under which the insurance may be continued.
When used in connection with group insurance, it refers to the year-end analysis of the experience of the pool or the risk itself. The carrier has to maintain certain legal reserves plus amounts for incurred but unknown claims, in addition to reserves for certain extensions such as maternity and major medical.
A campaign conducted to enroll persons in an existing group insurance plan who are eligible to participate but not covered for instance. Evidence of insurability may or may not be required.
Ordinarily the term “retention” will not come up within the context of smaller group plans. In larger cases, it is the amount over claims that the carrier feels is needed to run the plan, pay taxes, etc. Some carriers include commissions as retention items.
An amendment which modifies terms of the group contract or certificates of insurance. It may increase or decrease benefits, waive a condition or coverage, or in another way amend the original contract.

Schedule of Insurance
A list of the amounts of insurance for each coverage according to predetermined classifications which have been decided upon by the policyholder and insurer.
The method of administration under which the policyholder maintains all records regarding persons covered under a group insurance plan. Although some Self Administrative Plans are billed by the carrier, the policyholder generally prepares the premium statement for each premium due date and submits it with a check to the insurer.
An arrangement whereby an employer or employee group, or both, assume all the responsibilities and liabilities of an insurer.
Probably the best definition of self-insurance is “having no formal plan with a carrier.”
Medical care insurance generally gears reimbursement to semiprivate accommodations. Thus, where a private room is charged, the excess over prevailing semiprivate charges is not reimbursable and may not be a “covered expense” under major medical. Much less expensive for the buyer.
Stop Loss
Limits the employee’s out-of-pocket cost (co-insurance and deductible) for a given claim or time period. Plan pays 100% above the limit.

Tax Credits
Those eligible will receive tax credits to help pay insurance costs when they enroll on the Health Insurance Marketplace. Tax credits will make it easier for millions of low-and middle-class Americans to get health insurance.
Third Party Administrator
An individual or firm hired by an employer to handle claims processing, pay providers, and manage other functions related to the operation of health insurance. The TPA is not the policyholder or the insurer.
Trade Association Groups
Groups made up of many employers in the same industry. Group policies may be issued to cover the members of the trade association and their employees and dependents.

Waiting Period
There are two kinds of waiting periods. One of these concerns the eligibility of new employees. In certain types of businesses, it is practical to enroll only those who remain employed after a specified number of months. Thus, following two months on the job, the employee becomes eligible. The other type of waiting period is the hiatus between the onset of a disability and the date that the benefits commence. In a typical weekly indemnity plan, for example, the first eight days of an illness might be the waiting period.

Yearly Renewable Term (YRT)
The basis for most group life insurance in force today. Although it is assumed that the coverage will renew each year, there is a year-end calculation based on the new ages of the participants. If there has been no employee turnover during the year, then the rate should increase (by about 8 percent) because everybody is a year older. In practice, when older people retire, they are replaced by younger workers, so the life rate could actually go down.

Where we are

Strategic Wellness & Insurance
Management Services, Inc.

Phone: 646.366.6640
Fax: 212.869.5913
[email protected]

1 Liberty Plaza 165 Broadway,
19th floor,
New York, NY 10006

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15 Park Place,
Suite 3,
Bronxville, NY 10708

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