A method of payment for health services in which a physician or hospital is paid a fixed, per capita amount for each person served, regardless of the actual number of services provided to each person. Your managed care organization (MCO) gives your doctor a certain amount of money to treat you. If you are healthy and don’t require much treatment, your MCOmay not need to use all the money allotted for your care. The leftover money turns into profits for the MCO. But if you have a disability and require repeated and expensive care, your MCO may lose money on your care.
Career average pay formula
A benefits formula that ties pension benefits to the participants’ earnings over the entire period with the employer.
Cash balance plan
A hybrid type of pension plan that meets the funding and legal qualifications for a defined benefit pension plan but is communicated like a defined contribution plan. Funds are held in individual interest-bearing accounts for each participant and translated into a defined benefit at retirement.
Cash Or Deferred Arrangement (CODA)
An arrangement under Section 401(k) of the Internal Revenue Code in which employees agree to forgo compensation that is then credited to a tax-exempt trust for the benefit of the employee.
Cash surrender value
The amount available in cash upon voluntary termination of a policy by its owner before it becomes payable by reason of death or Maturity.
See Certified Compensation Professional.
See Certified Employee Benefit Specialist.
A statement issued to individuals insured under a group policy that explains the essential provisions relating to their coverage.
Certified Compensation Professional (CCP)
A professional designation granted by the American Compensation Association.
Certified Employee Benefit Specialist (CEBS)
A professional designation awarded by the International Foundation of Employee Benefits Plans in conjunction with the Wharton School to individuals who complete ten college-level courses and examinations.
Certified Pension Consultant (CPC)
A professional designation awarded by the American Society of Pension Actuaries to individuals who complete three examinations and meet experience requirements.
CHFC or Chartered Financial Consultant
A professional designation granted by the American College of Life Underwriters to agents and others in the life insurance field who meet experience requirements and pass tests.
Any request for payment of benefits under a plan; notification to an insurance company that payment of an amount is due under the terms of a policy.
Money set aside to pay for ongoing or unreported claims against an employee benefits plan.
Full (100 percent) vesting of benefits after the completion of a specified number of years of service.
A type of health care plan in which services are provided by a preselected group of medical professionals.
or chartered life underwriterA professional designation granted by the American College of Life Underwriters to agents and others in the life insurance field who meet experience requirements and pass tests.
A fixed amount or percentage you pay a provider for treatment covered under your plan. For example, an HMO may charge you a $10 fee for each doctor visit.
See coordination of benefits.
Consolidated Omnibus Budget Reconciliation Act of 1985, which requires employers to offer continuation of group health coverage, at cost, to most employees and dependents who cease to become covered by employer-provided health insurance.
Seecash or deferred arrangement.
An insurance provision that requires that the insured individual pay a fixed percentage of losses covered by the policy. Insured employees thereby receive less than 100 percent reimbursement for covered claims.
See cost-of-living adjustment.
See corporate-owned life insurance.
Collective bargaining agreement
A contract between an employer or group of employers and a labor union or group of labor unions representing employees that covers wages, hours, and conditions of employment.
Collectively bargained plan
A pension plan that provides benefits under a contract established by the collective bargaining process between a union and an employer.
An employee benefits plan with both insured and trusteed plan features. Also, the use of two or more pension plans in combination, (e.g., a defined benefit plan and a 401(k) plan) to provide pension benefits for employees and their beneficiaries.
Judicial precedent used by the courts to interpret legislative intent when statutes are not specific. Judicial precedent is in the form of the body of published or known court rulings from both federal and state courts. In some cases, precedent extends back to precolonial English courts.
A system of billing for insurance costs on the basis of average claims experience for the general population as opposed to the claims experience of the particular employer. For example most HMOs use a community-rated billing system based on the entire client population of the HMO. See alsoexperience rating.
Comprehensive major medical insurance
A policy that combines the protection of a basic policy with a major medical policy, typically offering a low deductible, a coinsurance feature, and high maximum benefits.
A work schedule in which work normally accomplished in a five-day workweek is compressed into a shorter period, usually four days.
