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Glossary of Insurance Terms

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


Disclaimer: This glossary contains general definitions of insurance terminology. For more complete definitions of terms that may apply specifically to you, please refer to the provisions contained in your health plan's policy.

A

Accelerated Death Benefit (ADB) - Benefit included on basic and supplemental group life insurance policies with a standard waiver of premium provision. Benefit issued on the date proof is received the insured is terminally ill with less than 12 months to live.

Accident or Accidental - Sudden, unexpected event that was not reasonable foreseeable.

Accident Guard - Insurance coverage designed to provide supplemental coverage in the event of accidental injury or death.

Accidental Death and Dismemberment Benefit (AD&D) - The benefit payable if an insured loses his life or a member of his body as a result of an accident, while insured under active policy.

Actively at Work or Active at Work - Employee is performing the normal duties of his occupation and working the number of hours set forth in the Application.

Activities of Daily Living (ADL) - Usual activities of an insured in the non-occupational environment, such as mobility, personal hygiene, dressing, sleeping and eating. Skills required for community or social living also are included.

Aggregate Attachment Point - Employer’s overall limit of claim liability during a contract period.

Aggregate Individual Maximum - Equal to the group’s Specific Deductible Level. Eligible claims that apply toward the individual maximum are based on two criteria: 1) type of benefits included in the aggregate plus 2) eligible claims that fall within the contract basis of the aggregate contract. The accumulation of claims that fall below the Individual Maximum will apply towards the aggregate attachment point.

Aggregate Stop Loss - Provides a ceiling on the dollar amount of eligible expenses that an employer would pay, in total, during a contract period.

Aggregating Specific - Option available to an employer that is designed to reduce specific premiums. The employer accepts additional liability up to a pre-determined amount specified by the carrier.

Anniversary Date or Renewal Date Flexible Benefits Plan - The anniversary of your Flexible Benefits Plan issue date or other date on which the Plan renews.

Application - Document which sets forth the eligible classes, the amounts of insurance, and other relevant information pertaining to the plan of insurance for which the Policyholder applied. The Application is attached to and forms a part of the policy, and shall include any subsequent amendments to the Application.

Automobile - Valid registered four-wheel passenger car (including policyholder-owned cars), station wagons, jeeps, pick-up trucks and van-type vehicles.

B

Base Annual Salary - The gross annual compensation prior to before-tax payroll deductions, if any, which an Insured earns from his occupation with the Policyholder and which was used in the calculation and remittance of premium.

Basic Weekly Wage - Gross weekly compensation prior to before-tax payroll deductions, if any, which an Insured earns from his occupation with the Policyholder and which was used in the calculation and remittance of premium.

Beneficiary - The person or persons designated by a policyholder to receive insurance policy proceeds.

Benefit - The amount payable by an insurer to a claimant, assignee or beneficiary.

Benefit Period - The length of time specified in a policy during which benefits will be paid to a disabled insured.

C

Cafeteria Plan - A written plan that meets the requirements of Code 125 and offers Covered Employees a choice between cash and particular nontaxable benefits, such as health insurance, thereby providing a funding mechanism by which employees may pay for the benefits they choose on a pre-tax basis.

Cancer Care - Insurance coverage that covers medical expenses related particularly to the treatment of cancer.

Child Tax Credit - Under Code 24, a credit against tax liability that a taxpayer may be able to claim for a qualifying child, regardless of whether any dependent care expenses are incurred.

Claimant - Insured or beneficiary exercising the right to receive benefits.

Class - The category into which insureds are placed in order to determine the amount of coverage for which they are eligible under the policy.

COBRA - The federal Consolidated Omnibus Budget Reconciliation Act of 1985, which established, among other things, the Group Health Plan continuation coverage rules that are found in ERISA, the Code and the Public Health Service Act (PHSA).

Code - The Internal Revenue Code of 1986, as amended.

Co-Insurance - A cost-sharing arrangement under which a covered person pays a specified percentage of the cost of a specified service, such as 20% of the cost of a doctor’s office visits.

Contract Basis - Timeframe in which claims are applicable to the stop loss policy.

Contributory - The insured pay a portion of the premium for group insurance coverage.

Conversion Privilege - A policy provision that is available if the employee’s life insurance or a portion of it terminates which allows an employee to convert to an individual life insurance policy without evidence of insurability.

Coronary Care - Insurance coverage that covers medical expenses related particularly to the treatment of coronary illnesses.

