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Glossary

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Accelerated Death Benefit - A benefit that allows a terminally ill insured to receive part of the face amount of their life insurance policy in advance of their death, as either in one lump sum or in installments.

Acquisition Expenses - Total expenses included in the pricing of a policy. These include commissions, expenses and premium taxes. The acquisition expenses are added to the amount of premium we need to pay a client's stop loss claims.

Actuary - Develops pricing of the products and measures trends that may require changes. Responsible for reporting loss ratio results and providing ultimate loss ratio projections.

AD&D - (Accidental Death & Dismemberment) Insurance providing a benefit if the insured person dies by accidental means or accidentally loses certain specified body parts (leg, arm, eye, etc.).

Advice of Termination - A warning letter to a producer that the group has not paid premium and will be terminated on X day if we are not in receipt of premium.

Aggregate Claim Auditor - An auditor that reviews total paid claims (aggregate claims) for a group that has exceeded the annual aggregate deductible. The auditor may go on-site to the TPA or request detailed information for a desk audit which is done in house to determine if the group has exceeded the annual aggregate deductible and is due a reimbursement.

Aggregate Factor - The dollar figure that is multiplied by the number of covered persons each month during the contract period to calculate the annual aggregate deductible.

Aggregate Stop Loss - The form of stop loss coverage that provides protection for the employer against the accumulation of total claims for the group as a whole exceeding a stated level. This is protection against abnormal frequency of claims in total rather than abnormal severity of a single claim (specific stop loss).

Annual Aggregate Deductible - Generally, this number represents the overall limit of claim liability for the group's health benefit plan. Beyond this point the stop loss policy indemnifies the group at the end of the contract period. Also called attachment point.

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Application - The group completes and signs an application form requesting that coverage be placed with HCC Life and indicates the initial sold terms from the underwriter's quote. HCC Life evaluates the application to determine the final terms and acceptance of the group.

ASO - (Administrative Services Only) is an arrangement under which an insurance company, for a fee, processes claims and handles paperwork for a self-funded group. It is similar to the services offered by a TPA.

Attachment Point - see Annual Aggregate Deductible.

Benefit Plan - A description of employee benefits covered under a plan.

Beneficiary - The person or persons who will be paid life insurance benefits under the policy due to the insured's death.

Binder Premium - The first month's premium required to initiate coverage with HCC Life for a new group, and the first month's premium of the renewal contract period for a renewing group. On new groups, it is typically required in advance of the effective date to show intent of the group to purchase coverage with HCC Life.

Bound Business - All cases placed with HCC Life that we have received a minimum of the first month's premium. This does not mean that coverage is binding, only that we have received the initial premium.

Case - Group, named insured, policyholder.

Case Management - Medical management of catastrophic situations to insure optimal outcomes and cost effective treatment plans.

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Claim Cost Negotiation - Negotiation with a provider (hospital/doctor) either for a pre-determined rate (prospective negotiation) or a reduction in charges incurred (retrospective negotiation).

Common Carrier Benefit - An additional accidental death benefit payable if the Insured or any eligible dependent(s) die as the result of an accident while riding as a fare-paying passenger on public transportation.

Concurrent Review - Certifies continuing inpatient days for a claimant. Typically initiated by the provider (hospital/doctor) and reviewed/certified by the UR Vendor, Case Manager, or HCC Life Medical Staff.

Contingent Beneficiary - The person(s) designated to receive policy proceeds if the primary beneficiary(ies) should die before the Insured. Also known as a secondary beneficiary.

Contributory - Means employees pay all or part of the cost of their group life insurance. The employer determines the amount of employee contribution.

COB - Coordination of Benefits is a contract provision that prevents a policyholder from profiting by collecting from two different group plans such that the total collected is greater than actual expenses incurred. COB provisions provide for primary and secondary status for the various plans involved and seek to guarantee that the total paid by all will not exceed 100% of the out-of-pocket expenses of the claimant.

COBRA - (Consolidated Omnibus Budget Reconciliation Act.) Federal legislation relative to requirements for continued health coverage for employees and/or their dependents that would otherwise lose coverage.

Commission - Money paid to a Producer, TPA or Licensed Agent for the placement of insurance and is usually paid as a percentage of gross premium. Commission is included in the Acquisition Expenses referenced earlier.

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Contract Analyst - Responsible for issuing the stop loss policy in a timely manner and any subsequent revised schedules or endorsements.

Contract Basis - Refers to the date range that a covered expense must be incurred and the date range that covered expense must be paid during the policy period. Examples are: 12/12, 24/12, 15/12, Paid, 12/15.

Conversion - An individual policy issued to an employee or dependent that leaves the group plan. The conversion policy may be issued with regard to pre-existing conditions at appropriate rates. The benefits are generally limited and the individual is responsible for paying the premium rates to the conversion carrier. HCC Life offers conversion for a company called Celtic Life Insurance Company to its stop loss clients and Gerber Life Insurance Company to its Group Life clients.

