Glossary

The amount of capital an organization requires to survive or to meet a business objective for a specified period of time and risk metric, given its risk profile. (ASOP No. 46)

The ACA requires health plans offered in the individual and small group markets to provide coverage for specific items and services known as essential health benefits. EHBs must include items and services within the following 10 categories: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care. HHS allows each state to choose from a set of plans to serve as the benchmark plan in their state. All state-required benefits enacted prior to December 2011 are considered to be included in EHBs. (Determining Minimum Value and Actuarial Value Under the Affordable Care Act)

Date (or dates) as of which a policy must be deemed in force, according to the plan of conversion, for the policyholder to be eligible to receive consideration. (ASOP No. 37)

The owner of one or more policies eligible to receive consideration under the plan of conversion. (ASOP No. 37)

New or evolving risks that may be difficult to manage since their likelihood, impact, timing or interdependency with other risks are highly uncertain. (ASOP No. 46)

Information about an interaction between a provider of health care services and a member that is documented through the submission of a claim to an MCO, and shared between the MCO and the state Medicaid agency. (Medicaid Managed-Care Capitation – Rate Development and Certification)

Benefits offered by MCOs to their Medicaid members that are above and beyond the benefits offered by the state Medicaid plan. Common examples are adult dental services, non-emergency transportation, and adult vision services. (Medicaid Managed-Care Capitation – Rate Development and Certification)

The discipline by which an organization in any industry assesses, controls, exploits, finances and monitors risks from all sources for the purpose of increasing the organization’s short- and long-term value to its stakeholders. (ASOP No. 46)

The collection of processes by which the organization identifies, classifies, sets risk appetite for, mitigates, measures, and finances (with capital) its risk exposures.

The continuing process by which risks are identified, risks are evaluated, risk appetites are chosen, risk limits are set, risks are accepted or avoided, risk mitigation activities are performed, and actions are taken when risk limits are breached. (ASOP No. 46)

An institution, company, corporation, partnership, government agency, university, employee benefit plan, or other organization that may be subject to a financial audit, financial review, or financial examination, as well as the individuals who are authorized to act on behalf of the organization.

A method under which the actuarial present value of the projected benefits of each individual included in an actuarial valuation is allocated on a level basis over the earnings or service of the individual between entry age and assumed exit age(s). The portion of this actuarial present value allocated to a valuation year is called the normal cost. The portion of this actuarial present value not provided for at a valuation date by the actuarial present value of future normal costs is called the Actuarial accrued liability. (ASOP No. 4)

The discipline by which an organization in any industry assesses, controls, exploits, finances and monitors risks from all sources for the purpose of increasing the organization’s short- and long-term value to its stakeholders. (ASOP No. 46)

The continuing process by which risks are identified, risks are evaluated, risk appetites are chosen, risk limits are set, risks are accepted or avoided, risk mitigation activities are performed, and actions are taken when risk limits are breached. (ASOP No. 46)

The collection of processes by which the organization identifies, classifies, sets risk appetite for, mitigates, measures, and finances (with capital) its risk exposures.

The ACA requires health plans offered in the individual and small group markets to provide coverage for specific items and services known as essential health benefits. EHBs must include items and services within the following 10 categories: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care. HHS allows each state to choose from a set of plans to serve as the benchmark plan in their state. All state-required benefits enacted prior to December 2011 are considered to be included in EHBs. (Determining Minimum Value and Actuarial Value Under the Affordable Care Act)

As defined in the American Institute of Certified Public Accountants (AICPA) Statement of Position (SOP) No. 95-1, Accounting for Certain Insurance Activities of Mutual Life Insurance Enterprises, & 22. (ASOP No. 10)

As defined in SFAS No. 97, & 23. (ASOP No. 10)

The period for which differences in morbidity are being quantified by the risk adjustment methodology. (ASOP No. 45)

The incident or activity that triggers potential for claim or claim adjustment expense payment. (Draft Proposed Revision of ASOP No. 36)

An employee of or contractor to state or federal regulators performing a financial examination on behalf of a governmental agency responsible for oversight of the financial condition of the entity.

Policies in force on the appraisal date, including any remaining obligations and risks that relate to coverage provided previously (e.g., the runoff of claim liabilities). (ASOP No. 19)

The number of deaths statistically expected in a given time interval. (ASOP No. 48)

An estimate of the mean value of an unknown quantity where the mean value represents a probability-weighted average of the quantity over the range of all possible values. (ASOP No. 36)

Legislative or regulatory rules that disallow or limit certain categories of expenses in determining rates. (ASOP No. 29)

Future cost estimates for expenses related to prospective property/casualty risk transfer or risk retention other than the following: losses, the provision for profit and contingencies, the cost of capital, investment expenses, and federal and foreign income taxes.

Administrative or investment expenses borne or expected to be borne by the benefit plan or retiree group benefits program.

A group of policies for which nonguaranteed elements are determined by using common numerical values of a particular experience factor.

A value or set of values that represents the actual experience of a policy form. Examples of experience factors include rates of mortality, expense, investment income, termination, and taxes.

A measure of the difference between actual experience and that expected based upon a set of actuarial assumptions, during the period between two actuarial valuation dates, as determined in accordance with a particular actuarial cost method. (ASOP No. 4)

A measure of the difference between actual experience and that expected based upon a set of actuarial assumptions, during the period between two actuarial valuation dates, as determined in accordance with a particular actuarial cost method. (ASOP No. 4)

The period of time to which historical data used for actuarial analysis pertain.

A rate modification technique that involves evaluating the policyholder’s actual experience relative to the average experience of similarly classified policyholders to derive a rate unique to that policyholder’s risk. (Property/Casualty Ratemaking)

One who is qualified by knowledge, skill, experience, training, or education to render an opinion or otherwise testify concerning the matter at hand.

The specialized skills or knowledge possessed by an individual. (ASOP No. 38 Revision)

An explicit provision for uncertainty in a reserve or unpaid claim estimate. (ASOP No. 36)

The extent of risk presented by one or more entities that have been provided coverage under a plan or contract.

The basic unit that measures a policy’s exposure to loss.

A unit by which the cost for a health benefit plan is measured. For example, an exposure unit may be a contract, an individual covered, $100 of weekly salary, or $100 of monthly benefit.

A low-frequency event with high-severity or widespread potential effects that causes unusually large aggregate losses and that could distort the historical experience. An extreme event may exhibit contagion, which is a lack of independence between the occurrence of losses among different entities.