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The Group Insurance Dictionary: Group Insurance and Everything In Between

By: Benefits by Design | Tuesday March 10, 2020

Updated : Tuesday September 29, 2020

Employee benefits and insurance terminology is confusing. There are many words that frequently come up that may make everyone else scratch their heads. Words like renewal, total loss ratio, premiums, co-insurance, stop-loss, or underwriting.

We’ve resolved to clear up that confusion once and for all by defining some of the most common words and terminologies in group insurance all in one place. Consider this the official group insurance dictionary! You can use the Table of Contents to the left to quickly navigate to the definition you want.

Accidental Death and Dismemberment (AD&D) Insurance

An insurance policy that provides financial assistance for when tragedy strikes. Coverage is available should a plan member die as the result of an accident, loss of a limb, or loss of their sight or hearing.

Learn more about Accidental Death & Dismemberment (AD&D) Insurance

Administrative Services Only (ASO)

A Self-Insured funding model, whereby the employer pays only for Claims incurred, rather than a set Premium. Employers utilize the administrative services of the Insurer to help manage claims.

Learn more about Administrative Services Only (ASO)

Advisor

A general term applied to licensed experts in a variety of fields, including Financial, Individual or Group Insurance. An Advisor offers professional advice and guidance to help their clients in their fields of expertise.

Learn more about how to choose an Insurance Advisor

Allocation Period

The period that determines the frequency in which employees can access their benefits allotment. Typical allocation periods are monthly, quarterly, semi-annually, and annually.

Auto-coordination

The ability for unpaid portions of Claims to automatically be reimbursed through another benefits program.

Beneficiary

A designated individual who may become entitled to a benefit under a plan in the event the plan member becomes deceased. Beneficiaries are a requirement when policies include a Life Insurance benefit.

Learn more about the importance of Beneficiaries

Business Assistance Program (BAP)

Confidential support service providing access to professional accounting, counselling, legal and human resources experts who understand the business challenges faced by employers.

Learn more about Business Assistance Programs (BAP)s

Claim

A request by a policyholder to an Insurer for coverage or compensation for a covered loss or policy event.

Co-insurance / Co-pay

The breakdown of responsibility of cost for eligible costs, generally expressed as a percentage. A common co-pay is an 80/20 split. This means the Insurer covers 80% of the cost of an eligible expense, and the employee is responsible for the remaining 20%.

Coordination of Benefits

Coordination of Benefits refers to the framework between two insurance companies that offer coverage to the same individual and indicates who is responsible for paying a claim and in which order.

Learn more about Coordination of Benefits

Credibility

The percentage of which a groups’ own experience is used to set the Premium rate. This percentage increases with the length of time a group remains with a single Insurer, and accumulates faster for groups of a larger size.

Critical Illness Insurance (CI)

An insurance policy that pays out a lump sum if the policyholder is diagnosed with a critical illness, such as stroke, cancer, or heart disease.

Learn more about Critical Illness Insurance (CI)

Deductible

The amount that must be paid out-of-pocket by an employee before the plan begins to pay for eligible expenses.

Dental Insurance

Insurance coverage for eligible dental expenses incurred by the employee and their Dependents.

Learn more about Dental Insurance

Dependent

A person who relies on another, especially a family member, for financial support. Common examples include spouses or partners, children, or even siblings.

Diagnostic Specialist Access Insurance (DSAI)

Provides immediate access to specialist consultations and diagnostic examinations in Canada when placed on a medical wait-list that exceeds 21 days.

Learn more about Diagnostic Specialist Access Insurance (DSAI)

Disability Insurance

An insurance policy that provides income when a plan member is unable to perform their work as a result of a disability. Can include Short Term Disability (STD) Insurance and Long Term Disability (LTD) Insurance.

Learn more about Disability Insurance

Effective Date

The date in which the benefits plan becomes effective and employees can begin submitting Claims.

Eligibility Date

The date in which an employee becomes eligible to enroll in the benefits plan. Employees added to a plan more than 31 days after the Eligibility Date may be considered a Late Applicant.

Employee Assistance Program (EAP)

Confidential support service offering counselling for individuals and their families experiencing work-life challenges.