Constructive Receipt - A tax law doctrine under which an employer who is given a choice between cash and nontaxable benefits (e.g. employer–provided health insurance) must include in gross income the cash that could have been received. The doctrine of constructive receipt is frequently explained with the phase that “an employee can’t turn his back on taxable income." Code 125 provides a safe harbor from constructive receipt for Cafeteria Plans.

Controlled Group of Corporations - Two or more corporations with overlapping ownership, which are treated as a single employer for various purposes under the Code.

Coordination of Benefits - A clause included in health plans or established by law to determine the order of responsibility for benefits in situations where a Participant has coverage under more than one plan. Most plans use a variation of the NAIC model coordination of benefits rule (also known as the birthday rule).

Co-Payment - A cost-sharing arrangement under which a covered person pays a specified dollar amount for a specified service, such as $10 for a prescription or $20 for a doctor’s office visit.

Critical Illness - Insurance coverage that provides a lump sum payment upon first diagnosis of a covered “critical illness.” Covered Critical Illnesses are: Cancer, Carcinoma-in-Situ, Heart Attack, Stroke, End Stage Renal Disease, Major Organ Transplant Surgery, Quadriplegia, Coronary Artery Bypass Surgery, Balloon Angioplasty, Stent, or Laser Relief Obstruction Procedures.

D

DCAP - See “Dependent Care Assistance Plan."

DOL - The U.S. Department of Labor.

Deductible - An amount that a person must pay towards a covered health benefit before any benefit is payable from a plan.

Delinquent Filer Voluntary Compliance Program (DFVCP) - A DOL program that offers a procedure under which plans may correct failures to file Form 5500’s and pay a reduced penalty.

Dependent - Employee’s legal spouse; and/or any unmarried children of the insured, whether natural or adopted who are within the age limits as described in the group application; and not in active military service.

Dependent Care Account - A Flexible Benefit program that allows payment of Dependent Care expenses with pre-tax dollars for the care of a dependent.

Dependent Care Assistance Plan (DCAP) - A written plan that meets the requirements of Code 129, under which employees are provided with dependent care assistance. Most DCAP’s are Flexible Spending Arrangements (FSA’s) offered under a Cafeteria Plan.

Dependent Care Credit - Under Code 21, a credit against tax liability that a taxpayer may be able to claim for a qualifying dependent, if the taxpayer has certain employment-related dependent care expenses.

Dependent Life Insurance - Insurance benefit paid in the event of the death of an insured dependent any time from any cause.

Diagnosis - The determination of the nature and circumstances of a disease condition.

E

Effective Date - The date that insurance coverage goes into effect.

Eligibility Date - The date on which a member of an insured group may apply for insurance.

Eligibility Requirements - Underwriting requirements the applicant must satisfy in order to become insured.

Eligible Employees - Those employees who have met the eligibility requirements for insurance set forth in the policy.

Elimination Period - A period of time that the insured must wait before disability benefits are paid.

Employee - Actively at work, full-time, employee whose principal employment is with the Employer, at the Employer’s usual place of business or such place(s) that the Employer’s normal course of business may require, who is actively at work for the minimum hours per week as stated in the Application and is reported on the employer’s records for Social Security and withholding tax purposes.

Employee-Pay-All Plan - A group plan in which the insureds (employees) pay the entire premium.

Evidence of Insurability (EOI) - Statement of medical history to determine if employee is approved for coverage when amount of life insurance is in excess of the guarantee issue amount for group or late enrollees under a contributory plan or enrollees under a supplemental life program which does not meet minimum participation requirements.

Exclusions - The section of a policy that outlines specific circumstances under which benefits will not be paid.

F

Flexible Benefits Program or Flexible Spending Account - A program authorized by the IRS; offered through employers that allows employees to choose to pay for certain benefits with pre-tax dollars.

G

Gap Care - Supplemental medical expense insurance that helps bridge the gap between medical care expenses and most benefits not paid by your other medical plan.

Group Insurance - An arrangement for insuring a number of people (employees) under a single, master insurance policy.

Group Policyholder - The legal entity to which the master policy is issued.

Guarantee Issue Amount (GI) - Guaranteed benefit amount payable to the designated beneficiary in the event of the insured’s death.

I

Injury - Bodily injury resulting from an accident and independently of all other causes.

