Dictionary


Dictionary




Insurance and carriers

Insurance is a very familiar term, isn't it? Everyone takes Insurances. This is like a piggy bank, where a lot of people put in their money every month/quarter/year, and when they get sick they pull out the money for their medical expenses. This helps, as not everyone is going to get sick in one month; so the money gets equally distributed across all people. This one was just a small illustration. The Concept goes lot bigger, however the fact remains the same, the money can be utilized when it’s needed. Of Course, there is a limit of money that can be pulled, and a set of rules attached. Insurance can be of different types. Health Insurance, Life Insurance, Spending accounts etc. 

There are firms that offer Insurance to people. Those Insurance providers are known as Carriers. So these firms offer us insurance and take an amount against it every month / year, which is called the Premium amount. They also store the Insurance details; hence they need to be informed when any employee changes his Insurance elections.

and automating the business processes is one of the core errands of any given enterprise. Conventionally enterprises created their own software packages to manage their automation needs and the software used to be strict to their own business functions; until the concept of standard customizable software came into the market.


Benefit Structure

These are like the three building blocks of Benefits. Let's learn about them one by one.

A Plan type is a type of Benefit provided by the Employer. For Example Life Insurance is a plan type, Medical Insurance is a plan type too. So these are the types of the benefits. Each type has a name. The different types of Plan Types can be based on the Benefit sets offered by the enterprise. However some basic plan types are:

  1. Medical
  2. Dental
  3. Vision
  4. Prescription - Drugs
  5. Basic Life insurance
  6. Group Term Life insurance
  7. Optional/ voluntary Life insurance
  8. Accidental and Death insurance
  9. Spending Accounts
  10. Vacation Buy / Sell
  11. Employee Assistance Plan

A plan is the actual insurance that is provided by the Carrier. For an Example, the Carrier ABC introduced three insurance of type Medical.

  • ABC Medical type 1
  • ABC Medical type 2
  • ABC Medical type 3

Now, the above three insurances are the three insurance plans, of Medical Plan type. These three could be different in many ways. Like the areas where they are offered, the Premium amounts, the laws etc. So when an employee gets to take a Medical Insurance, he gets to choose from one of the three plans, as per this example. He will choose based on his preferences.

An option is a level, the level up to which the plan can be enrolled in. For an example, Joe takes ABC Medical type 2 plans for himself and his wife Jill. So he is in Employee + spouse tier / level. Similarly Jack takes the same ABC Medical type 2 plans for himself only. So he is in Employee only tier / level. These levels are called Options. Another good example would be like a Life insurance plans. If Joe takes a tier where he gets 3 X his base pay as the Insured amount, and Jack takes the same plan with 6 X his base pay. These two tiers, 3 X and 6 X would be the Options for the Life insurance plans. Not all plans have options. Some Don't. Like an Employee Assistance Plan does not actually need tiers. Either it’s opted in or opted out.

Now, we have all the available parts like, plans, plan types and option alright? Our Enterprise wants to enable a set of rules for the available Benefits. Rules like, Expat Employees (Employees who work overseas for any work related assignments) should get only Life Insurances, no Med, Den or Vis for them. Currently Active Employees (Employees who are currently working in our firm) should get all of it. Retirees (Retired Employees) should not get LTD and STD, they should get everything else.

So we have all these requirements alright? To help this, OAB has a system called a Program. We will start learning the concept of the Program with an example first. We will create the three Programs Expats, Actives and Retirees. Then we will attach the Plan types as per the requirement. Like, we will attach the Life Insurance plan types to the Expats, all except LTD and STD to the Retirees and all the Plan types to the Actives. Now we will set up rules that will allow only Expats to get the Expats Program and similarly Active and Retiree Programs to Active and Retiree population respectively.

What we understood from here? Program is a bigger unit with which we can associate Plan types and Plans in order to make them available / unavailable to certain groups. Not just that, we can do a lot many things with Programs. It is not necessary to have Programs; however having programs enables the user to do a lot of things simpler. Designers divide the entire population with their unique characteristics, and then create programs to keep the rules valid.

