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.
Learn more about allocation periods
Annual Maximum
The maximum amount that a plan member can be reimbursed in a calendar year for a specific medical item or service.
Arms Length
Refers to the relationship between parties, indicating a lack of vest interest in a company financially and/or no relations to a shareholder.
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.
Claims Experience
Your claims experience calculates the total Paid Claims versus the Total Premium that was collected since plan implementation or the last renewal (also known as the experience period). It provides the percentage of premiums that were used by the insurer to pay out claims to the plan members.
Learn more about claims experience
Coinsurance / 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%.
Conversion of Benefits
When an employee loses coverage under the group plan (including but not limited to: termination of employment, leave of absence, or no longer working the eligible hours) they can switch their coverage to an individual plan without submitting health evidence. The conversion option must be exercised before a specific deadline, which can differ between carriers. Benefits that are eligible for conversion include Life, AD&D, Critical Illness, Extended Health and Dental.
Learn More about Conversion of Benefits
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
Cost-Sharing
Cost-sharing is the division of responsibility for Premium payment between an employer and an employee. Cost-sharing is achieved through payroll deductions from the employee’s paycheck, with the amount split between the two parties determined by the employer at plan set up.
Learn more about cost-sharing arrangements
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
Dental Pre-Determination
A request sent to the insurer by the dental office which outlines the intended procedure for a patient. This must be submitted prior to the procedure in order to determine if the treatment is eligible. If it is not, it can help provide direction for alternate treatment options.
Dependent
A person who relies on another, especially a family member, for financial support. Common examples include spouses or partners, children, or even siblings.
Dependent Life Insurance
Insurance coverage for an employee’s dependents, including a spouse and dependent children. Under group coverage, the beneficiary is automatically the employee, and the benefit amount is a lump sum that is often larger for the spouse than for the children.
Learn more about Dependent Life Insurance
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
Excess Coverage
Benefits that are based on salary, such as some Life and AD&D plans, as well as disability benefits, have non-evidence maximums (NEM) included in the plan design. When employees have a salary increase that makes them eligible for coverage above the NEM, they can apply for the Excess Coverage by submitting health evidence.
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.
Explanation of Benefits (EOB)
When a plan member submits a claim, they will receive a report provided by the insurer which explains the eligibility, co-pay amounts (if applicable) and the amount the insurer has covered of a submitted claim. An EOB will also explain if a claim has been denied.
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)
Frequency Limit
Certain medical items or services are tied to a frequency limit instead of an annual maximum. In such a case, the maximum resets after a certain number of years or months has elapsed since the initial or previous purchase of the specific item or service.
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
Incidence Rate
The rate at which people go on disability leave.
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 Event
An important change in a person’s life that may affect an aspect of their benefits coverage, such as a marriage, salary change, or the birth or adoption of a child.
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 (NEM)
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.
Participation Requirements
The percentage of eligible employees who are required to be enrolled in the employee benefits plan.
Learn more about participation requirements
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.
Learn more about group benefits pooling
Preferred Pharmacy Network (PPN)
An agreement made between a provider and a pharmacy chain that gives plan members under that provider access to reduced dispensing fees or other perks.
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.
Reasonable and Customary (R&C) aka Usual and Customary (U&C)
The standard or average cost for a particular medical service or supplies in a specific geographical area. Determined by each insurer and used to inform reimbursement amounts. If a service provider charges above the Reasonable and Customary amount, the plan member will pay out-of-pocket for any amounts that are above the R&C amount.
Reduction of Insurance
When an employee reaches a specified age, the total amount of their Life Insurance and/or AD&D benefit may be reduced by a certain percentage – known as a reduction schedule. For example: At age 65, the benefit amount is reduced by 50%, and at age 70, the benefit amount is reduced by a further 50%.
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.
Schedule of Benefits
An overview of your insurance coverage. It includes the type of benefit, the insurance carrier, benefit amounts, deductibles, maximums and co-insurance percentages. Each benefit only includes the categories that apply to that specific type of coverage.”
Learn more about how to read and understand your Schedule of Benefits
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
Trustee
A person or firm that holds and administers property or assets for the benefit of a third party. In Group Insurance, a trustee must be named alongside a Beneficiary who is a minor to receive and hold funds until they reach the age of majority.
Underwriting
The process through which an individual or institution (such as an Insurer) takes on financial risk for a fee, often represented in Premiums.
Learn more about Group Insurance Underwriting
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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