Term |
Definition |
| 1099 EE’s | 1099 is a federal tax schedule used to report income for non-employees. Refers to employees who are not owner/partner/officers and who do not have their compensation reported on federal tax schedule W-2. Most insurance carriers do NOT consider these employees eligible or place strict conditions on their eligibility. |
| AB 1672 | Assembly Bill 1672. Legislation formulated by the CA State Assembly and approved by the governor in 1992 basically providing that insurance carriers marketing plans to employer groups between 2 and 50 eligible enrollees underwrite such groups on a “guaranteed issue” basis. This means that if an employer can prove they are a legitimate business entity with 2 or more full- time employees and can provide documention to support these claims, an insurance carrier MUST issue an insurance policy at the filed rate and only has the authority to apply a RAF of up to minus 10 or plus 10 percentage points to this rate based on their assesment of risk. Health issues within a 2-50 eligible group are irrelavent outside of the RAF determination. |
| AD&D | Abbreviation for Accidental Death and Dismemberment. A rider that offers a benefit for cerntained qualified accidental loss of life or certain qualified partial or total loss of extremities or eyesite. |
| Aggregate Deductible | Refers to a type of family deductible processing that mandates that the family deductible be satisfied before any one enrolled member gets into benefit. This is a “one for all, all for one” method that has it’s pros and cons. |
| Ancillary | Basically, describes benefits other than those covered under the group medical plan, I.e. chiropractic, vision dental, etc. |
| Benefits | Refers to services an insurance policy comits to pay for and how it will pay for them. |
| Brand Name | Refers to prescription medications that are marketed under a brand name and are often in patented and monopolistic manufacture resulting in much higher prices than for generic drugs. Newer brand name medication often have no generic equivalent. |
| Cal-COBRA | A state mandated right to continue employer group health insurance for groups of 19 or fewer full time employees. Employees pay their own premium and can remain on the plan for up to 36 months. |
| Carriers | Refers to insurance companies. |
| Carve-outs | Insurance policies written for a “carved-out” population in a group of employees who might otherwise be considered eligible. |
| COBRA | Consolidated Omnibus Budget Reconciliation Act of 1985. Affects groups of 20 or more full time employees The portion of which is relavent to health insurance provides for a right of continuation of employer group benefits after an employee has ceased to conventionally qualify by virtue of loss of full time status or termination of employment. Employee must pay their own premium and has the ability to remain on coverage for up to 36 months. |
| Coinsurance | The insured’s share of financial responsibility for a given benefit. Typically a percentage of negotiated fees collected after claims processing. |
| Composite Rates | A method of calculating employee rates based on averageing out age based rates and general group risk. Almost always used in reference to 51+ EE groups. |
| Consumer Directed Healthcare | Refers to the recent trend of of increased cost sharing of medical care with consumers. This involves high deductible PPO plans often in conjuction with self-funding tools such as HSAs. |
| Contracted Rates | The rates a participating provider with a given insurance carrier agrees to accept as payment in full. All charges for covered benefits above these rates must be written off and not billed to the insurance carrier or insured. |
| Contracted write-off | The amount over and above the contracted rate than must be written off by a participating provider and not billed to the insurance carrier or insured. |
| Co-payment | The insured’s share of financial responsibility for a given benefit. Typically a flat dollar amount collected at the time service is rendered. |
| DE-6 | A State of CA tax form used to report W-2 employee wages to the EDD (Employment Development Department) The chief tool used by underwriters to determine whether minimum participation is being met. |
| Deductible | An out of pocket requirement on a PPO plan prior to the payment of benefits. PPO plans typically have both individual and family deductibles. Family deductibles can be satisfied by either the aggregate or imbedded model. |
| Deductible carry-over | A feature many PPO plans offer that allows any deductible satisfied during the current calendar year on the previous plan to be credited towards the deductible on replacement plan. |
| Diagnostic | |
| Dual Option | The ability to write one PPO and one HMO plan for the same group with the same carrier. |
| Errors and omissions | Incorrect or omitted information given to a client that influenced their buying decision. Agents are liable for these mistakes and must carry liability insurance spedific to this risk in order to transact business. |
| First Dollar Benefit | Refers to benefits on a plan containing a deductible that may be accessed before the medical deductible is satisfied. These benefits are virtually always subject to applicable co-payments and/or co-insurance. |
| Formulary | An insurance carrier’s published list of preferred and/or covered brand name medications. FDA approved generics are virtually always covered under a plan’s generic drug benefit and not dependent on formulary listing. |
| Formulary | An insurance carrier list of preferred and in some cases, covered, prescription medications |
| Full Flex | A program that allows for pre-tax contributions for unreimbursed medical and dependent day care expenses under Sect. 125. |