Cost Containment - Features in a plan of benefits or in the administration of a plan designed to reduce or eliminate certain charges to the plan such as charges for unnecessary surgery or hospital days thus improving the plan's loss experience.

CPT - (Current Procedural Terminology.) A listing procedure code set maintained by the AMA (American Medical Association) for reporting medical services and procedures. The purpose of CPT is to provide a uniform language that accurately describes medical, surgical, and diagnostic services. Generally used for physician visits, labs, surgeries, etc.

Disclosure Statement - Form used to notify HCC Life of all large and/or ongoing claims prior to the binding of coverage for all new and renewal business groups. The underwriter may also require this form at the time of reinstatement for terminated groups.

EDI - (Electronic Data Interchange.) The electronic exchange of formatted data, such as medical claim information.

EOB - Explanation of benefits.

ERISA - Employee Retirement Income Security Act of 1974. The basis of most employee benefit legislation. This federal legislation allows for and sets guidelines regarding a group's ability to self-fund their benefits.

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Expiration Date - The date stated in the policy, indicating when the policy expires and coverage ceases.

Final Termination Letter - When we have not received a response on prior collection of premium, this letter terminating the group is sent directly to the group, terminating the group's coverage back to the last day of the month for which premium was paid.

Grace Period - The 31-day period following the premium due date during which an overdue premium may be paid. All provisions of the policy remain in force during this 31-day period.

Gross Premium - The total premium collected on a case, including Acquisition expenses.

Group - The employer entity that has placed their stop loss insurance and/or life coverage with HCC Life.

Guarantee Issue - The maximum amount of group life insurance we will issue without requiring proof of good health, subject to application limitations. The benefit is not available for a late applicant.

HCCL Risk Management - HCC Life department that focuses on medical underwriting, case management oversight, and catastrophic case management (transplant) to insure quality healthcare and maximize claim cost savings for both HCC Life.

HCCL Solutions - Program that evaluates pricing on all major claims and provides savings to HCC Life and our clients through claim cost negotiations.

Higher Education Benefit - An additional accidental death benefit payable to any dependent children of the employee that are enrolled as a full-time student or in the last year of high school and within one year is a registered student attending an accredited educational institution full time. This benefit is payable annually for a maximum of four years.

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HIPAA - The Health Insurance Portability and Accountability Act of 1996, or HIPAA for short, is designed to protect health insurance coverage for workers and their families when they change jobs. HIPAA has been expanded over the years to also include EDI, privacy and security rules.

ICD-9 CM - (International Classification of Disease-Clinical Modification) List of official disease descriptions and their universally accepted numeric codes. Used for provider billings.

Initial Enrollment - The number of employees on a policy at the time the binder premium is received or the number of employees we are notified on our quote and has been accepted by the group and an application is requested.

In-Network - Services rendered by providers within a contracted Preferred Provider Organization Network for the group.

Life Insurance - A benefit payable in the event of death to the insured. This coverage is usually a flat amount or a percentage of salary.

Loss Adjustment Expense - Fees incurred for utilizing a vendor to provide a service to reduce or maintain a stop loss claim (i.e., claim negotiation, case management, bill audit, medical necessity review.)

Loss Limit - Maximum amount of covered expenses incurred by each covered person, which can be used to satisfy the aggregate deductible.

Loss Ratio - The ratio used to measure the amount of claims reimbursed by HCC Life versus the premium collected to reimburse all claims.

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Marketing - HCC Life personnel responsible for finding and educating new producers on the products and services offered by HCC Life. Also assists the underwriters' follow-up on quoted cases and difficult renewals.

Net Premium - The remaining premium after commission fees are deducted.

Net Net Premium - The remaining premium after all acquisition fees are deducted. This amount is solely allocated for claim reimbursements.

Notice - Notification by a TPA or Producer to HCC Life of any covered person that has incurred or has the potential for reaching at least 50% of the amount of the Specific Deductible.

Out-of-Network - Services rendered by providers not contracted as part of the Preferred Provider Organization Network for the group.

Paid/Funded - Charges that are covered and payable, adjudicated and approved, check/draft issued and mailed, and funds available in the account on the date the check or draft is issued.

Policy - The contract of coverage issued to the employer, typically either stop loss (Specific and/or Aggregate) or Group Life.

Policy Issuance - Department responsible for binding a coverage with HCC Life based on information received from underwriting and sales administrators and issuing the final policy to the producer for delivery to the policyholder.

PPO - Group (network) of preferred providers (Hospitals, Doctors, Lab, etc.) that have agreed to provide their services to member groups of the PPO for a discounted fee. The reason they accept a lesser fee is the principle that through plan design incentives implemented by the group these providers will have the opportunity to receive more patients and generate a profit by increasing their volume of patient encounters.

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Pre-certification - UR function that certifies the number of days a claimant will need to stay in the hospital in advance of the admission and/or procedure.

Premium Accounting - Department that controls the function of applying premium payments received by HCC Life, paying commissions to producers that remit gross premium and monitoring late premium payments.

