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Accelerated Benefit
A benefit of life insurance that allows an insured who is terminally ill or unable to perform two or more activities of daily living without substantial assistance to ask that a portion of his or her life insurance benefit be payable in advance to pay for required care. The life insurance benefit payable at death is reduced by the amount of the accelerated benefit that is paid.

Accidental Death and Dismemberment Insurance
A form of health insurance that provides payment in the event of death or specific bodily losses resulting from an accident.

Actuary
A specialist in the mathematics of insurance who calculates rates, reserves, dividends and other statistics. (Americanism: In most other countries the individual is known as "mathematician.")

Adjuster
A representative of the insurer who seeks to determine the extent of the insurer's liability for loss when a claim is submitted.

Adverse Selection
The tendency for people to avoid buying health insurance unless they are sure they will benefit from it. In a health insurance context, this means that people with chronic health problems are more likely to seek health insurance coverage than healthier people.

Age Discrimination in Employment Act ("ADEA")
A federal law that protects older employees from employment discrimination on the basis of age.

Agent
Typically someone employed full time by an insurance company, who specializes in and sells only insurance offered by that company.
1. Independent agent represents at least two insurance companies and (at least in theory) services clients by searching the market for the most advantageous price for the most coverage. The agent's commission is a percentage of each premium paid and includes a fee for servicing the insured's policy.
2. Direct or career agent represents only one company and sells only its policies. This agent is paid on a commission basis in much the same manner as the independent agent.

Alternative Medicine
Includes practices that differ from conventional medicine. Some alternative medicine practices are homeopathy, naturopathy, chiropractic, massage therapy, nutritional counseling and herbal medicine. A typical definition is "every available approach to healing that does not fall within the realm of conventional medicine".[1]
Alternative medicine practices may be based on non-traditional belief systems or philosophies, and some may not follow the scientific method. They may incorporate spiritual, metaphysical, or religious underpinnings, untested practices, pre-modern medical traditions, or newly developed approaches to healing. If an initially untested alternative medical approach is subsequently shown to be safe and effective, it may then be adopted by conventional practitioners and no longer considered "alternative".

Pros and cons
Pros
- Provides employees with more health care choices.
- Can be successful in treating conditions not responsive to traditional medicine.
- Can help in alleviating symptoms of chronic illnesses or injuries.
Cons
- Increased administration, cost and communication.
- Health effects of many therapies are still largely unproven.

Notes
Many alternative medicine expenses are reimbursable through health care spending accounts (Section 125).

Americans with Disabilities Act ("ADA")
A federal law that protects employees from discrimination on the basis of disability, and imposes upon employers the requirement that they make "reasonable accommodations" for their employees' disabilities.

Annuity
An agreement by an insurer to make periodic payments that continue during the survival of the annuitant(s) or for a specified period.

At-will Employment
An employment relationship in which either the employer or the employee may terminate the employment at any time for any reason.

Benefits
"Benefits" are job-related "perks," such as health, dental, vision, life, and disability insurance often with the insurance premiums paid partly or entirely by the employer as well as pension and retirement benefits.

Best Interests of Child
The legal standard a judge applies in deciding issues of adoption, custody, visitation rights or other matters affecting a child.

Benefit Period
The amount of time your California health insurance coverage is effective.

Benefit Schedules
A list showing how benefits are arranged for employees. For example: life insurance may be two times annual salary for in-office employees and two times commissioned earnings (excluding bonuses) for sales employees. It would also show any maximum benefit periods, elimination periods and any other variables along with premium amounts.

Broker
Typically someone who represents and sells insurance policies from several different companies; not employed by any one insurance company.
Insurance salesperson that searches the marketplace in the interest of clients, not insurance companies.

Broker-Agent
Independent insurance salesperson who represents particular insurers but also might function as a broker by searching the entire insurance market to place an applicant's coverage to maximize protection and minimize cost. This person is licensed as an agent and a broker.

