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Glossary of Terms

  • 401(k) Plan

    An employer-sponsored retirement plan that has become an expected benefit and is therefore important in attracting and retaining employees. A 401(k) plan allows employees to defer taxes as they save for retirement by placing before-tax dollars directly into an investment account. Employers can also contribute to the plan tax-free, for instance by matching contributions.

  • AD&D - Accidental Death and Dismemberment

    In insurance, accidental death and dismemberment (AD&D) is a policy that pays benefits to the beneficiary if the cause of death is an accident.

  • Age Banded Rates

    Small groups are charged with what the insurance industry calls “age-banded” rates. Age-banded simply means age-based. In other words, cost is assessed for the age of each employee and spouse in the group.

  • Americans with Disabilities Act (ADA)

    The ADA is a civil rights law that prohibits discrimination against individuals with disabilities in all areas of public life, including jobs, schools, transportation, and all public and private places that are open to the general public.

  • Beneficiary

    A beneficiary is the person or entity you name in a life insurance policy to receive the death benefit.

  • Cal-COBRA

    A California health coverage protection. Cal-COBRA requires employers with 2 to 19 employees to provide their employees (and their dependents) the right to continue health insurance coverage after a qualifying event occurs. If you elect to receive COBRA benefits, you will pay 100% of the total premium for your benefits plus a 2% administrative fee.

  • Certificate of Insurance

    A certificate of insurance is a document used to provide information on specific insurance coverage. The certificate provides verification of the insurance and usually contains information on types and limits of coverage, insurance company, policy number, named insured, and the policies’ effective periods.

  • Claim

    A demand to the insurer by the insured person for the payment of benefits under a policy.

  • Coinsurance

    A percentage of the charges that you pay for covered services. For example, a 20 percent coinsurance on a $200 procedure means you pay just $40.

  • Composite Rate

    An insurance premium based on the average risk profile of a group rather than the risk profile of an individual policyholder. A composite rate implies that all members of a particular group pay the same insurance premium for insurance against a specific peril.

  • Contingent Beneficiary

    If you choose to name more than one person to receive a benefit, you can name some to be primary and others to be secondary (also called contingent). Primary beneficiaries are first in line to receive benefits. Secondary beneficiaries receive a benefit if the primary beneficiary for that specific share has already died when the benefit becomes payable.

  • Contract

    An insurance contract is the legal agreement with your insurance company that sets out the terms of your coverage. The contract usually includes your application, the policy, and any changes made later to the policy.

  • Coordination of Benefits

    Families with two working adults may be covered by more than one health or dental plan. If your primary plan doesn’t pay the full amount of an expense, you can submit a claim to the other plan for the balance. In this way, you can receive up to 100% of your expense.

  • Copayment (copay)

    The set amount you pay for covered services – for example, a $10 copay for an office visit. For example, a $10 office visit copay means you’ll pay $10 for each office visit.

  • Covered Expenses (also called eligible expenses)

    Specified hospital, medical and miscellaneous health care expenses that will be considered in the calculation of benefits due under a health insurance policy.

  • Date of Service

    The actual date the service was rendered.

  • DE9C Form

    DE9C is the quarterly wage and withholding report for California employers. The form is used to report wage and payroll tax withholding information for California employers. In a way, it is the California equivalent of the Form 941 except the detailed withholding for each employee is reported.

  • Deductible

    The amount of covered expenses that must be incurred and paid by the insured before benefits become payable by the insurer.

  • Dental Insurance

    A type of insurance that provides coverage for dental expenses. It’s usually provided as part of a group plan, but you can also buy it on its own.

  • Dental Maximum Allowable Charge (MAC)

    The fees, on which program deductibles, maximums and coinsurance percentage are based, that a dental program will reimburse a dentist for a service as defined by contract. This is the amount that can be charged back to patients. This is also referred to as the maximum allowable charge (MAC). Dentists have agreed to accept a maximum plan allowance based on the agreements they have signed with Delta Dental. This does not apply to non-participating dentists.

  • Dependent Life Insurance

    Life insurance for an employee’s spouse or children.

  • Disability

    A physical or mental condition that makes an insured person incapable of performing one or more duties of his or her occupation.

  • Disability Benefit

    A benefit added to some life insurance policies providing for waiver of premium and sometimes payment of a monthly income if the insured becomes totally and permanently disabled.

  • Disability Income Insurance

    A form of health insurance that provides periodic payments when the insured is unable to work as a result of illness or injury.

  • Eligibility Period

    The length of time you must be a member of a group before qualifying for coverage under the group plan. For example, an organization whose health and dental plan has a 90-day eligibility period would require 90 days of qualified employment before coverage could begin.

  • Elimination Period

    The waiting period an employee must be disabled before disability benefits become payable.

