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Administrative Services Only – An arrangement under which insurance company or TPA, for a fee, processes claims and handles paperwork for a self-funded group.

Aggregate Factor – This is the dollar figure that is multiplied by the number of covered persons each month during the contract period to calculate the AAP (Aggregate Attachment Point). It includes anticipated claims plus margin.

Aggregate Reinsurance – When an employer elects to self-insure his employee benefit plan, there is generally a limit to the risk the employer agrees to assume for funding payment for employee claims. To limit this risk, the employer purchases aggregate reinsurance.

Attachment Point – For aggregate stop-loss insurance, it is the point at which the stop-loss insurance carrier begins to reimburse the employer based upon the cumulative total of claims paid within a policy year. For specific stop-loss insurance it is that point at which the total of claims paid on behalf of each covered individual during a policy year exceeds the amount at which the stop-loss insurance company will reimburse the employer.

Claim Lag – The time between a claim's incurred date and its submission to the insurer for payment; or the time between a claim's incurred date and the date the insurer makes payment.

Expected Paid Claims – An estimate for the dollar value of claims to be paid during the contract period.

IBNR – Incurred, But Not Reported - A reserve for claims that have been incurred but have not yet been submitted for payment. This is the reserve intended to cover claim run-out upon termination of the program.

Incurred and Paid – An expense both incurred during the contract period and paid during the same contract period.

Minimum Attachment Point – The lower Aggregate Attachment Point to be used for a contract period generally stated as a dollar amount or calculated aggregate deductible times the number of months in the contract period.

Minimum Premium – An employer is responsible for paying all claims up to an agreed upon aggregate limit, with the insurer responsible for any excess amount.

Deficit Carry forward – This is the amount of claims in excess of the aggregate insurance amount during the plan year that will carry forward into the next plan year.

Reserve – Refers to a specific amount of claims established to cover "run-out" in the event a group should terminate for any reason.

Stop-Loss Coverage – A form of insurance that reimburses self-funded insurance plans for losses in excess of a predetermined amount.

Specific Stop-Loss – Individual or specific stop-loss insurance is a key to self-funding and the control of claims liability for the employer. This coverage provides that should benefits be paid on a covered employee or dependent that exceed the reinsurance attachment point during the policy term, all amounts above that level are the responsibility of the insurance company.

Aggregate Stop-Loss – Aggregate stop-loss insurance protects against the hazards of upward fluctuations in claims frequency or severity. It limits the overall annual claims liability by reimbursing the company when the claims paid for the self-funded plan, as a whole, exceed a certain preset level.

Aggregate Advancement – The aggregate re-insurer will lend to the policyholder paid claim amounts in excess of the accumulative maximum monthly aggregate funding level. This protection eliminates the possibility of excessively drawing upon the policyholder's cash flow in the event of an unusually high paid claim month.

Terminal Liability (Run-Out) – An aggregate insurance product which simply covers claims presented and paid from the termination date up to a predetermined timeframe and dollar limit, normally 33% of the annual aggregate amount. (Normally, this is referred to as "Reserve Run-Out Cap”.)