Cafeteria Plan
A type of employment benefits plan in which the employee selects benefits from a "menu," up to a specified dollar amount.

CAL-COBRA
California Legislation that protects employees of companies with less than 20 employees. Picks up where the Federal Cobra laws leave off. Carriers are responsible for notification and administration. Premiums can be 10% higher than premiums paid by employer. It is important to acknowledge that the CalCobra entitlements are connected to the master plan of the company’s insurance. Therefore if the company no longer offers health insurance, there will be no Cal-Cobra health plan available to the former employee. This is true for Cobra participants as well.

Capitation
A flat per patient fee paid to providers no matter how many services they have provided.

Captive Agent
Representative of a single insurer or fleet of insurers who is obliged to submit business only to that company, or at the very minimum, give that company first refusal rights on a sale. In exchange, that insurer usually provides its captive agents with an allowance for office expenses as well as an extensive list of employee benefits such as pensions, life insurance, health insurance, and credit unions.

Carrier
An insurer, or insurance carrier, is selling the insurance; the insured, or policyholder, is the person or entity buying the insurance policy. The amount of money to be charged for a certain amount of insurance coverage is called the premium.

Case Management
Identifying an individual patient’s needs and problems, and devising a method to meet those appropriately and cost-effectively. Consultation with medical professionals helps the patient take advantage of care appropriate for the patient’s condition rather than a fixed set of treatments and procedures.

Casualty
Liability or loss resulting from an accident.

Casualty Insurance
That type of insurance that is primarily concerned with losses caused by injuries to persons and legal liability imposed upon the insured for such injury or for damage to property of others. It also includes such diverse forms as plate glass, insurance against crime, such as robbery, burglary and forgery, boiler and machinery insurance and Aviation insurance. Many casualty companies also write surety business.

Certificate of Coverage
A document issued to a member of a California group health insurance plan showing evidence of participation in the health insurance plan.

Certificate of Creditable Coverage
A written statement from your prior health insurance company or health plan documenting the length of time you were covered by that particular health insurance plan.

Chartered Property and Casualty Underwriter (CPCU)
Professional designation earned after the successful completion of 10 national examinations given by the American Institute for Property and Liability Underwriters. Covers such areas of expertise as insurance, risk management, economics, finance, management, accounting, and law. Three years of work experience also are required in the insurance business or a related area.

Claim
A demand made by the insured, or the insured's beneficiary, for payment of the benefits as provided by the policy.

COBRA
Consolidated Omnibus Budget Reconciliation Act; Federal legislation that allows you or a family member to continue your health plan enrollment when coverage is lost. A loss of coverage could include separation from employment, marriage of a dependent, a dependent reaching age 26, or divorce or legal separation. Act that gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce and other life events. Qualified individuals may be required to pay the entire premium for coverage of up to 102 percent of the cost to the plan.

Combined Ratio After Policyholder Dividends
The sum of the loss, expense and policyholder dividend ratios not reflecting investment income or income taxes. This ratio measures the company's overall underwriting profitability, and a combined ratio of less than 100 indicates an underwriting profit.

Commercial Lines
Refers to insurance for businesses, professionals and commercial establishments.

Commission
Fee paid to an agent or insurance salesperson as a percentage of the policy premium. The percentage varies widely depending on coverage, the insurer and the marketing methods.

Copayment
The amount you pay out-of-pocket for a service provided by a health care provider.

Co-insurance or Co-payment
A provision in a health insurance contract by which the insurer and insured share, in a specific ratio, payment of the covered losses.

Conversion Privilege
The right given to an insured person under a group insurance contract to change coverage, without evidence of medical insurability, to an individual policy upon termination of the group coverage.

Coverage
The scope of protection provided under an insurance policy. In property insurance, coverage lists perils insured against, properties covered, locations covered, individuals insured, and the limits of indemnification. In life insurance, living and death benefits are listed.