A cost containment method under which hospital admissions for elective and emergency treatment are reviewed and certified for appropriateness within twenty-four hours following admission, with both ongoing review for continued stays and postdischarge audits of the bills received.
Consolidated Omnibus Budget Reconciliation Act of 1985
Under the Internal Revenue Code, an individual who has the right to receive money at a particular time is considered in constructive receipt of the money and is taxed as if it were paid at that time, even if the individual chooses to receive the money later or to receive a normally untaxable benefit instead. Section 125 of the Internal Revenue Code provides a special exception to this rule.
Consumer price index (CPI)
An indicator of the cost of living, published by the U.S. Department of Labor’s Bureau of Labor Statistics, that measures price changes in a fixed “market basket” of goods and services purchased by a hypothetical average family. The CPI-U reflects the buying habits of all urban consumers; the CPI-W reflects the buying habits of wage earners and clerical workers.
The portion of plan contributions or premiums that is placed in a special account to cover the possible loss from adverse conditions that may result from investments, interest earnings, mortality, and withdrawals.
Individual(s) designated under an annuity policy to receive the payments in the event of the annuitant’s death.
Individual(s) designated under an annuity policy to receive the payments in the event of the primary beneficiary’s death.
Any pay or benefit that is dependent on the performance or productivity of the employee.
Continued stay review (CSR)
A utilization review that determines whether continued hospital care is appropriate.
An employee benefits plan to which the participants contribute a portion of the funds to finance the benefits provided by the plan. Contributions may be either voluntary or mandatory (i.e., required as a condition of participation).
Conventional insurance contract
An insurance agreement under which the insurer pays claims from the premium and adjusts reserves, returning any surplus to the employer after deducting for operational costs.
A fund used in connection with individual or group insurance policies, the assets of which are separately invested and used to purchase life annuities for retired participants.
Usually refers to the employee’s right to convert from group to individual coverage upon termination of group coverage without providing evidence of insurability.
Convertible term insurance
Term life insurance that can be exchanged for another plan at the option of the policyholder and without evidence of insurability.
Coordination of benefits (COB)
A provision of a group health insurance policy that eliminates duplicate payments from multiple carriers and limits benefits to 100 percent of expenses. The provision also designates the sequence in which primary and secondary coverage will be paid when an individual is insured under two contracts.
The basic benefits provided to employees covered by a flexible benefits plan, before add-ons.
Under a flextime arrangement, the hours when all employees are expected to be at work.
Corporate-owned life insurance (COLI)
Cash value life insurance that has the employer as the policyholder. It may be used to finance nonqualified deferred compensation arrangements.
A trust company or the trust department of a bank.
Cost-of-living adjustment (COLA)
An increase in pay, retirement earnings, or other income benefits designed to catch up with increases in the cost of living. COLAs are generally tied to changes in the consumer price indexes.
A process that attempts to limit services that may drive up costs.
Having employees pay part of the cost of the health care that they receive through deductibles, coinsurance, and so forth.
An employee who has fulfilled the eligibility requirements of a pension plan, for whom pension benefits are being accrued or have been accrued, or who is receiving benefits under the plan.
Hospital, medical, and miscellaneous health care expenses incurred by insured individuals that entitle them to a payment of benefits under a health insurance policy. Found most often in connection with major medical plans, the term defines by either description, reasonableness, or necessity the type and amount of expense that will be considered in the calculation of benefits.
The period of employment during which an employee is a participant in a benefits plan.
See certified pension consultant.
Seeconsumer price index.
Credit life insurance
Term life insurance issued through a lender or lending agency to cover payment of a loan, installment purchase, or other obligation in case of death.
Under ERISA, each anniversary year in which an employee completes at least 1,000 hours of service.
As an employee that is counted in calculating benefits amounts under a pension plan.
An association set up to provide small loans to association members at favorable rates.
Seecontinued stay review.
As an employee while participating in a pension plan after its adoption.
As defined in ERISA, fair market value of plan assets, if it is available. Otherwise, current value is the fair value as determined in good faith by a trustee or named fiduciary pursuant to the terms of the plan and in accordance with Department of Labor regulations, assuming an orderly liquidation at the time such determination is made.
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