Do you find employee benefits terminology confusing? It is an industry full of “insurance speak”, and a lot of acronyms.  This glossary will help.

Administrative Services Only – this type of contract is “self insured” and means that you are paying the insurance company a fee to provide administrative services such as claims adjudication and payment.

ASO – common acronym for above.

Adjudication – the process the insurance company uses to determine if a submitted claim is acceptable to be reimbursed.

Basic dental coverage – typically includes coverage for cleanings, fillings, x-ray, endodontic and periodontic work.

BA – Bachelor of Arts. Not insurance related. It’s the degree I completed at the University of Guelph and it follows my name wherever it goes.

Benefit year maximum – the maximum coverage available to the insured between the renewal dates of an insurance contract. Not to be confused with a “Calendar Year Maximum”.

Cafeteria Plan – see Flex Plan.

Calendar year maximum – the maximum coverage available to an insured between January 1st and December 31st. Not to be confused with “Benefit Year Maximum”.

Claims experience – a measure of the insured claim payments received from the insurance company to the premium payments made to the insurance company. See also paid loss ratio and incurred loss ratio.

CMS – Compensation Management Specialist. An industry designation conferred on me by the International Foundation of Employee Benefit Plans and Dalhousie University.

Cost Plus – a very tax effective method of reimbursing claims not eligible to be paid through the group plan by using an insurance company to administer the claim payment. Premiums are not charged on a monthly basis for this coverage but rather there is an administration charge at time of claim. Considered an “add-on” benefit under most group plans. Well worth investigating for your plan!

Co-insurance – this means that the costs of a specific claim are being shared between the individual submitting the claim (employee) and the insurance company. As an example, an 80% co-insured benefit means the insurance company is reimbursing the employee 80% of the cost of the claim and the employee will be responsible for the remaining 20%.

Co-pay – see above.

Coordination of benefits – the ability of an employee to claim their portion of the “co-insurance” through their spouses benefit plan.

COB – acronym for above.

Critical illness insurance – will provide a lump sum of cash to the insured if they are diagnosed with a covered illness. Designed to provide the funds necessary to make the lifestyle adjustments required after an illness. Examples include a wheelchair ramp, stair lift or the funds can be used to seek alternative treatments for the illness.

Credibility – the statistical validity of an insured groups claims experience. Used during renewal underwriting to determine renewal rates.

Deductible – a specific dollar maximum which must be met before claims reimbursement begins.

Dental Fee Guide – each year the dental association publishes a fee guide which outlines the charges for specific dental treatments. Most benefit programs automatically adjust their coverage to correspond with changes in the fee guide. However, some plans can be based on Current Fee Guide minus 1 year (or 2 years, or 3 years….) which means the employee is responsible to pay the dentist the difference in the cost between fee guides.

Disability insurance – designed to replace your income in the event that you are unable to work due to accident or illness. See also Short Term Disability and Long Term Disability.

Dismemberment – coverage can be provided for the specific loss of, or the loss of use of, digits, limbs, sight, hearing, etc.

Employee Assistance Program – an anonymous referral based program that employees can utilize to seek help with a vast array of issues including, but not limited to, mental health, financial well being, marital and substance abuse problems.

EAP – commonly used acronym for above.

Flex Plan – provides each employee the ability to use “credits” assigned by their employer to enroll in the level of coverage they require. In other words, each employee could have a different benefit plan that is specific to their own situation. These contracts are limited to very large employee groups and require a dedicated human resources team to help administer.

Fully Insured Plan – these programs do not share any risk between the insurance company and the contract holder. The insurance company is liable for all eligible claims submitted.

Generic drug coverage – drugs that offer the same benefit as a brand name drug but cost less and thus have a lower impact on claims experience.

GBA – Group Benefits Associate. An industry designation conferred on me by the International Foundation of Employee Benefit Plans and Dalhousie University.

Health care spending account – funds placed in an “account” by the employer to be used by the employee as they wish. Usually a “top-up” for an insured plan.

HCSA or HSA – see above.

Incurred loss ratio – paid claims are grossed up by a factor to account for claims that have been incurred by the plan members but have not been submitted yet. This grossed up number is measured against the premium paid by the contract holder to determine how close to the predetermined target the client is. This is used during the renewal process to establish renewal rates.

Living Benefits – A suite of insurance products that provide money in the event of a diagnosed critical illness or disease which may prevent you from working. Includes Critical Illness insurance, Short and Long term disability products.

Long Term Disability – insurance coverage designed to provide you with a monthly income if you are unable to work due to accident or illness.

Major dental coverage – typically includes coverage for crowns, bridges and dentures.

Modular plan – see Flex plan.

Out of Country coverage – emergency medical travel insurance typically found as part of healthcare coverage. Provides emergency medical care while travelling abroad for business or pleasure.

Paid loss ratio – see claims experience.

Short term disability – insurance coverage designed to provide you with a weekly income if you are unable to work due to accident or illness.

Target Loss Ratio – the ideal ratio, as established by the insurance company, of premium received from the contract holder and claims paid out. Claims experience is measured against this target when the insurance company sets the renewal rates