Here are some of the more commonly used employee benefit terms. If there are any terms that you would like clarification on, or would like to see added to this list, then please let us know.

Accidental Death & Dismemberment – payable only in the event of death or dismemberment resulting from an accident. Severity of the loss determines the payment sum.

Adjusted Incurred Claims - the incurred claims, adjusted for trend to be brought up to current levels.

Adjusted Premium – the billed premium for each experience period, adjusted to reflect current rates, demographic changes and the impact of plan amendments.

Administrative Services Only (ASO) – an arrangement under which a company (insurance company or third party administrator (TPA)) will, for a fee, handle the administration of claims, benefits, and other administrative functions, but bears no liability arising from claims against those services. The employer self-insures the cost of providing the health and dental benefits. As there is risk involved, ASO is most suitable for large employers.

Beneficiary – an individual who is receive the insurance proceeds at the death of the insured.

Billed Premium – the actual amount of premium billed to the client by the insurance company during each experience period.

Coinsurance – a provision in a health insurance contract by which the insurer and insured share, in a specific ratio, the covered expenses under a policy. For example, the insurer may reimburse the insured for 80 per cent of covered expenses, the insured paying the remaining 20 per cent of such expenses.

Contingent Beneficiary – an individual or entity that is entitled to receive the proceeds of a life insurance policy if the primary beneficiary is not living at the time of the insured’s death. The contingent beneficiary can be an individual or several individuals.

Cost Plus – can provide for payment of any health and/or dental treatments that are not covered under your benefits plan, or can be used to pay for any co-insurance.  Items to be covered by Cost Plus must meet the Canada Revenue Agency (CRA)’s list of eligible expenses under a Private Health Services Plan (PHSP). It is important that the Cost Plus coverage not just be offered to your company’s shareholders (see page 4 – https://hermes.manulife.com/canada/repsrcfm-dir.nsf/Public/TaxTopicIndividualInsuranceforEmployeeGroupPlans/$File/tepg_taxtopic_IndInsEGP.pdf).

Credibility – the probability that past claims experience for the client will be consistent and therefore an accurate reflection of claiming patterns that are likely to occur in the future.

Critical Illness – provides a one time lump sum tax-free payment (usually within 30 days) in the event the insured is diagnosed with one of the critical illnesses listed in the insurance policy.

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

Dental – provides coverage for dental care work. Premiums paid can be used towards your medical expense tax credit under your income tax. There are 3 categories of dental coverage:

  • Basic – preventative and restorative work (incl. examinations, fillings, cleanings, scalings, root canals).
  • Major – caps, crowns, onlays, dentures, bridges, etc.
  • Ortho – braces for dependant children under the age of 18.

Dependent Life – provides the employee with a one time cash benefit in the event of loss of life of a spouse or child.

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

Dispensing Fee – the charge made by a pharmacy (in addition to the ingredient costs) for dispensing prescription drugs.

Extended Health Care – supplements provincial health care plans to help cover costs such as : out of country travel, hospitalization, prescription drugs, medical equipment, vision care, professional services, etc. Premiums paid can be used towards your medical expense tax credt under your income tax.

Evidence Of Insurability – proof of an individual’s good health, required by the insurance company before optional life insurance or disability coverage is approved.

Fee Guide – a list of procedure codes and recommended charges for individual treatments performed by dentists.

Generic Drug – a drug with the same active ingredients, strength and effectiveness as the original brand-name drug, Generic drugs are generally less expensive than their brand-name equivalents.

Incurred But Not Reported Reserve (IBNR) - a reserve established to cover the insurance company’s liability for claims incurred by plan members during the experience period but, due to natural lag, will be reported to and paid by the insurance company during the following period. The insurance company retains liability for these lag claims, even if the client terminates their coverage.

Incurred Claims – paid claims for the experience period, adjusted to include the change in reserve.

Integration – coordination of the disability income insurance benefit with other disability income benefits, such as Canada and Quebec Pension Plans.

Life Insurance – payable in a lump sum to the employee’s beneficiary (tax-free) in the event of death. It has no cash value, and in many instances, can be converted to an individual policy when coverage under the group plan terminates.

Long Term Disability (LTD) – provides a monthly benefit in the event of a total disability. The amount received is based on the amount earned before the disability began. Coverage usually begins at 119 days (after the WI/STD benefits cease), and run either for 2 years, for 5 years, or to age 65.

Non-Evidence Maximum (NEM) or Non-Evidence Limit (NEL) – the maximum amount of life insurance or disability coverage that can be obtained without providing medical information.

Paid Claims – the actual amount of claims submitted and paid by your insurance company within the  experience period.

Pooled Claims – claims in excess of a pre-determined level that are removed from the paid claims in each experience period so that they wil not impact the experience rating.

Scaling Unit – each scaling unit represents 15 minutes in the dentist’s chair. The number of scaling units provided under an employee benefit plan varies from insurance carrier to insurance carrier, with 10-16 annual units being the norm. If you are switching insurance companies, it is imperative that the number of scaling units be as close as possible in order to avoid any potential surprises for the employees when at the dentist’s office.

Trend Factor – the expected increase to paid claims as the result of inflation, increased utilization, the introduction of new drugs and treatments, delisting of government services, deductible leveraging, and changes to provincial dental fee guides.

Weekly Indemnity (WI)/ Short Term Disability (STD) – provides weekly financial protection in the event of a total disability. The amount received is based on the amount earned before the disability began. Coverage usually begins at hospitalization or accident or fater 7 days of illness, and continues for 119 days.

Weighting – the level of emphasis applied to each experience period used to calculate the weighted adjusted incurred loss ratio. The weighting used depends on the benefit and the pattern of past experience.

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