Glossary of Terms

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Accidental Death and Dismemberment (AD&D)

Coverage that pays benefits in the event an individual dies or is dismembered as a result of an accident.


Coordination of Benefits (COB)

Process whereby insurance carrier must determine claim liability when an individual has coverage under more than one plan.

Consolidated Omnibus Budget Reconciliation Act (COBRA)

Legislation enacted in 1986 designed to extend coverage to terminated employees and their families, as well as for dependents losing coverage due to death of employee, divorce, etc.

Co-payment (co-pay)

A fixed amount that the member or covered insured must pay out-of-pocket.



The annual amount of medical expense that must be incurred before benefits are payable.


Employee Assistance Program (EAP)

A confidential counseling and referral program to assist employees and their families with life’s challenges (e.g., stress, substance abuse, child care) that may affect their job performance.

Explanation of Benefits (EOB)

Statement given to employees to explain how a claim was paid and to whom.


Flexible Spending Account (FSA)

This plan is regulated by IRC Section 125.


A panel of drugs chosen by a managed care organization to treat patients. Drugs outside the formulary are rarely used unless medically necessary.


Health Maintenance Organization (HMO)

Network of physicians/hospitals that provide services on a prepaid basis. Patient usually pays a small co-payment for office visits and nothing for hospitalization. All services, treatment, and referrals must be coordinated through the primary care physician or there are no benefits.


Long Term Disability (LTD)

Provides partial income protection against income loss due to an illness or injury for “long term” disabilities.



Any individual or dependent who is enrolled in, and covered by, a health care plan.


Open Enrollment

The annual period during which employees are allowed to enroll and/or transfer between employer-sponsored plans.


Preferred Provider Organization (PPO)

Network of physicians and/or hospitals that provide services at reduced rates to employees. Employee has the option whether or not to use network providers.

Primary Care Physician (PCP)

A family practitioner, general practitioner, or internist that you select from a list of network physicians who is responsible for the coordination of every aspect of your medical care when you are enrolled in an HMO plan.


Short Term Disability (STD)

Provides partial income protection against income loss due to an illness or injury for “short term” disabilities.

Skilled Nursing Facility (SNF)

A facility that provides inpatient services for persons requiring skilled nursing care.

State Disability Insurance (SDI)

A state-administered plan that provides partial income protection for income loss due to an injury or illness. The following five states provide SDI coverage: CA, RI, NJ, NY, and HI.

Summary Plan Description (SPD)

Booklet or certificate that explains benefits and employee rights.


Usual, Customary, and Reasonable (UCR)

The level whereby a claim charge is based upon historical fee patterns deemed to be in line with normal charges for the same procedure performed in the same area.


Workers’ Compensation (WC) Insurance

Provides income protection against income loss due to a job-related injury or illness.