  • Emergency

    An acute, unexpected or unforeseen illness or accidental injury which results in a sickness or accidental bodily injury of the insured.

  • Employee (EE)

    EE stands for Employee. It also stands for Employee Contribution.

  • Employee Assistance Program (EAP)

    Provides counseling and other services to employees.

  • Employee Retirement Income Security Act (ERISA)

    The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in these plans.

  • Employer (ER)

    ER Stands for Employer or Employer Contribution.

  • Essential Health Benefits (EHB)

    The Affordable Care Act requires non-grand-fathered health plans in the individual and small group markets to cover essential health benefits (EHB), which include items and services in the following ten benefit categories: (1) ambulatory patient services; (2) emergency services; (3) hospitalization; (4) maternity and newborn care; (5) mental health and substance use disorder services including behavioral health treatment; (6) prescription drugs; (7) rehabilitative and habilitative services and devices; (8) laboratory services; (9) preventive and wellness services and chronic disease management; and (10) pediatric services, including oral and vision care.

  • Evidence of Coverage (EOC)

    A document that shows detailed information about your benefits and coverage. Your employer’s human resources department should be able to provide you with a copy.

  • Evidence of Insurability (EOI), or Evidence of Good Health

    A medical questionnaire an employee must complete to disclose medical history.

  • Exclusions

    Things that are not covered by an insurance policy. They can include certain medical conditions you had before you applied for the insurance; high-risk activities such as sky-diving. You can sometimes buy extra insurance to pay for risks that wouldn’t otherwise be covered.

  • Exclusive Provider Organization (EPO) Plan

    A managed care plan where services are covered only if you go to doctors, specialists, or hospitals in the plan’s network (except in an emergency).

  • Explanation of Benefits (EOB)

    A summary of services received, including dates received and the provider’s name. An EOB is not a bill, but it can help you keep track of your health care expenses. There may be times when you receive an EOB rather than a Summary of Accumulation (SOA) — for example, if your employer’s plan is self-funded or you received emergency care from a non-Kaiser Permanente provider.

  • Extended Health Insurance (EHC)

    A form of health insurance that provides, in one policy, protection for hospital and medical expenses not covered by government programs and usually other health care expenses, such as prescribed drugs, medical appliances, ambulance, private duty nursing, etc.. The policy may contain a deductible amount, coinsurance and high maximum benefits. Also called extended health benefits (EHB).

  • Federal COBRA

    A federal law that lets you keep your group health plan when your job ends or your hours are cut. Federal COBRA applies to employers and group health plans that cover 20 or more employees.

  • Flex Dollars

    Money provided by an employer to be used by an employee to obtain various benefits, such as health insurance and life insurance.

  • Flexible Spending Arrangements (FSAs)

    There are two types of FSAs: health FSAs and dependent care FSAs. A Health FSA allows employees to be reimbursed for medical expenses in a tax-advantaged way without having to be enrolled in a HDHP. A dependent care FSA reimburses employees for certain dependent care expenses in a tax-advantaged way. FSAs are usually funded by employees, but employers can contribute to them as well.

  • FMLA

    The federal Family and Medical Leave Act (FMLA) requires certain employers to provide some employees with unpaid, job-protected leave due to certain family and medical reasons. The following chart generally explains the law and its requirements.

  • Grace Period

    A period in which an insurance policy is effective even though the premium is past due.

  • Group Benefits, Group Insurance

    A benefit plan developed for an employer that could include coverage for life, disability, extended medical and prescription drugs, dental, and critical illness.

  • Group Life Insurance

    Group life insurance is a type of life insurance in which a single contract covers an entire group of people. Typically, the policyowner is an employer or an entity such as a labor organization, and the policy covers the employees or members of the group.

  • Group Policyholder

    An organization (for example an employer or association) that enters into a group insurance contract with an insurance company.

  • Guaranteed Death Benefit

    The minimum amount an insurance company pays to the beneficiary when the insured person dies.

  • Guaranteed Renewable Policies

    A feature of an individual insurance policy where the insurance company guarantees to renew the insurance at the end of a certain period, regardless of any changes in your health. Premiums may increase at renewal times.

  • Health Care Services

    It means any services included in the furnishing to any individual of medical, mental, dental or optometric care or hospitalization or nursing-home care or incident to the furnishing of such care or hospitalization, as well as the furnishing to any person of any and all other services for the purpose of preventing, alleviating, curing or healing human physical or mental illness or injury.

  • Health Coverage Tax Credit (HCTC)

    HCTC is an IRS tax credit for 72.5 percent of health care insurance premiums, which may apply to certain individuals who are 55–65 years of age and are receiving benefits from PBGC. The HCTC is effective through the end of 2019.

