Q: What is Actively-At-Work?
A: A contract provision that provides that the coverage will only be available for employees actively at work on a full time basis on the effective date of the coverage. Those not actively at work on that date become eligible upon their return to work. The matching provision for dependent coverage is often a not-hospital-confined provision.
Q: What is a MEWA?
A: Multiple Employer Welfare Arrangement
Q: What is a MET?
A: A Multiple Employer Trust
Q: What is AD&D?
A: Accidental Death & Dismemberment
Q: What is meant by Administrative Services Only (ASO)?
A: An arrangement under which a company, for a fee, processes claims and handles paperwork for a self-funded group. This frequently includes all services (actuarial services, underwriting, benefit description, etc.) No assumption of risk is assumed by the company under this agreement.
Q: What is Adverse Selection?
A: The tendency of a higher risk persons or groups to seek coverage more less than risky persons or groups, for example, people with poor health applying for a higher benefit plan while those younger or of good health do not apply (or pay) for a higher benefit plan.
Q: What is Aggregate Factor?
A: The dollar figure that is multiplied by the number of covered persons each month during the contract period to calculate the Annual Attachment Point. It includes expected claims plus margin.
Q: What is Aggregate Stop Loss?
A: The form of excess coverage that provides for the employer against the accumulation of claims exceeding a stated level. This is protection against abnormal frequency of claims in total rather than abnormal severity of a single claim.
Q: What is Annual Attachment Point?
A: This number represents the overall limit of claim liability for the group (employer). Beyond this point the Stop Loss policy indemnifies the group at the end of the contract period. This is also called the aggregate deductible or trigger point.
Q: What is COBRA?
A: COBRA – Consolidated Onmibus Budget Reconciliation Act. Legislation relative to mandated benefits for all types of employee benefits plans. The most significant aspects are the requirements for continued coverage up to 36 months (30 months for dependents in the event of the employee’s death) for employees and/or their dependents under the plan which would otherwise loseWeight Exercise coverage.
Q: What is Conventional Funding?
A: Fully insured plans. Typically premiums are paid monthly in advance and experience is not normally part of the policy provisions.
Q: What is Conversion?
A: An individual health policy issued to an employee or dependent leaving a group health plan. The conversion policy is issued without regard to pre-existing conditions at actuarially determined rates. The benefits are generally limited.
Q: What does Coordination of Benefits (COB)
mean?
A: The contract provision that prevents a claimant form profiting by collecting from two different group plans. COB provisions provide for primary and secondary status for the various plans involved and seek to guarantee that the total paid by all will not exceed 100% of the out-of-pocket expenses of the claimant.
Q: What is Cost Containment?
A: Features in a plan of benefits or in the administration of a plan designed to reduce or eliminate specific charges to the plan such as charges for unnecessary surgery or hospital days thus improving the plan’s loss experience.
Q: What is a Covered Employee?
A: A person meeting the definition of eligibility in the employer’s plan document.
Q: What is Deposit Premium?
A: The amount required in order to place a Stop Loss policy in force, generally the first month’s premium.
Q: What is DRG?
A: Diagnostic Related Group. This is a prospective payment system that pays a set amount for a given diagnosis. If treatment actually costs less, the provider keeps the excess; if treatment costs more, the provider loseWeight Exercises.
Q: What is ERISA?
A: ERISA – Employee Retirement Income Security Act of 1974. This is the basis of most employee benefit legislation. Even new laws and changes are normally designed as amendments to ERISA. This federal legislation allows for and sets guidelines regarding a group’s ability to self-fund their benefits. The legislation also establishes for rules, regulations, and standards.
Q: What is Expected Paid Claims?
A: An estimate of the dollar value of claims to be paid during the contract period.
Q: What is Experience Period?
A: A historical period with specific beginning and ending points for which paid claims and covered employees are known. To have a complete understanding of the experience period, it is also necessary to know what the plan design was, whether it was the first or subsequent contract period.
Q: What is meant by Final Enrollment?
A: A complete listing of employees covered on the effective date of coverage. They must be eligible by the definition established in the plan document.
Q: What is Final Underwriting?
A: A review of quoted rates and factors upon receipt of requested additional documents and data to firm up a conditional offer.
Q: What is Form 5500?
A: The annual filing form for ERISA.
Q: What is meant by the term “Ground Up”?
A: Refers to a claim from the first dollar payable by the claimant as opposed to the first dollar payable by the self-funded plan, the Stop Loss plan or the reinsurer of the Stop Loss plan.
Q: What is a HMO?
A: Health Maintenance Organization. This is an organization that provides comprehensive and preventative health care services for a fixed periodic payment capitation rate form the covered person (or the covered person’s employer) generally through owned (or contracted) facilities and a salaried medical staff.
Q: What is IBNR?
