In Benefits Q&A

Adjudication: the process used by the insurance company to determine the eligibility of a claim and the amount to be reimbursed.

Calendar Year Maximum: the maximum coverage available to an insured individual between January 1st and December 31st.

Claims Experience: a measure of the claim payments made by the insurance company to the premium payments made to the insurance company.

Coinsurance/Co-Pay: the percentage the insurer is responsible for paying for an eligible claim. As an example, an 80% co-insurance 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%.

Coordination of Benefits (COB): This is the process by which a health insurance company determines if it should be the primary or secondary payer of medical claims for a patient who has coverage from more than one health insurance policy.

Deductible: a dollar maximum that must be met by the employee before reimbursement of a claim begins.

Dependent: any of the following individuals actively enrolled under a Government plan (ie. MSP) who is covered under the benefit plan and continues to meet our eligibility requirements

  1. One Spouse of the Member
  2. any unmarried child, stepchild, legally adopted child or legal ward (but not a foster child) who is under age 19 or 22 and financially dependent on the Member or the Spouse, and
  3. Under the age of 25 or 26 if the unmarried child is also in full-time attendance at a recognized educational institute, and
  4. any unmarried disabled child of any age who is living with and is financially dependent on the Member and/or Spouse and is incapable of self-sustaining employment. Disabled status is subject to approval by Us. The Dependent must become disabled while covered as a Dependent under Clause 2 and 3 above.

The Member must be prepared to prove that an individual claimed as a Dependent falls within these requirements.

Incurred Claims: claims that were incurred but not yet submitted for reimbursement (typically referred to as the ‘incurred but not reported’ (IBNR) reserve). The IBNR addresses the lag between the date a claim has occurred and the date the claim is actually paid out.

Claims outstanding vary by benefit in determining the IBNR:

Benefit IBNR
Extended Health Care 19.5% of claims without a drug card, 7.0% of claims with a drug card
Vision Care 18.9% of claims
Dental Care 5.2% of claims

Incurred Loss Ratio
: the proportion of incurred claims to paid premiums during the policy year period.

Inflation: a sustained increase in health care costs. Due to the trend of rising health care costs, it is necessary to adjust past experience figures for the expected rise in future claim costs. An inflationary adjustment is therefore included when evaluating the claims experience.

  • This ‘trend factor’ differs by benefit and reflects the various inflationary impacts that will affect the claims. This year, the trend factors applied were 6% for EHC and 4% for Dental Care.
  • The inflation rate for health benefits is typically significantly higher than the general Consumer Price Index (CPI).

Late applicant: an employee or dependent who did not apply within the allotted period of time and must now medically qualify.

Member: an Employee or other person who has coverage under the benefit plan.

Pool: a practice whereby a group of firms joins together to secure better insurance rates and coverage plans by virtue of their increased buying power as a block.

Reserves: the estimated amount of money that must be set aside to pay for future claims. There are different kinds of reserves including a disabled life reserve, waiver of premium reserve, and an incurred but not reported reserve.

Disabled Life Reserve: the estimate of the current value of all future periodic payments to a Long Term Disability Claimant;

Waiver of premium reserve: is established when an employee becomes totally disabled in preparation to pay a life claim and

Incurred but not Reported Reserve: a portion of the group benefits plan premium that is set aside for claims that are incurred in one contract year but are not reported until the next contract year.

Spouse: a person legally married to the Member of a benefit plan or a person who has been residing with the Member in a common-law relationship for at least 1 year and who is publicly represented as the Member’s Spouse. Only one Spouse is eligible for coverage under the benefit plan at any one time.

Stop Loss: Insurance purchased through the insurance company that provides a layer of protection for catastrophic risk. For BCCA Employee Benefit Trust, Extended Health Care claims in excess of $25,000 per person per year are removed from the pool’s claims experience.

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

Waiting Period: the period of time an employee must wait from the hire date before they are eligible for the benefit plan.

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