Acronyms, Glossary and Definitions
A/E – Actual to Expected
COB – Coordination of Benefits
ERM – Enterprise Risk Management
HMO – Health Maintenance Organization
IBNP – Incurred But Not Paid
IBNR – Incurred But Not Reported
IRC – Internal Revenue Code
IRS – Internal Revenue Service
MEWA – Multiple Employer Welfare Association
NAIC – National Association of Insurance Commissioners
PEO – Professional Employer Organization
TPA – Third Party Administrator
VEBA – Voluntary Employee Welfare Organization
Active Life Reserve. This is the combination of (a) contract reserves and (b) unearned premium reserves. This is one of the four categories of reserves, each of which is a function of status: (a) active, (b) disabled, (c) retired and (d) claim.
Claims Adjudication. This is the process of claims processing in its entirety.
Claims Due and Unpaid. These are claims which have been approved for payment but which have nots been released into the “mail stream”.
Claims Liability. The sum of (a) IBNR, (b) IBNP, (c) claims due and unpaid and (d) outlers which are individually-valued.
Development Method. This is often referred as the (a) Completion. (b) Extension, (c) Traditional or (d) Projection Method. The Method uses a traditional lag report (using incurred and paid dates) to assists in projecting the unpaid claims.
Health Benefits. Hospital (or institutional), physician (or similar), Rx, Vision, dental and disability.
Incurred Date. The date defined as such in the computational protocol. Examples include: (a) date of accident or onset of illness for a claims made, (b) date of diagnosis or (c) date of treatment for a claims paid.
In Course of Settlement. The reserve amount attributed to claims already known and identified by the claims payer but not (a) adjudicated, (b) settled or (c) paid. This reserve amount contrasts with claims liabilities which have not yet been identified by the claims payer (i.e., the IBNR portion). This reserve amount may also be described as reserves for claims which are on file on the Valuation Date but have not bee both adjudicated and paid.
Incurred But Not Paid. This claims liability is the sum of (a) IBNR, (b) In Course of Settlement and (c) Due and Unpaid.
Lag. The time interval between the (a) incurred date and the (b) paid date. It might also the time interval between the (a) report or notification date and the (b) paid date.
Loss Adjustment Expense. This is the amount added to the Claim Reserve to cover the administrative or processing cost of paying the reserved claims.
Outlier Claim. Any claim which, because of it characteristics (size, extended settlement period, e.g.), is more accurately or efficiently measured for claim reserve purposes, on a per case basis as opposed to the lag data basis.
Present Value of Amounts Not Net Due. This also commonly referred to as the Disabled Life Reserve. This liability recognizes the long-range periodic benefits inherent with (a) disability income and (b) long-term retirement care benefits. It is always separate from the Claim Reserve.
Per Member Per Month. This quotient is the monthly financial cost/Income amount divided by the number of covered persons (or members)(participants, spouses and children).
Resisted Claim Reserve. Such may also be referred to as a contested or litigated claim. It is a claim liability but is valued using its own set of facts and circumstances.
Seasonality. Phenomenon where claims vary by calendar month for reasons typical not medical in nature.
Trending. The rate at which health costs are expected to change (usually increase) in the future.
Valuation Date. The date as of which the claim reserve is computed.