| General Agent | A third party wholesaler that can provide multi-carrier quotes, sales and underwriting support for retail insurance brokers. A general agent often takes their compensation in the form of an “override”, a commission paid completely separate from the retail broker commission. |
| Generic | Refers to prescription medications that are off patent and manufactured by competing pharmaceutical companies and marketed under their generic pharmaceutical/chemical names. The combination of competition and the absence of advertising expense keep prices on these medications much lower than that of their brand name counterparts. |
| Group Life | Life insurance written for an employer group. It is often guranteed issue or subject to much less stringent “group” underwriting. |
| Gurantee issue | De |
| HMO | Health Maintenance Organization. A type of health insurance policy that requires members to select a participating PCP (Primary Care Provider) who provides first level care for all non-emergent issues and coordinates specialist care within the HMO network. HMO plans typically have more restrictive benefits and authorization requirements along with a much smaller network of available doctors in exchange for lower out of pocket expenses than PPO plans and usually, no deductibles. |
| Imbeded Deductible | Refers to a a type of family deductible processing that allows for the satisfaction of an individual deductible within the family deductible so that a heavy individual useer in the family can get into benefit sooner. |
| In Network | Providers in the preferred provider network or HMO network of the the plan in question. |
| Individual | Refers to insurance for individual applicants outside of employer groups. Individual insurance is fully medically underwritten. |
| Inpatient Hospital | A benefit category describing services received in a hospital involving an overnight stay. Often implies more involved, expensive procedures to be performed. |
| Large Group | In CA, refers to a group with 51+ eligible employees and therefore NOT covered under AB 1672 protections. |
| Mail order RX | A program that many insurance plans have that allows for a multi-month quantity of maintenance medications to be sent via mail to the subscriber. A discount often applies to the copayment in these programs. |
| Non-formulary | Medications that do not appear on an insurance carrier’s preferred list. Depending on the plan, these medications may not be covered as a benefit at all. |
| Out of Network | Providers out of the preferred network. This type of usage subjects the member to lower net benefits on a PPO plan and often, no benefits on an HMO plan. |
| Out of Pocket Max | The maximum financial exposure an insured has in a calendar year. This amount may or may not include the plan deductible on various carriers’ plan sumarries. |
| Outpatient Hospital | A benefit category describing services received in a hospital typically not involving an overnight stay. Often implies less involved, less expesive procedures. |
| Participation | An insurance carrier requirement specifying a certain level of enrollment in the plan relative to the number of employees eligible for coverage. |
| POP Plans | The simplest provision of Sect. 125 tax code that allows employee paid premiums to be separated from payroll pretax for the benefit of employees and employers. |
| PPO | Preferred Provider Organization. A type of health insurance policy that allows members to choose from a wide variety of providers without the coordination of a Primary Care Provider (gatekeeper). Provider visits are self-referred. The best benefit value on these plans are realized when member stays within the PPO network. PPO plans very often, although not always have deductibles that must be satisfied before certain benefits may be accessed. |
| Pre-existing waiting period | A waiting period imposed on PPO members who have not had previous coverage. This period can be up to 6 months but can be offset in whole or in part by creditable prior coverage. |
| Preventive | Benefits physical examinations and health screening of a purely preventative nature and not related to services dealing with a specific complaint or illness. |
| Providers | Refers to any provider of medical care. Can mean a doctor, hospital, laboratory, etc. |
| RAF | Risk Adjustment Factor. A 20 percentage point varialble “rate corridor” an insurance carrier can apply to their base (1.00) quoted rate for a given plan. RAF can be up to 10 percentage points higher than the base (1.10) or up to 10 percentage points lower (.90). Factors such as group size, group demographics and stated health conditions can all effect the RAF. |
| Riders | Describes additional policies that may be written simutaneously with group medical, often without additional paperwork or underwriting. |
| SB 578 | Senate Bill #578. Legislation formulated by the CA State Senate and approved by the governor providing that employer groups who had 50 or fewer eligibles for either 50% or more of the previous calendar year or for two consectutive calander quarters during the current calendar year (verified by DE-6 filings) are eligible for the provisions of AB 1672 “guranteed issue” legislation. |
| Sect. 125 | Part of the IRS tax code that allows everything from the pre-tax separations of employee paid premiums to pre-tax contributions for unreimbursed medical expenses to pre-tax contributions for dependent day care. |
| Small Group | In CA, refers to a group from 2-50 eligible employees and/or covered under AB 1672 protections. |
| Wrap | The act of writing a group with two or more insurance carriers. Often involves extensive restrictions and is usually used in the context of writing a Kaiser HMO plan with any given outside carrier. |