Deduction
A portion of an employee's paycheck that is "withheld" or "held back" by an employer. "Normal" deductions include payments for federal and state taxes, health insurance premiums, and union dues.

Deductible
The amount of covered expenses that must be incurred and paid by the insured before benefits become payable by the insurer.

Defined Benefit Plan
A pension plan in which the benefit to the retiree is some portion of the salary paid during the employment. For example, a plan that provides 50% of the average of the three highest earning years is a defined benefit plan. Compare "Defined Contribution Plan."

Defined Contribution Plan
A pension plan in which the employee and employer contribute to a plan in prescribed amounts, but whose benefits to the retiree will depend upon how much the plan earns. For example, a plan in which the employee and employer each contribute 5% of the employee's wages, but which has no obligation to provide any specific amount on retirement, is a Defined Contribution Plan. Compare "Defined Benefit Plan."

Dental Indemnity
A dental insurance plan that pays benefits in a predetermined amount in the event of a covered loss.

Disability Income Insurance
A form of health insurance that provides periodic payments when the insured is unable to work as a result of illness or injury.

Elimination Period
A specified number of days at the beginning of each period of disability during which no disability income benefits are paid.

Employee Assistance Program (EAP)
Provides family support services that address a variety of concerns such as legal support, bereavement counseling, eldercare counseling and other issues.

Employee stock ownership plan ("ESOP")
An employer-provided benefit that allows employees to purchase stock in the company under certain favorable terms.

ERISA
Abbreviation of the Employee Retirement Income Security Act, the federal law that regulates health and retirement benefits in employment.

Excess and Surplus Lines Carrier
an insurance company whose rates are not filed with a state and that is not protected by a state’s Guarantee Fund. They typically issue policies on businesses with a higher hazard element that admitted insurance companies wouldn’t cover.

FMLA
Family and Medical Leave Act; Covered employers must grant an eligible employee up to a total of 12 workweeks of unpaid leave during any 12-month period for one or more of the following reasons:
• for the birth and care of the newborn child of the employee;
• for placement with the employee of a son or daughter for adoption or foster care;
• to care for an immediate family member (spouse, child, or parent) with a serious health condition; or
• to take medical leave when the employee is unable to work because of a serious health condition.
Guaranteed acceptance
• A provision allowing employees to be accepted for the group insurance generally without having to provide medical evidence of insurability.

General Liability Insurance
Insurance designed to protect business owners and operators from a wide variety of liability exposures. Exposures could include liability arising from accidents resulting from the insured's premises or operations, products sold by the insured, operations completed by the insured, and contractual liability.

Health Insurance Portability and Accountability Act of 1996 (HIPAA)
HIPAA amended the Employee Retirement Income Security Act (ERISA), to provide new rights and protections for participants and beneficiaries in group health plans. HIPAA includes protections for coverage under group health plans and patient privacy. These protections limit exclusions for preexisting conditions, prohibit discrimination against employees and dependents based on their health status and allow a special opportunity to enroll in a new plan to individuals in certain circumstances. For individuals, HIPAA includes protections that guarantee access to individual policies for people who qualify and guarantee renewability of individual policies. HIPAA also gives consumers the right to access their health information and limits who can look at and receive a person's health information.

Health Maintenance Organization (HMO)
Prepaid group health insurance plan that entitles members to services of participating physicians, hospitals and clinics. Emphasis is on preventative medicine, and members must use contracted health-care providers.

Health Savings Account
Plan that allows you to contribute pre-tax money to be used for qualified medical expenses. HSAs, which are portable, must be linked to a high-deductible health insurance policy.

Indemnity
Restoration to the victim of a loss by payment, repair or replacement.

Liability
Broadly, any legally enforceable obligation. The term is most commonly used in a pecuniary sense.

Liability Insurance
Insurance that pays and renders service on behalf of an insured for loss arising out of his responsibility, due to negligence, to others imposed by law or assumed by contract.

