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Accidental Death and Dismemberment (AD&D) Insurance1
Insurance that gives additional benefits if an employee dies accidentally or suffers certain types of injuries. Coverage is commonly provided as a rider to a group life insurance contract but may also be provided through a separate group insurance contract.

Accumulation Period1
The time period within which expenses used to satisfy a per-cause deductible must be incurred for each illness or accident.

Aggregate Stop-Loss Coverage
Stop-loss coverage under which the insurance company is responsible if total claims under a self-funded plan exceed some specified dollar limit during a set time period.

A provision in a group benefit plan under which a covered person may transfer any or all rights under the contract (including benefit payments) to another party.


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.

Benefit Period1
The period of time benefits will be paid prior to which a new deductible for benefits must be satisfied.

Benefit Statement1
A personalized statement that specifies the benefit plans for which an employee is eligible and the explains what benefits are available to that particular employee and his or her family. It is usually given to employees on an annual basis.

Buy-Up Plan1
A benefit plan under which a covered person can purchase additional coverage at his or her own expense.


Cafeteria Plan1
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.

Calendar-Year Deductible
A deductible that applies to medical expenses incurred within a calendar year. A new deductible must be satisfied in a subsequent calendar year.

Carryover Provision1
A provision in a medical expense plan that allows any expenses applied to the deductible and incurred during the last 3 months of the year to be applied to the deductible for the following year.

Catastrophic Benefits Rider1
A rider to a disability insurance contract that provides additional benefits if the insured suffers a severe disability. The benefit triggers are the same criteria that trigger benefits in long-term care policies.

Certificate of Insurance1
A description of the coverage provided to employees.

A provision of the Consolidated Omnibus Budget Reconciliation Act of 1985 that requires group health plans to allow employees and certain beneficiaries to elect that their current health insurance coverage be extended at group rates for up to 36 months following a qualifying event that results in the loss of coverage. The provision applies only to employers with 20 or more employees. In addition, a person electing COBRA continuation can be required to pay a premium equal to as much as 102 percent of the cost to the employee benefit plan for the period of coverage for a similarly situated active employee to whom a qualifying event has not occurred.

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

Coinsurance Limit1
A stop-loss limit under which covered expenses are paid in full after a specified dollar amount of expenses have been subject to a coinsurance provision.

Common Deductible1
The term used for a medical expense plan deductible if there is a single deductible that applies to the aggregate expenses of each family member. There is no separate deductible for individual family members.

Consumer-Choice Plan1
See Consumer-Directed Medical Expense Plan.

Consumer-Directed Medical Expense Plan1
A medical expense plan that gives the employee increased choices and responsibilities with the selection of his or her own medical expense coverage.

Contributory Plan1
An employee benefit plan under which participants pay a portion, or possibly all, of the cost of their own coverage.

A fixed-dollar amount that an insured must pay for a covered service under a medical expense plan.

Creditable Coverage1
Coverage under a medical expense plan for purposes of HIPAA. The coverage must have existed within the last prior 63 days.


The initial amount of medical expenses an individual must pay before he or she will receive benefits under a medical expense plan.

Dental Health Maintenance Organization (DHMO) 1
An HMO that provides dental care only.

Most commonly defined under a group medical expense plan to include an employee’s spouse who is not legally separated from the employee and any other unmarried dependent children (including stepchildren and adopted children) under age 19 or, if full-time students, age 23, 24, 25, 26.

Dependent Life Insurance1
Group life insurance on the lives of eligible dependents of persons covered under the plan. Amounts of coverage are usually limited, and the employee is automatically the beneficiary.

Direct Reimbursement1
A self-funded dental insurance plan under which employee selects the provider of dental services, pays any charges incurred, and submits the bills to the employer for reimbursement.

Disability Income Insurance1
Insurance to partially or totally replace the income of employees who are unable to work because of sickness or accident.

Discount Plan1
A dental or other benefit plan that provides members with a discount on the purchase of professional services.

The refund by mutual insurance companies to groups that are experience rated and have had better claims experience than anticipated.