We will learn about all of these in details, in Benefit Structure section.


Life Events, Eligibility and Electability

As we had discussed in the example here, there can be multiple plans and Employees can choose from the various options available. However there can be Plans which are limited to a certain set of population only. For an example, we can have a plan that can only be availed by someone who resides in the state of California. It is region specific. If we live in Texas, we cannot get the plan. To rephrase it, we are not eligible to get that plan, isn't it?

Now, what is that eligibility? The Employee should be in residing in the state of California. This is a statement that tells us who is eligible and who is not. If we satisfy the condition we are eligible, if not we are not. So that's called Eligibility. We will learn more about it while configuring the set up.

An employee cannot change his benefits election anytime he wants. He must have an event that will enable him to change his elections. Now what is an event? An event could be anything that happens to the employee. Employee getting Hired, getting Married, Had a child, Had a Divorce etc are events. In OAB it’s called the life events. The Life events are caused by any type of data change in Employee's record. The change in data could be anything related to the indicative data or might be related to the data of its contacts. 

So when a life event happens, Employees may get an opportunity to update a set of their benefits elections. We shall use the word may, because it is highly dependent on our enterprise requirements. For an example, if Joe had a divorce, he should be allowed to change the tiers of his Medical, dental and vision Plan types; as he might wish to remove his spouse from his benefits. However it will not make sense, if the enterprise allows him to change his Life Insurance as part of a Divorce, as Divorce has got nothing to do with Life Insurance. That limitation is called the Electability. So here, Medical, Dental and Vision plans and the tiers are there in Joe’s electable choices; which literally means, he can choose one of the available choices. However Life Insurance is not in his electable choices, which means, he cannot change his Life Insurance elections as part of this Life Event.

What is the difference between Electability and Eligibility?

It is a million dollar question. :) We will take an example of Joe and Jack. 

  • So Joe stays in California, and is eligible to pick the ABC Life Insurance ‘A’ Plan. He is eligible for ‘B’ Plan and ‘C’ Plan as well. Jack stays in Texas. All he gets eligibility for B Plan and C Plan only; no A plan. 
  • Now Joe gets married. But as per our company rules, he is not supposed to change his Life Insurance Plans with Marriage Life event. So in this case, Joe has eligibility for all Life Insurance Plans, A, B and C. However no electability to change his Life Insurance Plans.
  • Jack gets a hike in his Salary. Now that's a Salary Change Life Event. So with this Life Event, one can change his Life Insurance. Hence Jack has eligibility to Plan B and C, and he can choose any one of them. So He has electability to both Plan B and C.

 

Facts:

  • Electability is always a subset of Eligibility. Because if someone is not eligible for the plan; the plan can never be electable for him. 
  • Electability is always dependent upon the Life event; whereas Eligibility is driven by data. 

So now is it clear? 

Let’s take another example. Joe loves to eat Non-Vegetarian Food, but on Mondays and Tuesdays he does not eat Non-Vegetarian food for one of his religious beliefs. Let's say, he went to a Vegetarian Restaurant on a Sunday night. Now, even though he can eat Non-Vegetarian on Sundays, he can’t order Non- Vegetarian for his dinner, as it’s a Vegetarian Restaurant. So his Eligibility is restricted to just Vegetarian food. So his electability is the same; as he does not get an option for Non- Vegetarian in eligibility itself.

Imagine Joe, in a Non-Vegetarian Restaurant on a Monday Evening. The Eligibility is very much there. There are non- Vegetarian dishes in the Restaurant, but based on the day of the week, as it’s a Monday, he can't eat Non- Vegetarian food. So that's his limitation as per the day. So he does not have electability, even though he has the eligibility.

What If he goes to a Non-Vegetarian restaurant on a Wednesday Evening? He can have Non- Vegetarian; because his Eligibility is there, as the restaurant does serve Non-Veg. Again it being a Wednesday, He can allow himself to have some chicken wings. So there is Eligibility as well as Electability.