Licensed
Indicates the company is incorporated (or chartered) in another state but is a licensed (admitted) insurer for this state to write specific lines of business for which it qualifies.

Loss Control
All methods taken to reduce the frequency and/or severity of losses including exposure avoidance, loss prevention, loss reduction, segregation of exposure units and noninsurance transfer of risk. A combination of risk control techniques with risk financing techniques forms the nucleus of a risk management program. The use of appropriate insurance, avoidance of risk, loss control, risk retention, self-insuring, and other techniques that minimize the risks of a business, individual, or organization.

Loss Ratio
The ratio of incurred losses and loss-adjustment expenses to net premiums earned. This ratio measures the company's underlying profitability, or loss experience, on its total book of business.

Loss Reserve
The estimated liability, as it would appear in an insurer's financial statement, for unpaid insurance claims or losses that have occurred as of a given evaluation date. Usually includes losses incurred but not reported (IBNR), losses due but not yet paid, and amounts not yet due. For individual claims, the loss reserve is the estimate of what will ultimately be paid out on that claim.

Maximum Benefit Period
The maximum length of time for which benefits are payable during any one period of disability.

Medi-Cal
California's Medicaid health care program. This program pays for a variety of medical services for children and adults with limited income and resources. Medi-Cal is supported by federal and state taxes.

Open Enrollment
This is the time you can enroll, change health plans, or add eligible family members. You'll receive your Health Plan Statement before the open period begins with information on your current coverage and the steps you'll need to take if you need to make changes. Any changes made during open enrollment take effect the following January 1.

Personal Lines
Insurance for individuals and families, such as private-passenger auto and home-owners insurance.

Policyholder Surplus
The sum of paid in capital, paid in and contributed surplus, and net earned surplus, including voluntary contingency reserves. It also is the difference between total admitted assets and total liabilities.

Preferred Provider Organization (PPO)
Network of medical providers who charge on a fee-for-service basis, but are paid on a negotiated, discounted fee schedule.

Preferred Provider Organization (PPO)
An arrangement in which a third-party payer or an independent administrator contracts with a number of medical care providers to furnish services at lower than usual fees in return for prompt payment and a certain volume of patients.

Preventive Care
A term often relating to dental insurance that includes benefits for treatments such as regular exams and cleanings designed to help prevent more serious conditions such as gum disease.

Pre-existing Condition
A mental or physical problem suffered by an insured prior to the effective date of insurance coverage.

Payroll Deduction
Relating to group insurance, the employee's share of premiums deducted from his or her payroll earnings and then paid to the insurance company by the employer.

Portability
A provision of voluntary coverages that allows a terminating employee (other than for reason of retirement or disability) to continue coverage at the same or reduced benefit amount to a stipulated age, depending on the coverage.

Reinsurance
In effect, insurance that an insurance company buys for its own protection. The risk of loss is spread so a disproportionately large loss under a single policy doesn't fall on one company. Reinsurance enables an insurance company to expand its capacity; stabilize its underwriting results; finance its expanding volume; secure catastrophe protection against shock losses; withdraw from a line of business or a geographical area within a specified time period.

Renewal
The automatic re-establishment of in-force status effected by the payment of another premium.

Reserve
An amount representing actual or potential liabilities kept by an insurer to cover debts to policyholders. A reserve is usually treated as a liability.

Risk Class
Risk class, in insurance underwriting, is a grouping of insureds with a similar level of risk. Typical underwriting classifications are preferred, standard and substandard, smoking and nonsmoking, male and female.

Risk Management
Management of the pure risks to which a company might be subject. It involves analyzing all exposures to the possibility of loss and determining how to handle these exposures through practices such as avoiding the risk, retaining the risk, reducing the risk, or transferring the risk, usually by insurance.

Salary
The compensation paid by an employer to an employee for work performed for the employer usually a set amount of money for a certain period of time. Sometimes known as "wages".