Domestic Partners1
Usually defined to mean unmarried couples as long as they live together, show financial interdependence and joint responsibility for each other’s common welfare, and consider themselves life partners.


Eligibility Provision1
A provision in a group insurance plan that determines who will be eligible for coverage under the plan and when coverage will begin.

Elimination Period1
See Waiting Period.

Employee Benefits1
All benefits and services, other than wages for time worked, that employers provide to employees in whole or in part. Narrower definitions include only employer-provided benefits for situations involving death, accident, sickness, retirement, or unemployment.

The signing up of participants for coverage in an employee benefit plan.

Evidence of Insurability1
The requirement that an applicant meet the underwriting standards of an insurance company before coverage is issued.

A provision in an insurance contract that indicates situations that the insurer does not intend to cover.

Expected Claims1
The portion of premiums paid that the insurance company anticipates will be necessary to pay claims during the experience period.


Family Deductible1
A provision in a major medical plan that waives future deductibles for all family members once a specified aggregate dollar amount of medical expenses has been incurred or after a specified number of family members have satisfied their individual deductibles.

Fee Schedule1
A list of covered benefits and the maximum fee that will be paid to the provider of benefits. Such a schedule is found in many surgical expense policies, dental policies, vision care plans, and group legal expense plans.

First-Dollar Coverage1
Coverage for benefits without a deductible or percentage participation.

Flat-Benefit Schedule1
A benefit schedule under which the same amount of coverage is provided for all employees regardless of salary or position.

Flexible Benefit Plan1
See Cafeteria Plan.

Flexible Spending Account (FSA) 1
A provision in a cafeteria plan that allows an employee to fund certain benefits on a before-tax basis by electing to take a salary reduction, which can then be used to fund the cost of any qualified benefits included in the plan. Benefits are paid from an employee’s account as expenses are incurred, but monies in the account are forfeited if they are not used by the end of the plan year.

Full-Time Employee1
An employee who works no fewer than the number of hours in a normal work week. For insurance purposes, the employee generally must work at least 30 hours.


A physician who serves as a managed care member’s initial contact for medical care and who authorizes the use of specialty physicians.

Grace Period1
A period specified in a group insurance contract (usually 31 days) during which a policyowner may pay any overdue premium without interest.

Group Benefits1
A broad term that refers to retirement plans and welfare benefits.

Group Insurance1
A method of providing employee benefits, characterized by a group contract, experience rating of large groups, and group underwriting.

Guaranteed Issue1
Group insurance coverage issued without an employee’s having to provide evidence of insurability.


Health Insurance1
Protection against the financial consequences of poor health. It includes disability income insurance, medical expense insurance, and long-term care insurance.

Health Insurance Portability and Accountability Act (HIPAA)1
Federal legislation, passed in 1996, that reforms the health care system through numerous provisions. One of the act’s primary purposes is to make insurance more available, particularly when an employed person changes jobs or becomes unemployed.

Health Maintenance Organization (HMO)1
A managed system of health care that provides a comprehensive array of medical services on a prepaid basis to voluntary enrolled persons living within a specific geographic region. HMOs both finance health care and deliver health services. There is an emphasis on preventive care as well as cost control.

Health Reimbursement Arrangement (HRA)1
A type of personal savings account from which unreimbursed medical expenses can be paid. It can be used by employees or the self-employed and is established in conjunction with a high-deductible medical expense plan.

Health Savings Account (H S A)1
A type of personal savings account from which unreimbursed medical expenses can be paid. It can be used by employees or the self-employed and is established in conjunction with a high-deductible medical expense plan.

High-Deductible Health Plan1
A medical expense plan that uses insurance policies with high deductibles, often as much as $5,000 or more. They are commonly used with consumer-directed medical expense plans.

See Health Insurance Portability and Accountability Act.

See Health maintenance Organization.

Hospital Expense Coverage1
Benefits provided under a medical expense plan for hospital charges incurred. Benefits are for room and board and other charges for certain services and supplies ordered by a physician during a person’s hospital confinement.

Hospital Precertification1
A requirement under many medical expense plans that a covered person or his or her physician obtain prior authorization for any nonemergency hospitalization.