Insurance - A plan of risk management that, for a price, offers the insured an opportunity to share the costs of possible economic loss through an entity called an insurer.

Insured - The person (employee, dependent or group member) who is covered for insurance under the group policy and to whom, or on behalf of whom, the insurer agrees to pay benefits.

L

Limitations - See Exclusions

Long Term Care - A wide range of health and personal care – from simple assisted living arrangements to intensive nursing home care – for elderly or disabled person(s).

Long Term Disability (LTD) - Provides a reasonable replacement of monthly earnings to insureds that become disabled for extended periods of time due to accident or sickness.

Loss - (1) The amount of insurance or benefit for which the insurer becomes liable when the event insured against occurs; (2) the happening of the event insured against.

M

Material and Substantial Duties - Duties that are normally required for the performance of insured’s regular occupation and cannot be reasonably omitted or modified.

Medical Provider - Medical practitioner licensed to treat illness and acting within the scope of that license.

Medical Reimbursement Account - A Flexible Benefit program that allows for payment of out-of-pocket medical expenses with tax free dollars.

Minimum Attachment Point - The lowest amount the annual aggregate attachment point can be reduced when a drop in initial enrollment occurs.

N

Noncontributory - Policyholder pays 100% of the premium for group insurance.

P

Partial Disability or Partially Disabled - The insured is working, but as a result of an injury or sickness which caused Total Disability, the insured is able to perform one or more, but not all, of the material and substantial duties of his occupation on a full time or part time basis or is able to perform all of the material and substantial duties of his occupation on a part time basis and is earning less than 80% of his pre-disability earnings at the time the partial disability employment begins.

Pre-Disability Earnings - A sickness or injury, for which the insured received medical treatment, consultation, care or services, including diagnostic measures, or had taken prescribed drugs or medicines prior to his/her effective date of coverage.

Pre-Existing Condition - An injury or sickness that exists on the effective date of coverage.

Premium Conversion - A Flexible Benefit program that allows payroll deduction of eligible insurance premiums on a pre-tax basis.

Policy - The contract between the policyholder and GIS including the application which provides insurance benefits.

Policyholder - The person, firm, or institution named on the face of the policy. Policyholder also means any covered subsidiaries or affiliates set forth on the face of the policy.

R

Reasonable and Customary Charges (Usual and Customary Charges) - A charge for dental care that is consistent with the average rate or charge for identical or similar services in a certain geographic area.

Recurrent Disability - Allows continuation of LTD benefits if the insured returns to work for less than six months and is again disabled by the same or related causes.

Regular Occupation - Occupation routinely performed when a disability begins.

S

Seat Belt - Belts that form an occupant restraint system.

Seat Belt Benefit - Benefit paid if the insured suffers loss of life as the result of a covered accident which occurs while insured is driving or riding in an automobile if the automobile is equipped with seat belts and the seat belt was in actual use and properly fastened at the time of the accident.

Section 125 Plan - See Cafeteria Plan.

Short Term Disability (STD) - Provides non-occupational disability benefits and is payable when an employee becomes disabled due to accident, sickness or pregnancy and is under the regular care of a medical provider. The benefit amount, the day benefits begin, and the maximum period for which benefits are payable are chosen by the employer.

Sickness - Illness, disease, pregnancy or complications of pregnancy.

Specific Stop Loss - Limits the employer’s cost for eligible medical expenses for each covered individual (also known as individual stop loss, individual attachment point, deductible, retention, excess risk and pooling).

Stop Loss Coverage - Product that provides protection against catastrophic or unpredictable losses. Stop Loss coverage is purchased by employers who have decided to self-fund their employee benefit plans, but do not want to assume 100% of the liability for losses arising from the plans.

Supplemental Life - Sold in conjunction with basic group term life coverage.

T

Terminally Ill - Under the Accelerated Death Benefit, means an Insured has a life expectancy of 12 months or less due to a medical condition.

Total Disability or Totally Disabled - Due to Sickness or Injury, the Insured is unable to perform the main and important duties of any occupation for which the Insured is reasonably suited by means of education, training or experience.

V

Voluntary - Alternative or supplements to traditional group products, employee paid through payroll deduction.

W

Waiting Period - The period of time an employee must satisfy before being eligible for insurance.

Wavier of Premium - Insured’s life insurance benefit will continue without further payment of life insurance premium when an insured becomes totally disabled without interruption for at least six months. A claim must be filed with the insurer within 12 months after the date the disability began.