Accidental Death and Dismemberment (AD&D)

Insurance that pays a benefit when there is a loss of life, limb or eyesight as the result of an accident.

ADA (Americans with Disabilities Act of 1990;)

Prohibits discrimination in employment based on disability.


Periodic payments made to a benefit recipient, e.g. a monthly retirement benefit. (Contrasted to a lump sum.)


A person or entity designated to receive a benefit as a result of the death of the participant.


The maximum limit, e.g. the maximum amount of years of service that will be recognized, or the maximum amount of expenses for which one will be responsible.


An insurance company or other agency that administers a program such as life insurance or medical coverage.


A demand for payment, either by a participant in a plan or by a provider of services.

COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985;)

A federal law that significantly affects health plans by mandating the offer of the continuation of coverage for an employee or dependents subject to certain requirements.

Conversion of Coverage

When coverage under a group insurance contract ends, the act of obtaining individual insurance (typically at greater premium rates).


A stated amount of payment required by the recipient of a service; can be stated either as a dollar amount or as a percentage of the eligible expense.


When a person has satisfied the requirements to be entitled to a benefit; when an expense will be recognized for determining a benefit. (See also "eligible." An individual may be eligible for, but not covered by, a benefit plan.)


The amount of out-of-pocket expense that is first borne by the insured/covered individual before a plan pays a benefit.

Deduction [from Salary]

The employee's share of (premium) expense that is contributed via payroll, subject to current income tax. (SeeReduction [of Salary].)

Defined Contribution (DC) Plan

A retirement plan that specifies how much is contributed on behalf of a participant. The benefit is whatever the accumulated contributions can purchase. CLU's TIAA-CREF is a defined contribution plan.


Generally, a spouse or child(ren) of a participant; for some benefits, it may include a parent or other family member.Dependent is defined by each respective benefit plan or contract.


Recognized or covered for purposes of determining a benefit. (See "covered." An individual may be eligible for, but not covered by, a benefit plan.)

Flexible Spending Account (FSA)

An account by which an employee uses pre-tax deductions to accumulate funds for reimbursement of eligible expenses, governed by Section 125 of the Internal Revenue Code. Such accounts reduce taxable wages, and the funds are designated for use to reimburse either health care expenses or dependent care expenses. The funds must be used in the same plan year or forfeited by the employee/participant. (Also referred to as reimbursement account.)

Health Maintenance Organization (HMO)

Prepaid medical service group that emphasizes preventive health care. It is often characterized by predetermined health benefits in a specific "service area," with no claim forms required of the participant.

Health Plan

Refers to either medical, dental or vision coverage.

Health Savings Account (HSA)

A health savings account (HSA) is a tax-advantaged medical savings account available to taxpayers in the United States who are enrolled in a high-deductible health plan (HDHP). The funds contributed to an account are not subject to federal income tax at the time of deposit.

Qualified Life Event (Change in Family Status)

As defined by the Internal Revenue Code, an event that permits a change in coverage in the middle of a plan year. The most common forms of a life event are marriage or divorce, birth or adoption of a child, disability or death of a dependent, or change in employment of the participant or spouse.


The employer pays the entire cost of the benefit plan.

Open Enrollment [Period]

A specified period of time during which eligible participants are allowed to make changes in their coverage in a benefits plan. This may be in a health, life insurance, or flexible spending account plan.

Out-of-Pocket Expense

The cost for services that a participant must pay. This may include a deductible or copayments. Generally, it does not include "penalties" paid by a participant.

Participating Provider

A physician or other health care provider who has an agreement to provide services to participants in a plan.

Preferred Provider Organization (PPO)

A group of physicians and other health care providers that contract to provide services on a discounted fee-for-service basis. Costs (to participants or employers) are usually lower than a fee-for-service indemnity plan.

Primary Care Physician

(PCP) a family practitioner, internist, obstetrician-gynecologist, or pediatrician who provides routine medical care, with referral to specialists.

Proof of Insurability

Certification by a qualified physician that a participant is without excessive health risk, for obtaining either health or life insurance coverage. Also, known as "evidence of good health."


A person or organization that furnishes service or care, e.g. a physician or nurse

Reduction [from Salary]

The tax-deferral of compensation, for example by contributing to a 403(b) or 401(k), or pre-tax premium contributions. May be subject to current state income tax.

Summary Plan Description (SPD)

A statement to participants that summarizes the provisions of a plan in an easy-to-read format. It includes descriptions of eligibility, coverage, employee rights, and procedure for appeals.


When a tax liability is postponed. This differs from tax-free.


Without current or future tax liability.


An outside company that will provide a benefit, or service of a benefit, for a fee.


Entitled to a benefit. May either be immediately or after a certain period of employment or participation in a benefit plan.