Seat Belt Benefit
A provision in accidental death insurance that increases the accidental death benefit if an insured suffers loss of life in a vehicle accident and was wearing a seat belt at the time of the accident.

Self-Fund
When an employer provides a qualified group health plan, manages the payments to the plan and pays claims from the fund of employer and employee payments.

Severance Package
Money and/or other benefits that an employer may offer to a terminated employee to temporarily offset the employee's job loss. Also known as a "separation package".

Small Employer
In California's insurance code, a small employer is anyone who employs from 2-50 people. The employer(s) can be included in this number. The definition of small employer group may vary between states.

Social Security Benefits
Compensation from the federal government for retirement, death, or disability. It is exempt property in bankruptcy.

Stand-Alone
Refers to an insurance plan being sold by itself and not being bundled with another product. For example: Selling life insurance on its own would be "stand-alone." Requiring life insurance to be sold with medical insurance would be a "bundled coverage."

Stop Loss
Any provision in a policy designed to cut off an insurer's losses at a given point.

Summary Plan Description
A written summary, usually in pamphlet form, of the terms and conditions of an employee benefit plan, such as a health benefit or retirement benefit plan.

Surplus
The amount by which assets exceed liabilities.

Take Home Pay
The amount of one's paycheck -after certain required deductions (such as taxes) are taken out of the "gross" pay.

Third Party Administrator (TPA)
An organization responsible for marketing and administering small group and individual health plans. This includes collecting premiums, paying claims, providing administrative services, promoting products, and managing other functions related to the operation of health insurance. The TPA is not the policyholder or the insurer.

Time Rule
A formula for determining the portion of an employee's pension that is community property, based upon the number of years of work divided by the number of years married. For example, if a person earned a pension after working 20 years but was married for only 10 of those years, the community interest in the pension is 10/20 or 50%. The other 50% is the separate property of the employed spouse.

Unemployment Compensation Benefits
Compensation from the government to a worker who has lost his or her job. These benefits are exempt property in bankruptcy.

Unemployment Insurance Benefits
Payments made by a state agency to workers who lose their jobs through no fault of their own.

Underwriter
The individual at the insurance company that makes the decision whether or not to insure or issue a policy to an applicant. Those decisions are made based on guidelines the company has publicly established. The broker or agent deals directly with the underwriter; usually a client or applicant will not deal directly with an underwriter. The individual trained in evaluating risks and determining rates and coverages for them. Also, an insurer.

Underwriting
The process of selecting risks for insurance and classifying them according to their degrees of insurability so that the appropriate rates may be assigned. The process also includes rejection of those risks that do not quality.

Underwriting Expense Ratio
This represents the percentage of a company's net premiums written that went toward underwriting expenses, such as commissions to agents and brokers, state and municipal taxes, salaries, employee benefits and other operating costs. The ratio is computed by dividing underwriting expenses by net premiums written. The ratio is computed by dividing underwriting expenses by net premiums written. A company with an underwriting expense ratio of 31.3% is spending more than 31 cents of every dollar of net premiums written to pay underwriting costs. It should be noted that different lines of business have intrinsically differing expense ratios. For example, boiler and machinery insurance, which requires a corps of skilled inspectors, is a high expense ratio line. On the other hand, expense ratios are usually low on group health insurance.

Wages
The compensation paid by an employer to an employee for work performed. Sometimes known as "salary."

Waiting Period
A specified number of days that the insured must wait before becoming eligible for coverage. It could also apply to the time an insured is required to wait before becoming eligible for a certain type of benefits. For example, a new insured may have to be continuously insured for 12 months before becoming eligible for benefits for major services under voluntary dental insurance.

Whistleblower
The term for an employee who "blows the whistle" on an employer, i.e., who reports to the authorities an employer's illegal action or practice. Whistleblowers are entitled to a number of protections under state and federal law