Based on the example here, if we could imagine days as life events, we can draw these conclusions.

  • No Matter what day it is, Joe will always eat Vegetarian food, if he goes to the Vegetarian Restaurant.
    • Eligibility is always Independent of Life Event.
  • Even if he goes to the Non- Vegetarian Restaurant, his dinner typically depends on the Day.
    • Electability is always driven through Life Events.

Person Types

A participant is someone who is enrolled in one or more Plans. He could be an Employee, an ex-employee or at times he could just be a relative of an Employee.

A contact is someone who is in a family relationship with the Participant. It could be a spouse, Children, Domestic partner etc. A domestic Partner is someone who is sharing residence with the Contact, and could get married.

A Dependent is a contact who is covered under the Original Participant's plan. It could be any plan, in which the Original Participant has covered the Contact. Now the Contact can be called as a Dependent.

These are known as Person Types. There are a lot more of these, however we will discuss them in details later in this chapter.


Rates, Premiums and Coverages

We know, Carriers provide Insurances and charge a particular amount as a Premium. So the Premium gets paid to carrier. As the enterprise takes the Insurance for the employees, it pays the Premiums to the Carriers. Now, it’s the enterprise's responsibility to collect that money from the employees. Firms usually prefer to cut the amount from Employee's payroll as a deduction.

In most cases, the Employer puts in some amount of money towards the Premium contribution from its own pocket, and the Employee pays the rest of it. For an example, If the Premium amount is $500, the employer might put in a $200 towards the Premium and rest $300 will go to from the Employee's payroll.

Now, that amount that the employer paid is known as the Employer/ER Contribution. And the amount that the employee paid is known as the Employee/EE Contribution OR Rate. So in the example given above,

  • Premium = $500
  • ER Contribution = $200
  • Rate = $300

What is coverage now? Coverage is also known as the Benefit amount. This is nothing but the amount insured. In case of Life Insurance plans, the amount that is insured to the employee is known as the benefit amount. Not just on the Life Insurance plans, it can also be there in Plans Types like ADD, STD and LTD. Usually Health Coverage Plan types like Med, Den and Vis do not have it.


Person Types

Let's look at the different set of data, that we store and use as part of Benefits.

Indicative Data: The data related to the Person is known as Indicative data. It could be related to the Personal Facts like, Date of Birth and Gender or it could be data related to his assignment, like Working hours, organization etc.

Beneficiary Data: It’s the data related to the beneficiaries / dependents of the Person. The Personal Details of the children / spouse / DP are known as the Beneficiary data.

 

Derived Data: There are a few things in Benefits that are not stored directly in the system. For an example, age of a Participant is not stored anywhere. All we store is the Date of Birth. Age is later derived from the same. The system negates the Date of birth from the SYSDATE and arrives at the age. Similarly, there are few other things that are not stored directly. Those are known as Derived data. Examples of derived data are:

    • Compensation
    • Hours Worked
    • Length of Service
    • Full Time Equivalent
    • Age
    • Age and Length of Service Combined

 

Enrolment Data: The data related to the person’s current or past enrolment in benefits are called Enrolment data.

Where is all these data used? These data can be used to evaluate / determine Eligibility, Electability and rates of the Participants.


Compensation Objects

Compensation Object, usually referred as a Comp Object, is the level at which one can make elections. Let's say, there is a plan, Plan A. and it has options, Option 1, Option 2 and Option 3. Now, to get enrolled in Plan A, the Participant must choose one of the Options, isn't it? So if there is an election in the Plan A, there is an Option being involved at all cases. No one can just enrol in to the plan without having an option chosen. So the level at which the election is made is "Option in Plan". So for Plan ‘A’ the Comp Object level is "Option in Plan". And the Comp Objects here are:

  • Option 1 in Plan A
  • Option 2 in Plan A
  • Option 3 in Plan A

We cannot call Plan ‘A’ as the Comp Object, because, we need an option to be involved with it, Right?