Learn more about Employee Assistance Programs (EAP)s

Experience-rated

Refers to groups with previous experience or insurance coverage under another Insurer, which can be used to more accurately project future Claims and Quotes.

Extended Health Care (EHC)

Insurance coverage designed to supplement provincial health care plans, including drug coverage, Vision Care, and Travel Insurance.

Learn more about Extended Health Care (EHC)

Fully Insured

Insurers take on the risk of providing benefits to employees, with employers paying a fixed Premium (regardless of usage) and receiving an annual Renewal.

Learn more about Fully-Insured Plans

Grace Period

The period of time in which terminated employees may submit Claims incurred while still covered under the plan, and/or the period in which employees must submit claims from the prior year for reimbursement.

Group Insurance

Provides a specific group of people (ex. employees of a workplace, association, or union) with benefits coverage.

Learn more about Group Insurance

Group Insurance Advisor

A licensed, knowledgeable expert who acts as their clients’ advocate for their group benefits plan and offers advice and guidance in securing and maintaining a benefits plan.

Learn more about why you should use a Group Insurance Advisor

Health Care Spending Account (HCSA)

Non-taxable, defined-contribution plan where an employer decides on an amount to provide employees for eligible health expenses. HCSAs provide additional cost-containment to employers, allowing them to more accurately calculate annual benefits spend when compared to Fully-Insured solutions.

Learn more about Health Care Spending Accounts (HCSA)s

Incurred But Not Reported (IBNR)

The expected Claims that have been incurred in a given benefit year but have not yet been claimed, as Rolling Claims may allow claims to be submitted retroactively.

Individual Insurance

Insurance purchased for one individual rather than a group of people.

Learn more about Individual Insurance

Insurability / Medical Evidence

Satisfactory proof of insurability and good health, often including medical records, health habits, or pre-existing conditions. May be required for a Late Applicant or an employee with a pre-existing condition.

Insurer

An individual or company who, through a contractual agreement, undertakes to compensate specified losses, liability, or damages incurred by another individual.

Late Applicant

Employees added to the plan more than 31 days after their Eligibility Date may be considered a Late Applicant. Late Applicants may be required to submit Medical Evidence or back-pay Premiums, affecting their coverage.

Learn more about Late Applicants

Life Insurance

Insurance policy that provides financial assistance in the event of a covered plan member’s death.

Learn more about Life Insurance

Long Term Disability (LTD)

Protection for a covered employee from loss of income in the event that he/she is unable to work due to illness, accident, or injury for an extended period of time.

Learn more about Long Term Disability (LTD) Insurance

Medical Second Opinion (MSO) Services

Service for employees and eligible Dependents facing a serious illness, injury, or surgery or even something lingering such as a chronic illness, seeking a second opinion.

Learn more about Medical Second Opinion (MSO) Services

Non-Evidence Maximum

The maximum benefit available to an individual without the submission of Medical Evidence.

Non-Pooled Benefits

Rates are partially based on a group’s own individual experience. Non-Pooled Benefits typically include those with high frequency, lower-cost Claims such as Paramedical Coverage or Dental Insurance found in an Extended Health Care (EHC) benefit.

Non-Refund Agreement / Accounting

An arrangement where Premiums are paid to the Insurer, who is then liable for all eligible Claims. No accounting is prepared to determine whether the plan operated in a surplus or a deficit, and the Insurer absorbs any such deficit or retains any surplus.

Own Occupation

Refers to the occupational duties, or those similar to, that an individual has been trained to perform. Long-Term Disability (LTD) Insurance policies may have an own occupation period, whereby, to be considered disabled, you must be disabled by a condition that prevents you from performing the regular duties of your job for that period of time.

Paramedicals

Coverage for treatments from health care providers such as physiotherapists, chiropractors, massage therapists, and podiatrists. Paramedical coverage is often embedded in an Extended Health Care (EHC) benefit.

Learn more about Paramedicals

Personal Spending Account (PSA)

Provides additional health and wellbeing options, including child care, elder care, personal training, or a gym membership. Also known as a Wellness Spending Account (WSA).

Learn more about Personal Spending Accounts (PSA)s

Plan Administrator

The person or company, selected by the employer, to manage its benefits plan(s), with tasks and responsibilities including updating salary and employee information, adding or removing employees from the plan, record keeping, billing, and more.

