Glossary

A federally qualified health center is (1) an organization that receives grants under Section 330 of the Public Health Service Act; (2) an organization that does not receive a grant under the Section 330 of the Public Health Service Act, but otherwise meets all requirements to receive such a grant; or (3) an outpatient health clinic associated with tribal or Urban Indian Health Organizations (UIHO); and has applied for recognition and been approved as a federally qualified health center for Medicare and Medicaid, as described in Sections 1861(aa)(3) and 1905(l)(2) of the Social Security Act. Payments to these organizations are subject to requirements set forth in Section 190 2(bb) of the Social Security Act. (Medicaid Managed-Care Capitation – Rate Development and Certification)

A combination of fees that generally includes advance fees, periodic fees, and additional fees.

An actuary who prepares, supervises the preparation of, or peer reviews a health filing on behalf of a health plan entity. This includes actuaries employed by the health plan entity and consulting actuaries. This does not include a “reviewing actuary,” as defined in section 2.9. (ASOP No. 8)

An actuary who prepares, supervises the preparation of, or peer reviews a health filing on behalf of a health plan entity. This includes actuaries employed by the health plan entity and consulting actuaries. This does not include a “reviewing actuary,” as defined in section 2.9. (ASOP No. 8)

A condition in which program costs are projected not to exceed program income and assets over a specified period of time.

An evaluation of financial statements or internal controls over financial reporting by an auditor, conducted under generally accepted auditing standards, with a view to expressing an opinion on whether the financial statements are presented fairly in all material respects within the applicable financial reporting framework or on the effectiveness of the entity’s internal controls over financial reporting.

An evaluation of an entity’s financial condition by an examiner. It will generally include a review of the financial statement and will often include a review of financial strength, corporate governance, or management oversight.

A private or governmental entity or program that is intended to mitigate the impact of unfavorable outcomes of contingent events. Examples of financial or personal security systems include auto insurance, homeowners insurance, life insurance, and pension plans, where the mitigation primarily takes the form of financial payments; prepaid health plans and continuing care retirement communities, where the mitigation primarily takes the form of direct service to the individual; and other systems, where the mitigation may be a combination of financial payments and direct services. (ASOP No. 12)

A projection of covered lives, premiums, claims, expenses, capital and surplus, or other financial quantities that may be required by applicable law. (ASOP No. 8)

A report that conveys the performance or experience of a life or health risk-bearing entity at a specific point in time or over an accounting or measurement period that is provided to an internal or external party and on which the principal is expected to rely. The financial report may be based on any financial reporting regime appropriate to the assignment. Examples of financial reports include, but are not limited to, statutory financial statements, own risk and solvency assessment (ORSA) reports, enterprise risk management (ERM) reports, GAAP financial statements, asset adequacy analysis reports, and experience study reports.

An evaluation, by performing limited procedures, of financial statements or internal controls over financial reporting by an auditor, conducted under generally accepted auditing standards. The evaluation supports an auditor’s opinion on whether any material modifications should be made to the financial statements or to the entity’s internal controls over financial reporting. A financial review is often performed on interim financial statements. For this standard, a financial review does not include a review conducted for any other purpose, such as in support of a potential M&A or IPO transaction.

Reports on the financial position and the financial activities of an entity, prepared in accordance with accounting requirements prescribed or permitted by insurance regulators or accounting standards.

A method under which the excess of the actuarial present value of the sum of projected benefit payments for a specified period plus a funding objective as of the end of the period over the actuarial value of assets is allocated on a level basis over the earnings or service of the group during the specified period, including earnings or service for any future entrants assumed. The allocation is performed for the group as a whole, not as a sum of individual allocations. The portion of this actuarial present value allocated to a valuation year is called the annual cost allocation. (ASOP No. 4)

The future time period to which the historical data are projected. (ASOP No. 13)

Amounts required under section B.6(e) of Section 7. However, formula reserves required by Section 7 do not include any additional reserves established as a result of an asset adequacy analysis. (ACG No. 4)

A federally qualified health center is (1) an organization that receives grants under Section 330 of the Public Health Service Act; (2) an organization that does not receive a grant under the Section 330 of the Public Health Service Act, but otherwise meets all requirements to receive such a grant; or (3) an outpatient health clinic associated with tribal or Urban Indian Health Organizations (UIHO); and has applied for recognition and been approved as a federally qualified health center for Medicare and Medicaid, as described in Sections 1861(aa)(3) and 1905(l)(2) of the Social Security Act. Payments to these organizations are subject to requirements set forth in Section 190 2(bb) of the Social Security Act. (Medicaid Managed-Care Capitation – Rate Development and Certification)

A method under which the excess of the actuarial present value of projected benefits of the group included in an actuarial valuation, over the sum of the actuarial value of assets plus the unfunded frozen actuarial accrued liability, is allocated on a level basis over the earnings or service of the group between the valuation date and assumed exit. This allocation is performed for the group as a whole, not as a sum of individual allocations. The unfunded frozen actuarial accrued liability is determined using the unit credit actuarial cost method. The portion of this actuarial present value allocated to a valuation year is called the normal cost. (ASOP No. 4)

A method under which the excess of the actuarial present value of projected benefits of the group included in an actuarial valuation, over the sum of the actuarial value of assets plus the unfunded frozen actuarial accrued liability, is allocated on a level basis over the earnings or service of the group between the valuation date and assumed exit. This allocation is performed for the group as a whole, not as a sum of individual allocations. The frozen actuarial accrued liability is determined using the entry age actuarial cost method. The portion of this actuarial present value allocated to a valuation year is called the normal cost. (ASOP No. 4)

The level at which the subject experience is assigned full predictive value, often based on a selected confidence interval. (ASOP No. 25)

An un-discounted provision for the payment of outstanding losses and/or loss adjustment expenses in the anticipated future settlement amounts. (ASOP No. 20)

A phrase that indicates that a particular measure of plan assets equals or exceeds a particular measure of plan liabilities. Any other phrase that conveys a similar message must meet the requirements in this standard for the use of the phrase fully funded. Disclosure requirements for actuarial work products that include this phrase or any phrase that conveys a similar message are in section 4.1(p). (ASOP No. 4 Revision)

The inability to perform one or more ADLs. (ASOP No. 18)

Any comparison of a particular measure of plan assets to a particular measure of plan obligations.

A procedure for allocating the actuarial present value of projected benefits (and expenses, if applicable) to time periods usually in the form of a normal cost and an actuarial accrued liability. For purposes of this standard, a pay-as-you-go method is not considered to be an actuarial cost method.

A periodic measurement of pension obligations performed by the actuary that the plan sponsor may use to determine plan contributions or the benefit levels supportable by specified contribution levels. A funding valuation includes the determination of the minimum required contribution, as defined by the Employee Retirement Income Security Act of 1974 (ERISA).