Similarly, what if there is another plan, Plan ‘X’ and it does not have options? Here the enrolment in the Plan is at the Plan level. There is no Options Involved right? So the Comp Object Level is "Plan". And the Comp Object is just Plan ‘X’.

That was the broad view. We will learn more about them in Benefit Structures.


Waive Plans / Options

Thinking of enrolment, what if an employee does not want to be enrolled in Medical? What should he be enrolled in to? Or should there be no enrolments at all. 

If we allow him to not have any enrolments in Medical, if he does not want to, it will be difficult to manage the records later on. We would not have any history information. It’s difficult to say, whether the guy was not eligible or he just chose not to have any enrolments.

That leaves us just one way, to have an enrolment for the Participant, which will be called "No Coverage". With that we can at least say, he was eligible but he chose not to be in Coverage. This No Coverage objects are called Waive Objects.

A waive Object/ ‘No Coverage’ object can either be a Plan or an Option; based on the Comp Object level. In a case like Medical, we can have 4 Coverage plans and 1 waive plan. In ADD, if we have options like, 1 X base pay, 2 X base pay... So on. We can have a Waive Option that can be chosen.

However it is always advised to have at least one and only one Waive plan for each Plan type.


Waiting Periods and Temporal

We might come across business rules where, the Employer does not want to provide a particular benefit to a new hire, unless he has served for a particular period. For an example, we do not want our Employees to be eligible for Life Insurance plans, unless they serve for 6 months. Once they turn 6 months in the organization, they will receive another Life Event with which they will receive the eligibility to the Life Insurance plans. Now, those 6 months is called the waiting period. It justifies the name, doesn’t it?

But, how does the system know, that the person has turned 6 months in the firm? Like, the system cannot go on and check every profile every day, and determine, if he has crossed 6 months or not. For that matter, there can be many conditions of waiting periods like that. Not just the waiting periods, we can have rules set on age as well, saying, and the day one turns 65; s/he is no longer eligible for a plan. So how does the system manage it? There is a mechanism called Temporal. We will learn about the temporal and the factors that drive them, later in this chapter; however for now, let’s understand that Temporal is a mechanism, which helps the system determine the life events related to time.


COBRA

COBRA stands for "Consolidated Omnibus Budget Reconciliation Act" is a federal act that ensures health insurance coverage for a limited period to people, who lose their previous coverage because of anyone of the stated reasons. The reasons could be like Termination, Divorce etc. Even in case of Death of an employee, the covered dependents get COBRA coverage.

In short, if anyone was covered in any health plan provided by a firm, upon end of the coverage, the beneficiary gets a chance to stay covered for another few months. This is the simple logic of COBRA. This is in place to make sure no one gets de-enrolled from health coverage all of sudden. However there are clauses. The Beneficiary can get the COBRA Coverage only for 18 months. There are clauses with which the duration might get increased. The Beneficiary once enrolled has to pay 102% of the premium to the firm. So the Person pays 100% of the Premium, and again 2% of the premium to the firm, as a service charge; as the firm provides him the privilege of staying enrolled. 


HIPAA

The Health Insurance portability and accountability act was introduced in 1996 to irradiate issues related to the Privacy of one's health coverage history. Just to give a nebulous idea about the act, as per HIPAA rule, a person can request his health coverage history whenever he needs it; however that should be done with utmost privacy rules in place, and only to covered entities like, Health Insurers / carriers, Health care Clearing houses, Employer sponsored Health plans etc. HIPAA puts in regulations related to Protected Health Information, which is the information held by a covered entity, which concerns health status and health care payments of an individual. We will learn more about the Regulation and the implementation later in this chapter.


Reporting Groups

Reporting group is a set of programs / plans grouped together for reporting purposes. Federal administrative and regulatory rules like the COBRA and HIPAA are governed by Regulatory bodies. The reporting group, along with all the Program and plans defined as part of it, are attached to the regulation. In other words, the regulations govern the plans or Programs linked to the reporting group attached to the regulation.