Premium Accounting Analyst - A person that is designated a specific group of producers to apply, balance, and collect all premiums for all groups that fall in that region.

Premium Taxes - Tax levied against HCC Life and calculated as a percentage of gross premium. This amount is included in the acquisition expenses.

Producer - The licensed agent/broker representing a client who negotiates an insurance program. The producer is the agent of the insured and works with the carrier and the TPA to place the best and most appropriate insurance coverage for the client.

Provider - Person or facility rendering medical services (i.e., hospital, physician, pharmacy, etc).

Quoted Enrollment - The number of employees based on the census provided in the request for proposal.

Reimbursement - From a stop loss perspective, compensation to the group for all eligible claims in excess of the specific or aggregate deductible.

Reinstatement - The procedures when a group's policy is terminated (either at their request or for non-payment of premium) and the stop loss coverage is reinstated retroactive to the termination date.

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Rescinded - When a policy is removed from sold status and treated as if it were never sold. All parties are taken back to their position prior to the proposed effective date of coverage. There is no coverage in force and any collected premiums are returned.

Reserve - The anticipated dollar amount of our ultimate liability based on a known diagnosis during a policy year.

Retrospective Review - The review and negotiation of a claimant's catastrophic hospital charges after discharge from facility. This is the least desirable form of negotiation as the patient has left the facility and the bill may have already been paid.

Risk Management - Process of applying strategies to assess a large claim's potential cost accordingly. The goal is to reduce claim costs, provide quality services and assure optimum outcomes.

Risk Premium - Premium after removing acquisition expenses to reimburse claims. See Net Net Premium.

Sales Administrator - HCC Life employee that sends out and receives all of the completed and signed paper work from the Producer needed for Policy Issuance. Each regional office is assigned a Sales Administrator(s).

Self-Funding - The method of providing employee benefits in which the group does not purchase conventional insurance but rather elects to pay claims directly (generally through the services of a TPA) and purchase stop loss insurance to cover abnormal risks and claim fluctuations.

Shock Loss - A large loss that significantly affects the experience of a group. Generally claims on a single claimant during a single contract period totaling more than 50% of the Specific Stop Loss deductible.

Simultaneous Funding - A claim reimbursement advance service provided to our clients in that the client needs only to fund claims up to the specific deductible and then submit an advance funding request to HCC Life for amounts over the specific deductible. Must be received within seven days after the expiration date of the policy.

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Specific Claim Auditor - An individual who reviews specific stop loss claims to insure the TPA processed the claim in accordance to the group's plan of benefits as well as the stop loss policy.

Specific Deductible - The specified dollar amount paid on an individual claimant by an employer's plan before the stop loss policy will reimburse additional expenses. This amount is also referred to as the employer's liability under the contract.

Specific Stop Loss - The form of stop loss coverage that provides protection for the employer against a high dollar claim on any one individual. This is protection against abnormal severity of a single claim rather than abnormal frequency of claims in total. Also known as Individual Stop Loss.

Split Funding Corridor - An additional amount of liability assumed by the employer in exchange for lower premium rates. The employer is then responsible for paying claims over the specific deductible until the additional liability amount is exhausted. If claims do not exceed the specific deductible, then all the employer pays is the reduced premium amount.

Terminal Liability - A product that provides the employer with additional coverage upon termination of the self-funded plan for claims paid within three months after the end of the policy. This product is designed to prevent a gap in coverage when the employer purchases a fully insured product.

Termination Date - The date the policy is no longer in effect triggered by HCC Life or the client per the policy provision. The expiration date is different than the terminated date.

TPA - Third Party Administrator (also known as Plan Supervisor). A non-risk-bearing company that provides claims and administrative services for a self-funded client.

UB-92 - A generally accepted form used by hospitals to document and submit claims that has been in use since 1993.

Underwriter - An individual responsible for evaluating whether or not an insurer should assume a particular risk.

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Underwriting - The process of evaluating and pricing risk for each client based on the amount of risk involved.

Utilization Review - Process of certifying medical necessity for hospitalizations and procedures. Typically handled by an outside vendor arranged by the producer.

Variance - When a group sends in premium with number of lives and either the premium or the commission amounts are not equal to what the system calculates for that number of lives. We then send out a variance letter with a correct worksheet and explain the difference. Enrollment variance for underwriting purposes is when there is a change greater than 10% in the enrollment of the group, the underwriter may choose to trigger a provision of the policy and change the rates and/or factors the group contract is based on.

Vendor - Anyone who creates, maintains, or sells an insurance product to agents and employers, or otherwise has a direct or indirect relationship with HCC Life.

Waiver of Premium - In the event of a qualifying disability, life insurance premiums for the primary insured or covered employee and any covered dependents are waived during the disability period.

Written Premium - Expected premium calculated using initial enrollment. Calculation = Initial Enrollment x Gross Rate(s) x Number of Months in Policy. Total expenses included in the pricing of a policy. These include commissions, management fees and premium taxes. The acquisition expenses are added to the amount of premium we need to pay a client's stop loss claims.

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