Glossary

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Authorization to Release Information – A section of a claimant’s statement that permits an insurer to obtain claim-specific information from medical caregivers and institutions, government agencies, other insurers, and numerous other sources.

Automatic Reinsurance – A reinsurance agreement in which an insurer must cede specified types of cases or a block of business to a reinsured, and the reinsured must accept the risk for those cases up to a predetermined maximum.

Coinsurance – In reinsurance, a type of proportional reinsurance plan in which an insurer and a reinsured share the risk at a predetermined level. In medical insurance coverage, the percentage of all eligible medical expenses, in excess of the deductible, which is incurred as a result of sickness or injury and which an insured is required to pay.

Compliance – The function of an insurance company that is responsible for ensuring that the insurer and its marketers follow all applicable state and federal insurance requirements and regulations, as well as the requirements of organizations that regulate insurance.

Coordination of Benefits (COB) provision – A provision in a group health or long term disability insurance plan that prevents duplication of benefits—that is, payment of the same medical expenses or disability income insurance benefits by more than one insurer or by a government program.

Cost Containment – The reduction of unnecessary expenses of reimbursement for health insurance coverage.

Covered Person – For group insurance purposes, a person, not the primary insured, who is eligible for coverage consistent with a policy’s definition of dependent or spouse.

CPT – See Physicians’ Current Procedural Terminology.

Dependent – For insurance companies, generally (1) a spouse or (2) an unmarried child, including an adopted child, stepchild, and foster child who is under age 19 or to age 25 if disabled or full-time student, and who relies on the insured person for support and maintenance.

Diagnostic and Treatment Codes – Special codes that describe specific medical and dental diagnoses and treatments; include (1) a brief, specific description of each diagnosis or treatment and (2) a number that identifies each diagnosis or treatment.

Employee Census – In a Request for Proposal, a document that lists demographic information about both a proposed group and individual persons within the proposed group.

Employer-Employee Group – For group insurance purposes, a type of group that consists of an employer that is the policyholder, and its employees who are the insured.

Employment  Card (also called an employee application) – In group insurance, a document that provides the following information about each employee: name and address, date of birth, gender, Social Security number in the United States or social insurance number in Canada, name and relationship of beneficiary or beneficiaries and types of supplemental coverage selected by the employee.

Excess-of-loss Reinsurance – A type of nonproportional reinsurance providing that a reinsured will pay the amount of a claim above a predetermined limit.

Expected Claim Experience – The dollar amount of claims that an insurer estimates a group will submit.

Experience (of an insurer) – The inferences drawn from the cumulative events of a certain type (for example, claims) which, taken together, express historical trends with respect to an insurance product.

Explanation of Benefits (EOB) – A detailed statement showing each treatment or medication submitted as part of a claim, an insurer’s decision concerning payment of each charge, any amount that is considered as a deductible or a co-payment, an explanation of any charge for which part or all of the charge will not be paid and the total amount sent to a medical provider.

Illustration of Net Cost – For a proposal of insurance for group coverage, an explanation of rates that typically covers two or more years and shows possible future rating and premiums, provided the group’s claim experience remains within the parameters assumed for the insurance product.

Initial Deductible – In comprehensive medical plans, the amount an insured must pay before any medical expenses are paid by an insurer. 

Insurance Administration – The activities associated with assessing risk and issuing policies, obtaining reinsurance, handling claims, providing policy owner service and administering annuities.

International Classification of Diseases and Related Health Problems (ICD) – One of the most commonly used codes for medical diagnoses.

Managed Care – the name given to a broad spectrum of techniques that integrate payment for and delivery of health care and that seek to manage the cost, accessibility and quality of that care.

Marketing – The function of an insurance company that identifies its customers, defines and develops the products that customers want, conducts sales activities and distributes products to customers.

Medical Necessity – A criterion that is determined by a claim analyst for medical treatments; provides that the prescribed medical procedure is one that (1) is considered effective and that is normally used for the specified illness or injury and (2) does not exceed in scope, duration, or intensity the level of care needed to provide safe, adequate and appropriate diagnosis or treatment.

Physicians’ Current Procedural Terminology (CPT) – One of the most commonly used codes for medical treatments.

Policy Grace Notice (also called a lapse notice) – a written notification that a policy’s grace period is about to expire.

Policy Lapse – a termination of insurance coverage that occurs as a result of nonpayment of premium.

Preexisting Condition – a condition for which an individual received medical care during a specified period of time prior to the effective date of the proposed coverage. In group insurance, a condition for which an insured received medical care during a specified period, usually 3 to 6 months, prior to the effective date of coverage.

Protected Health Information (PHI) – individually identifiable health information, including demographic information, collected from you or created or received by a health care provider, a health plan, your employer (when functioning on behalf of the group health plan), or a health care clearinghouse and that relates to: (i) your past, present, or future physical or mental health or condition; (ii) the provision of health care to you; or (iii) the past, present, or future payment for the provision of health care to you.

Reinstatement – the process by which an insurer puts back in force a policy that lapsed because of nonpayment of renewal premiums.

Reinstatement Provision – a provision that describes the conditions a policy owner must meet in order for an insurer to reinstate a policy within a specified time after lapse.

Reinsurance – a form of insurance that enables an insurer to be indemnified, or paid, for covered losses claimed under insurance policies it has issued.

Reinsurance Audit – a formal examination of an insurer’s reinsurance records in order to evaluate whether those records contain accurate details.

Reinsured (also called the assuming company) – an insurance company that assumes the risk from a ceding company.

Renewal Underwriting – in group insurance, an underwriting review of all the selection factors considered when a group was originally underwritten and all changes in the group and its coverage between the previous time of underwriting and the current time.

Request for Proposal (RFP) – a document that provides detailed information about requested insurance coverage and that requests a bid from an insurer for providing the coverage.

Schedule of Benefits – Under a group insurance plan, a table that specifies the amount of coverage provided for each class of insured. For claim purposes, a listing of medical treatments and the maximum benefit amounts an insurer will pay for each treatment.

Stop-Loss Reinsurance – a type of nonproportional reinsurance providing that a reinsured will pay claims that exceed (1) a specified percentage of the loss incurred during a specified period and/or (2) a maximum dollar amount.

Subrogation – a contractual right that permits an insurer to recover payments made to an insured for medical care if that insured receives payment for damages through a legal action.

Summary Plan Description – An Erisa document that defines details of group insurance coverage, including the type of employee welfare benefit plan, the eligibility requirements and the employer’s claim administration procedure.