Learn more about Plan Administrators and their responsibilities

Plan Sustainability

The idea that a benefits plan should be sustainable over a long period of time with minimal disruptions or fluctuations.

Learn more about Plan Sustainability and why it’s so important

Pooled Benefits

Premiums are paid into a large pool of money held by an Insurer, with any Claims made being charged to the pool. Pooled benefits are typically those with low frequency, high-cost claims such as Life Insurance or Accidental Death and Dismemberment (AD&D) Insurance. By pooling these high-cost claims, the risk is spread over a large number of groups, ensuring Plan Sustainability for smaller groups when they incur these high-cost claims. Premium rates are adjusted based on the demographics of the group (taking into account different risk factors such as age, occupation, and sex) rather than on the actual claiming experience of the group.

Premium

The amount paid or to be paid to the Insurer for coverage.

Prorating

Determines whether or not a new employee hired in the middle of a benefit year will have their contributions reduced based on their date of hire.

Quote

A proposed outline of coverage from an Insurer, including cost and benefits coverages.

Rate Guarantee

Guarantees the rates and Premiums of a benefits plan for a predetermined amount of time, whereby the amounts cannot be changed.

Renewal

The process following the expiration of rates whereby an Insurer will re-evaluate rates based on a variety of factors, including demographics, Claims experience, Credibility, and more.

Learn more about Group Insurance Renewals

Rolling Claims

Unused Claims made in one benefit year can be claimed in the following year.

Rolling Contributions

Unused portions of contributions made in one benefit year can be rolled over to the next benefit year.

Self-Insured

Employers take on the risk of providing benefits to employees, rather than the Insurer, but pay only for actual Claims made instead of a standard Premium.

Learn more about Self-Insured solutions

Short Term Disability (STD)

Protection for a covered employee from loss of income in the event that he/she is unable to work due to illness, accident, or injury for a short period of time, up to a maximum.

Learn more about Short Term Disability (STD) Insurance

Stop-loss

Protection for employers whereby Claims incurred that exceed a specified dollar amount will be assumed by the Insurer, subject to a maximum.

Target Loss Ratio (TLR)

The percentage ratio of Premium left to pay Claims following the deduction of applicable administration fees, taxes, and commissions. For example, $100 in Premium, minus $30 in administration fees, taxes, and commissions, leaves a Target Loss Ratio of 70%.

Telemedicine / Telehealth

Generally refers to technology that allows the remote delivery of healthcare services, such as virtual access to a general healthcare provider or physiotherapy services. Some Extended Health Care (EHC) benefits may have an virtual health option embedded in them.

Learn more about Telemedicine and Telehealth

Third Party Administrator (TPA)

An institution, separate from an Insurer, who takes on administrative and other duties.

Learn more about Third Party Administrators (TPA)s

Travel Insurance

Covers costs and losses associated with travelling, and can be offered for in and out-of-country of country travel, or both.

Learn more about Group Travel Insurance

Trend Factors

Refers to a variety of factors under consideration when Underwriting a new policy, specifically any increasing inflationary costs of medical and dental services and the rate in which these services are used.

Learn more about Trend Factors and their importance in Group Insurance Renewals

Underwriting

The process through which an individual or institution (such as an Insurer) takes on financial risk for a fee, often represented in Premiums.

Virgin Group

An employer without pre-existing benefits coverage and no Claims experience from which to base a Quote on.

Vision Care

Coverage for vision treatments, eye exams, prescription glasses, and more. Vision care is often found embedded as part of an Extended Health Care (EHC) benefit.

Waiting Period

The period of time between an employee’s hire date and their Eligibility Date, whereby they become eligible to enroll in the benefits plan.

Waiver

The forfeiting of a right or coverage.

Waiver of Coverage

The forfeiting of certain benefits due to similar coverage under another plan.

Waiver of Premium

In cases where an employee is unable to work due to injury or illness, the Insurer may elect to waive the requirement for the employee to pay certain Premiums.

Wellness Spending Account (WSA)

Provides additional health and wellbeing options, including child care, elder care, personal training, or a gym membership. Also known as a Personal Spending Account (PSA).

Learn more about Wellness Spending Accounts (WSA)s

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