See Health Reimbursement Arrangement

H S A1
See Health Savings Account.


Incontestability Provision1
A provision in a group insurance contract stating that, except for the nonpayment of premiums, the validity of the contract cannot be contested after if has been in force for a specified period, usually either one or 2 years.

Initial Deductible1
A deductible that must be satisfied before any benefits are paid under a medical expense plan.


Life Insurance1
The transfer to an insurance company of part of the financial loss due to the death of an insured person.

Lifetime Maximum1
A specified overall maximum that applies to all benefits paid during the entire period an individual is covered under certain types of health insurance contracts.

Long-Term Disability (LTD) Income Insurance1
Disability insurance that provides extended benefits (possibly for life) after an employee has been disabled for a period of time, frequently 6 months.


Major Medical Coverage1
A medical insurance plan designed to provide substantial protection against catastrophic medical expenses. There are a few exclusions and limitations, but deductibles and coinsurance are commonly used.

McCarran-Ferguson Act (Public Law 15)1
A federal law that exempts insurance from certain federal regulations to the extent that individual states actually regulate insurance. It also provides that most other federal laws are not applicable to insurance unless they are specifically related to the business of insurance.

A federal/state program to provide medical expense benefits for certain classes of low-income individuals and families.

Medical Expense Insurance1
Protection against financial losses that result from medical expenses because of accident and/or illness.

The health insurance program of the federal government that is available to persons who are aged 65 or older and to limited categories of persons who are under age 65.

Medicare Supplement
A medical expense plan for those aged 65 or older under which benefits are provided for certain specific expenses not covered under Medicare. These may include a portion of expenses not paid by Medicare because of deductibles, coinsurance, or copayments and certain expense excluded by Medicare, such as prescription drugs.

A person who is covered by a managed care plan that uses network providers.

Modified Guaranteed Issue1
An underwriting category that falls between guaranteed issue and simplified issue. The insurer accepts most applicants but asks few medically related questions that may result in the declination of a small number of applicants.

The death rate of a group of persons covered under a benefit plan.


See National Association of Insurance Commissioners.

National Association of Insurance Commissioners1
An association composed of state insurance regulatory officials that has as its goal the promotion of uniformity in legislation and administrative rules affecting insurance.

Newborns’ and Mothers’ Health Protection Act1
Federal legislation that establishes minimum hospital stays for maternity that must be covered by insurance carriers.

Noncontributory Plan1
An employee benefit plan under which the employer pays the entire cost of the coverage.


Open-Access HMO
An HMO that allows members to see network specialists without going through a gatekeeper.

Open-Enrollment Period
The time during which coverage can be obtained or changes made under an employee benefit plan and during which the evidence-of-insurability requirement is lessened or waived.

Out-of-Pocket Limit1
A stop-loss limit under which covered expenses are paid in full after an individual has incurred a specified amount of out-of-pocket costs for deductibles, copayments, and percentage participation.

Over-the-Counter Drug1
A drug for which no prescription is required. Except for injectable insulin, such drugs are seldom covered under prescription drug plans.


Partial Disability1
A disability that is neither total or permanent but leaves an employee unable to perform some of the duties of his or her job.

Per-Cause Deductible1
A deductible amount that must be satisfied for each separate accident or illness before major medical benefits are paid.

Per-Cause Maximum1
A maximum benefit in a medical expense plan for all expenses arising from a certain cause.

Point-of-Service (POS) Plan
A medical plan that provides both in network and out of network benefits. The in network benefits is an HMO.

The ability to continue employer-provided or employer-sponsored benefits after the 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.

See Preferred-Provider Organization.

Preexisting-Conditions Provision1
A provision that excludes coverage, but possibly only for a limited period of time, for a physical and/or mental condition for which a covered person in a benefit plan received treatment or medical advice within a specified period before becoming eligible for coverage.

Preferred-Provider Organization (PPO)1
A benefit plan that contracts with preferred providers to obtain lower costs for plan members • groups of health care providers that contract with employers, insurance companies, union trust funds, third-party administrators, or others to provide medical care services at a reduced fee. PPOs may be organized by providers themselves or by such organizations as insurance companies, the Blues, or groups of employers.