A: Incurred But Not Reported – a reserve for claims that have been incurred but not yet been submitted for payment. This is the reserve intended to cover claim run-out upon termination of the health plan.
Q: What is meant by the terms Incurred and Paid?
A: This is an expense both incurred during the contract period and paid during the same contract period.
Q: What are Incurred Claims?
A: This refers to the accrual method of accounting for all known and unknown claims. Includes paid claims plus adjustments for claims reported but not yet paid and those incurred but not reported.
Q: What is the Incurred Date?
A: The date the covered service is rendered.
Q: What is Lag?
A: The delay between the actual time a service is rendered, or an item is supplied, and the time it is paid and recorded. Lag includes both claims that have not yet been submitted, and claims that have been submitted and not yet paid. Lag is the result of administrative efficiency of the provider, the employer (if the employer involvement is required in supplying claim forms or verifying eligibility), the employee and the claim administrator.
Q: What is Lifetime Maximum?
A: (a) Maximum payable under the employer’s plan per person. (b) Maximum payable under the Specific Stop Loss contract per person. Please note that (b) cannot be higher than (a), but that (a) may be higher than (b), in which case the employer has an uninsured exposure.
Q: What is a Loss Fund?
A: A term of for the funds the group has (or should have) set aside for the payment of claims based upon the covered persons and the Aggregate factors. The Loss Fund should cover the expected claims and the margin.
Q: What are Manual Rates?
A: A rate or other factor based on actuarial estimates rather than on the group’s own experience. Manual rates are used when there is no history of previous claims available for underwriting the plan.
Q: What is the Margin?
A: The difference between expected paid claims and the Aggregate deductible. Granting that the expected claims will most likely be paid in any circumstance, the margin is the corridor of risk the employer is accepting in his self- funded program.
Q: What is the Minimum Attachment Point?
A: The lowest Aggregate stop loss attachement point to be used for a contract period, generally stated as a dollar amount or as a percent of the first month’s calculated Aggregate deductible time the number of months in the contract period.
Q: What is a Paid Claim?
A: Payment occurs on the date the payment check is issued (or the draft is drawn), provided it is promptly delivered to the payee and is paid upon presentation. Other definitions of paid focus on the date the payment clears or is recorded as cleared in the company’s records.
Q: What is a Participating Employer?
A: S company, and its subsidiaries, electing to take part in a trust sponsoring membership.
Q: What is a PPO?
A: A PPO is a Preferred Provider Organization. A group of providers that have banded together in hopes of preserving and enlarging their market share by providing discounted services to groups with which they have contracts. These organizations can be of two types: (a) one is risk-bearing and provides its services in exchange for a pre-set monthly payment; (b) the other is non-risk bearing and provides discounts off its usual charges.
Q: What is a Provider?
A: A generic term for doctors, hospitals, nurses, dentists, therapists, and others who provide health care services.
Q: What is Retention?
A: The portion of the contribution retained as its cost of doing business including services fees, claims, and other administrative expenses.
Q: What is a Schedule of Benefits?
A: An outline of the benefits described in the plan document. Often supplies the exact values of items referred to in the body of the plan document such as the deductible.
Q: What is Self-Funding?
A: The method of providing employee benefits in which an employer group does not purchase conventional insurance but rather elects to pay claims directly utilizing a Stop Loss Agreement to cover abnormal risks or large losses.
Q: What is Shock Loss?
A: A large loss that significantly affects the experience of a group. Generally claims on a single claimant during a single contract period.
Q: What is SIC?
A: SIC – Standard Industrial Classification Code. This is the statistical classification standard underlying all establishment-based Federal economic statistics classified by industry. The manual is available from the National Technical Information Services and is the guiding document for employer eligibility.
Q: What is Specific Stop Loss?
A: The form of excess risk coverage that provides protection for the employer against a high claim on any one individual.
Q: What is a Specific Deductible?
A: The dollar amount paid by an employer’s plan before the Stop Loss policy will reimburse additional expenses.
Q: What is Stop Loss Coverage?
A: A general term referring to the category of coverage that provides insurance protection to an employer for his self-funded plan. This is also known as Excess Loss or Excess Risk.
Q: What is a Summary Plan Document (SPD)?
A: The description of employee benefits required to be distributed by ERISA to the employees covered under a plan. A synopsis of the benefits, usually in simple language is also included, which does not include all details of the plan.
Q: What is a TPA?
A: A TPA is a Third Party Administrator. This is usually a non-risk-bearing company that provides claims and administrative services for a self-funded client.
HCP National is a CA stop loss company whose home office is in Southern California. Experts in employee benefits, employer stop loss, MEWA stop loss reinsurance and MET stop loss reinsurance and Managed Care Stop Loss: Provider Stop Loss, HMO Reinsurance, and ACO Stop loss reinsurance. The above are generally accepted insurance definitions, but always consult your insurance policy for their definitions as it relates to your insurance.