  • Health Insurance

    A type of insurance that covers medical expenses (such as drugs, dental expenses, vision expenses, and paramedical expenses) or loss of income if you’re sick or injured

  • Health Maintenance Organization (HMO)

    A type of health insurance plan that usually limits coverage to care from doctors who work for or contract with the HMO. It generally won’t cover out-of-network care except in an emergency. An HMO may require you to live or work in its service area to be eligible for coverage.

  • Health Reimbursement Arrangements (HRAs)

    There are two types of HRAs: Traditional HRAs and Qualified Small Employer HRAs (QSEHRAs). Both accounts are funded solely by employers to help employees pay for medical expenses on a tax-free basis. However, Traditional HRAs can only be offered in conjunction with a traditional group health insurance plan, while QSEHRAs can only be offered by employers that do not offer group health, dental, or vision insurance.

  • Health Spending Account (HSA)

    A benefit that covers an employee’s health care expenses. Claims are made against this account to pay for health and dental expenses that are not covered under the terms of the regular benefit plan.


    The Health Insurance Portability and Accountability Act (HIPAA) impacts a wide variety of features of the U.S. health care system. Its best known and most important provisions affect the portability of health coverage, and the privacy and security of individuals’ personal health information.

  • Hospital Expense Insurance

    A feature of extended health care insurance that covers hospital expenses not covered by your provincial health plan during your stay in the hospital. It can include the cost of private or semi-private hospital rooms and other prescribed hospital services.

  • Hospital Indemnity

    A health insurance benefit that pays a flat amount for each day a covered person is in the hospital. The number of days covered is set and the daily amount paid doesn’t vary, regardless of the medical expenses, the covered person incurs. Also called “hospital cash plans”.

  • Insurer

    The party to the insurance contract who promises to pay losses or benefits. Also, any corporation licensed to furnish insurance to the public.

  • Lapsed Policy

    An insurance policy that has ended because you stopped paying premiums and there was not enough money in the policy (cash value) to keep the payments up to date.

  • Lifetime Limits

    Under the current law, lifetime limits on most benefits are prohibited in any health plan or insurance policy. Previously, many plans set a lifetime limit — a dollar limit on what they would spend for your covered benefits during the entire time you were enrolled in that plan.

  • Limitations/Exclusions

    Services that are limited or excluded from a benefit plan. The enrollee is usually responsible for the fee for services that are not benefits of the benefit plan.

  • Long-Term Disability Insurance (LTD)

    LTD is an insurance policy that protects an employee from loss of income in the event that he or she is unable to work due to illness, injury, or accident for a long period of time.

  • Maximum/Annual Maximum/Maximum benefit

    The maximum payment insurance provider will make within a given time period. Some plans have no maximum. Some maximums apply to the lifetime of the benefit plan; others apply to a particular time period (calendar year, benefit year, etc.) or to particular services.

  • Medicaid

    A federal state program that helps pay for health care for the needy, aged, blind and disabled, and for low-income families with children. A state determines eligibility and which health services are covered. The federal government reimburses a percentage of the state’s expenditures.

  • Medicare

    A federal health care insurance program for people aged 65 and over and the disabled. Eligibility is based mainly on eligibility for Social Security. Medicare helps pay charges for hospitalization, for stays in skilled nursing facilities, for physician’s charges and for some associated health costs. There are limitations on the length of stay and type of care.

  • Metal Tiers

    Covered California health insurance plans — and all health plans in the individual and small-group markets — are sold in four primary levels of coverage: Bronze, Silver, Gold and Platinum.

  • National Provider Identifier (NPI)

    HIPAA-mandated standard provider identifier in electronic claims processing. All providers are required to have an NPI

  • Non-Preventive Care Service

    If you have symptoms of a condition, this kind of service can help figure out what the condition is or help treat it. There is little or no cost for most preventive care services, but you’ll have to pay more if you have any non-preventive services.

  • Open Enrollment

    Open enrollment is the period of time each year in which eligible employees may enroll in your health plan.

  • Orthodontics

    A specialty within dentistry that focuses on correcting bites, occlusion, and the straightness of teeth. Orthodontic coverage typically involves a Lifetime Maximum Benefit (LTM) that pays out at 50% of the total case fee.

  • Out-of-Pocket Maximum/Limit

    The most you have to pay for covered services in a plan year. After you spend this amount on deductibles, copayments, and coinsurance, your health plan pays 100% of the costs of covered benefits. If your plan covers more than one person, you may have a family out-of-pocket max and individual out-of-pocket maximums. That means: When the deductible, coinsurance and copays for one person reach the individual maximum, your plan then pays 100 percent of the allowed amount for that person.

  • Payment

    What you pay when you come in for care. This may only cover part of what you owe for your visit. If so, you’ll get a bill for the difference later.

  • Plan Administration

    The daily management and implementation of a benefits plan. This might include handling claims, adjusting coverage, adding and removing employees, or any number of other procedures.