The total price that a group insurance policyowner pays for the entire amount of coverage purchased.

Premium Rate1
The price for each unit of group insurance benefit, such as each $1,000 of life insurance.

Prescription Drug Plan1
A benefit plan that covers the cost of drugs that are required by law to be dispensed by prescription.

Privacy Standards1
HIPAA rules that protect the privacy of personal health information.

Probationary Period1
A period of time that must be satisfied before an employee is eligible for coverage under a group benefit plan.

Provider Network1
A list of medical care providers that members of a managed care plan are encouraged to use, usually with financial incentives.


Qualified Beneficiary1
For purposes of COBRA, any employee, spouse, or dependent child who was covered under the employee’s group insurance plan on the day before a qualifying event.

Qualifying Event1
Under COBRA, an event that results in loss of coverage by a qualified beneficiary or an increase a qualified beneficiary must pay for coverage.


A unit price for each unit of insurance benefit.

Reasonable-and-Customary Charge1
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.

An authorization by a gatekeeper for a managed care plan member to receive treatment by a specialist. Without a required referral, benefits will not be paid or will be reduced.

An endorsement to an insurance policy for the purpose of adding, deleting, or classifying coverage.


Second Surgical Opinion1
A cost-containment strategy under which covered persons are encouraged or required to obtain the opinion of another physician after certain categories of surgery have been recommended. If a second opinion is mandatory, benefits are reduced if the second opinion is not obtained. Benefits are usually provided for the cost of a third opinion if the opinions of the first two physicians are in disagreement.

Section 125 Plan1
See Cafeteria Plan.

Settlement Options1
The methods by which proceeds from a group life insurance contract can be received. In general, proceeds are payable in a lump sum unless the insured or the beneficiary has selected an optional form of settlement.

Short-Term Disability (STD) Income Plans1
Disability income plans that provide benefits for a limited period of time, usually 6 months or less.

Social Insurance1
Government-run or –regulated insurance programs designed primarily to solve major social problems that affect a large portion of society. Distinguishing characteristics are compulsory employment-related coverage, partial or total employer financing, benefits prescribed by law, benefits as a matter of right, and emphasis on social adequacy.

Social Security1
The term commonly used to identify the old-age survivors, and disability insurance (OASDI) program of the federal government.

See Short-Term Income Plans

Stop-Loss Coverage1
The maximum amount of out-of-pocket expenses that a covered person must bear during a period of time under a medical expense plan; sometimes called coinsurance limit • the maximum amount of any claim that is charged to a group in an experience-rating calculation.

Supplemental Life Insurance1
Additional life insurance that all or certain classes of employees may purchase. Coverage is generally contributory and either incorporated into a basic group life insurance contract or contained in a separate contract.

Supplemental Major Medical Coverage1
A major medical plan that is coordinated with various basic medical expense coverages.

Survivor Income Benefit Insurance1
A group life insurance plan designed to relate benefits to the actual needs of each employee’s survivors. Benefits are paid in the form of periodic income to specific dependents who survive the employee, and no death benefits are paid unless an employee has qualified survivors.


Tiered Structure1
An approach under which different copayments or percentage participation apply to different categories of products or services. For example, a prescription drug plan might have different copayments for generic, formulary brand name, and nonformulary drugs.


The process by which an insurance applicant is evaluated, decisions are made on his or her acceptability for insurance, and a rating basis is established.

Universal Coverage1
Coverage for all Americans under some type of universal health plan.


Vision Plan1
An employee benefit plan that provides 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.


Waiting Period1
A period of time that an employee must be disabled (or otherwise wait) before benefits commence under certain employee benefit plans, such as disability income insurance, Social Security, and workers’ compensation insurance. Waiting periods for disabilities resulting from accidents may differ from waiting periods for disabilities resulting from sickness. Waiting periods are also used in long-term care insurance.

Workers’ Compensation Insurance1
A social insurance program 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.



1. Beam, Burton T., Jr. Group Benefits: Basic Concepts and Alternatives. The American College Press/Bryn Mawr, Pennsylvania. 2006.