Glossary

A schedule of benefits is an outline of the benefits that a plan covers.  This section often describes the exact values of items to which the body of the plan document refers, such as the deductible and out-of-pocket maximum.  The schedule of benefits also includes any yearly or lifetime limitations on specific benefits.

A secondary plan is a plan that, when coordinating benefits with another plan, the plan provisions determine must process and pay claims after the primary plan.

A Section 125 plan is a flexible benefits plan, which conforms to the rules and regulations that IRC Section 125 describes.

Self-funding is an arrangement where an employer pays claims with its own funds.  No insurance company collects premiums or assumes risk.  However, a self-funded employer may hire a third-party administrator (TPA) to process claims and a stop-loss insurer to cover excess losses.

The term "self-insured" refers to self-funding.

Shock loss refers to a large loss that significantly affects the claims experience of a group.  It generally represents claims on a single claimant during a single contract period that totals more than 50 percent of the specific stop-loss deductible.

STD coverage is temporary income replacement for a covered person who is disabled because of an accident or illness.

The Small Employer Group Health Coverage Act is a state law in Michigan that regulates health plans that are offered to small employers (i.e., an employer with two to 50 employees on 50 percent of its working days during the preceding and current calendar years).  The Act sets minimum participation standards, prohibits carriers from imposing pre-existing condition waiting periods for new and late enrollees, allows affiliation periods, and prohibits a minimum contribution level for employers.

The term "SMM" means summary of material modifications.

The term "SPD" means summary plan description.

A special enrollment period is the time an individual with special enrollment rights has to make enrollment elections under a plan.  The Health Insurance Portability and Accountability Act of 1996 (HIPAA) and federal regulations issued persuant to HIPAA prescribe the circumstances under which an individual has special enrollment rights.

The specific deductible is the dollar amount that an employer's plan must pay before the specific stop-loss policy will reimburse additional expenses.

Specific stop-loss coverage is a type of excess-risk coverage that provides protection for the policyholder (e.g., the employer) against claims on any one individual that exceed a predetermined amount (e.g., the specific deductible) during a specified contract period.

The term "STD" means short-term disability.

Stop-loss coverage is an insurance policy that a self-funded employer purchases in order to protect against catastrophic loss.  It is also called excess-loss coverage.

Subrogation is the plan's right to recover benefits that are paid to a covered person through legal suit against another party if the expenses the covered person incurred and the employer's plan paid are the fault of another party.  Subrogation includes the plan's right to be substituted in legal action against any party from which the covered person may recover. 

An SMM is a summary of plan changes that an employer must distribute to plan participants when there is a modification to the plan or a change in the information that regulations require to be in the summary plan description (SPD).

An SPD is an easy-to-read document that describes a plan's benefits, eligibility provisions, employee rights, and appeal procedures.