Explanation of Terms

A

Administration
The broad aspect of handling all functions of a group benefit plan once it has been sold. Service and claim functions may or may not be included.

B

Broker/Agent
An authorized representative of the group who solicits insurance contracts and services on the group's behalf even though he may be paid commissions by the insurance company.

C

Cafeteria Plan/Section 125
A flexible benefits plan, which generally complies with the requirements of IRC Section 125 and offers a choice of two or more benefits or a choice between cash and one more benefit.

Carrier
The insurer to a self-funded plan who agrees to underwrite (carry the risk) and provide certain types of coverage and service. The stop-loss carrier.

Claim
A demand to the plan by a covered person for payment of certain benefits provided by the plan.

Claim Adjudication
To properly adjust or adjudicate a claim based on eligibility, fee schedules, usual and customary amounts, and benefit coverage.

COBRA (Consolidated Omnibus Budget Reconciliation Act)
COBRA as it refers to benefits plans requires that coverage under the plan be continued for up to 18 months, at the employee's cost, when coverage under the plan is lost due to certain events. Continuation is also required for up to 36 months for dependents who lose coverage under the plan due to certain events. COBRA continuation applies to medical, dental, Flex, vision, prescription drug and all other health type coverage. It does not apply to disability of life coverage.

D

Dental Reimbursement Plan (DRP)
Plan that reimburses the insured for dental expenses incurred

E

Employee Benefit Plan
A plan established or maintained by an employer or employee organization or both. The purpose is to provide employees with a certain benefit such as medical insurance.

Employer
Any person acting directly as an employer or indirectly in the interest of an employer in relation to an employee benefit plan. The term may also include a group or association of employers.

Enrollment
The process of explaining the plan to the eligible employee and assisting them in properly completing their application for coverage.

Enrollment Form
A document signed by the employee as a notice of their desire to participate in the benefits of the plan. It may include health questions and questions relating to dependents who are being enrolled for coverage with the employee.

EOB (Explanation of Benefits)
A document that accompanies a claim check and summarizes how reimbursement was determined and among other things, explains the claim appeal process. If a check is not issued, the EOB summarizes how the claim was adjudicated (i.e. to deductible, denied as duplicate, etc.).

F

Fully Insured Plan
A benefit plan, which is purchased by the employer for fixed monthly premiums paid to the insurance company who bears the risk.

Funding
The providing of money for payment of claims incurred under a self-funded plan.

H

HIPAA
Health Insurance Portability and Accountability Act

HMO (Health Maintenance Organization)
A form of insurance, which provides benefits through specified providers who are under contract only. HMO's control costs by paying providers on a capitated rate regardless of the actual services provided.

I

ID Card (Identification Card)
A pocket size printed card issued to the employees who are covered under the plan.

M

Managed Care
An approach to controlling utilization, quality and cost of medical care using a variety of cost containment methods focused on incentives to choose less costly care and disincentives for choosing more costly care.

Medicare
Medicare, as it relates to benefits plans, outlines the order in which plans will pay benefits when Medicare also covers the person.

Medical Reimbursement Plan (MRP)
Plan that supplements a carriers high deductible plan and provides reimbursement of allowed medical charges paid by a carrier to the insured

P

Paid Claims
The dollar value of all claims paid under the plan during the plan year.

Plan Administrator
The person or entity named to administer the day-to-day operations of a plan. Typically the employer.

Plan Document
A comprehensive and detailed description of all provisions of the plan. The plan document is generally written in technical language.

Plan Sponsor
The entity that sets up the plan and is responsible for its funding and operation. Typically the employer. However, it may be an association or union in the case of groups that are not single employers.

POS (Point of Service) Gatekeeper
A form of insurance which utilizes a primary care provider to control access to medical services but, as opposed to an HMO or PSO, provides an out of network benefit.

PPO (Preferred Provided Organization)
An organization which contracts with providers of medical services (physicians and hospitals) to render services at discounted or pre-set fees to members of the PPO, in exchange for prompt payments and increased patient volume. The PPO then sells access to its network of providers to insurance companies and self-funded plans.

PSO (Provider Service Organization)
An HMO which is owned and operated by the providers rather than an insurance company.

Q

Quote
Also called a Proposal. The offer to a current or prospective case to underwrite specified risks and provide specified services at a quoted price. Quotes may be firm or subject to recalculation based on additional information.

R

Reimbursement Plan
A plan that provides reimbursement of expenses that have been paid as distinguished from an indemnity plan, which provides for the payment of expenses.

Renewal
The continuing of services to a plan who has been with the TPA or insurer during the past year.

S

Self-Funding
An arrangement under which some or all of the risk associated with a benefit plan is not covered by an insurance contract. The plan sponsor is responsible for that portion of the risk that is not insured.

Subrogation
The right of the plan to recover benefits paid to a covered person through legal suit, if the expenses incurred by the covered person and paid by the employer's plan are the fault of another party or individual. Also the right of the plan to be substituted in legal action against any party the covered person may recover from.

SPD (Summary Plan Description)
A comprehensive description of plan benefits, eligibility provisions and all limiting factors, which is written in a manner that will be easily understood by the average employee.

T

TPA (Third Party Administrator)
An outside company who provides professional services to the plan and employer such as collection of premiums, payment of claims, maintenance of eligibility records and other clerical services. A TPA operates on a service only basis and does not accept any risk under the plan.

U

UR (Utilization Review)
A cost control mechanism, which evaluates health care on the basis of appropriateness, necessity and quality. It may include pre-admission certification, concurrent review during hospital confinement, discharge planning, retrospective review of confinements and large case management.

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