  • Policy or Contract

    The legal document issued by the insurer to the policyholder that outlines the conditions and terms of the insurance.

  • Policyholder

    The person who owns an insurance policy. Also called the “insured”.

  • Portability

    It allows eligible insureds to “port” (that is, continue) their Group Life insurance coverage when they are in danger of losing that coverage because their employment is being voluntarily or involuntarily terminated.

  • Pre-Existing Condition

    A medical condition for which you’ve had symptoms, consulted a medical professional or received treatment before you apply for insurance or before your coverage takes effect.

  • Pre-Existing Condition Exclusion (PCE )

    Period is a health insurance benefit provision that places limits on benefits or excludes benefits for a period of time due to a medical condition that the policyholder had prior to enrolling in a health plan.

  • Pre-Taxed Premium Payments

    Medical insurance premiums are deducted from your pre-tax pay. This means that you are paying for your medical insurance before any of the federal, state, and other taxes are deducted.

  • Preferred Provider Organization (PPO)

    A type of health plan that contracts with medical providers, such as hospitals and doctors, to create a network of participating providers. You pay less if you use providers that belong to the plan’s network.

  • Premium

    The payment, or one of the periodic payments, a policyholder is required to make for an insurance policy.

  • Premium-Only Plan (POP)

    A type of cafeteria plan under Code Section 125 that permits employees to pay for their share of insurance premiums with pre-tax dollars.

  • Preventive Visits

    Preventive visits typically are annual visits or well-child exam visits to your primary care physician (PCP) that are prevention-focused. Most health plans must cover a set of preventive services — like shots and screening tests — at no cost to you.

  • Protected health information (PHI)

    PHI under the US law is any information about health status, provision of health care, or payment for health care that is created or collected by a Covered Entity (or a Business Associate of a Covered Entity), and can be linked to a specific individual.

  • Qualified Medical Expense

    Medical costs that you can pay with money from your HRA, HSA, or FSA.

  • Qualifying Life Event (QLE)

    A change in your situation — like getting married, having a baby, or losing health coverage — that can make you eligible for a Special Enrollment Period, allowing you to enroll in health insurance outside the yearly Open Enrollment Period.

  • Reinstating a Policy

    You may apply to restart your insurance coverage if it ended because you did not pay your premiums. This process is called reinstating your policy. To do so you must apply within two years of the date the required premiums were not paid. You must also provide evidence of insurability and pay any outstanding costs, plus interest.

  • Reinsurance

    An agreement between insurance companies to share insurance risk. One company transfers some of its insurance risk to another company, known as the reinsurer. Reinsurance is one way your insurance company manages the risks it takes on.

  • Rider

    A change or addition to an insurance policy that either expands or limits the coverage and benefits.

  • Risk

    The likelihood that an insured event will happen while the policy is in place. For example, in life and health insurance, risk is typically the likelihood that the person insured will die, be injured or get sick.

  • Short-Term Disability (STD)

    A benefit plan that pays an employee an income while he or she is unable to work due to non-work related illness or injury.

  • Substantiation (validation)

    This is how you prove expenses were eligible to be paid with money from your HRA, HSA, or FSA. Be sure to keep your bills, receipts and Summary of Accumulations or Explanation of Benefits. You may need them to validate your expenses. Check with your HRA or FSA administrator for specific requirements.

  • Summary of Accumulation (SOA)

    A statement that tracks the care you’ve received and how close you are to reaching your deductible and out-of-pocket maximum. Your SOA is not a bill, but it can help you keep track of whether you’ve met your deductible or out-of-pocket maximum for the year.

  • Tax-Free Savings Account (TFSA)

    A registered account you use to save money for any purpose. You don’t get a tax deduction when you contribute to the plan. Investment earnings in the account are tax-free and you don’t pay taxes when you withdraw money.

  • Taxable Benefits

    Employer-provided non-cash compensation that is subject to income tax.

  • Term Life Insurance

    A type of life insurance that provides coverage for a set period of time. The period (or term) of the coverage can be either a fixed number of years (e.g., 10 years) or to a set age (e.g., age 65). The policy has no cash value.

  • Underwriting

    The process by which an insurer determines whether or not, and on what basis, it will accept an application for insurance.

  • Voluntary Plans

    Voluntary plans are 100% paid by the employee (though employers are able to contribute, too). Employees can choose which voluntary plans are best for their own situation. Some voluntary plans pay cash benefits directly to employees to cover living expenses, lost wages, copayments and deductibles.

  • Waiting Period

    A waiting period is the length of time that employees must work at a company before their coverage is effective. Employers decide what the waiting period will be, but it cannot exceed 90 days according to the Affordable Care Act

  • Waiver of Premium

    A feature of some insurance policies that allows you to stop paying the premiums if you become disabled.

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