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Glossary

Following are definitions of terms used throughout this website. This glossary is not intended to be exhaustive. Rather, as a service to you, it offers a brief overview of terms and acronyms used in the various areas of specialty in which BCG is involved.

To gain even more insight into any term used herein or to find terms that do not appear in this glossary, we suggest contacting us or typing the word into the web search engine of your choice.


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- A -


Abuse – Any action, whether intentional or not, that results in improper conduct such as over-billing, billing for items or services not delivered, etc.

Accelerated Death Benefits (ADBs) – Some life insurance policies make a portion of the death benefit available prior to the death of the insured. Such benefits are usually available only due to terminal illness or for long-term care situations.

Accidental Death Benefit – An accidental death benefit is a rider added to an insurance policy which provides that an additional death benefit will be paid in the event death is caused by and accident. This rider is often called "double indemnity."

Access – An individual's ability to obtain health care services without regard to economic, geographic, physical, social or other barriers.

Accountable Health Plan (AHP) – Partnerships or joint ventures between practitioners and providers that assume responsibility for delivering medical care and managing the funds required to pay for the services rendered.

Accountable Health Partnership – An organization of doctors and hospitals that provides care for people organized into large groups of purchasers.

Accounts Payable – A balance sheet item representing the amount of money a company owes to its creditors.

Accounts Receivable – A balance sheet item representing the amount of money a company is owed by its customers for goods and services it has provided.

Accreditation – The process by which an organization recognizes a provider, a program of study or an institution as meeting predetermined standards.

Accrual basis – One of several methods of accounting. Requires that all interest and income be included as it is earned and that all expenses are included as incurred.

Acculturation - The process, usually assisted by HR professionals, whereby new workers are assimilated into the existing corporate culture.

Actuary - An actuary is an individual trained to calculate the potential cost of risk and determine the price of providing insurance to protect against such risks.

Acute Care – The treatment of severe and immediate illness or injury related to accident, trauma or surgery.

ADA-Americans With Disabilities Act – The Act makes it unlawful for any employer with 15 or more employees to discriminate against qualified individuals with a disability.

Adjustable Rate Mortgage (ARM) – An adjustable Rate Mortgage offers an initial interest rate that is usually lower than a fixed rate, but that adjusts periodically according to market conditions and financial indices. The rate may go up and/or down, depending on economic conditions. To limit the borrower's risk, the ARM will almost always have a maximum interest rate allowed, called a "rate cap."

Adjusted Community Rate or Rating (ACR) – Adjustments made to an annual budget established for paying healthcare costs based on the previous year’s actual costs of the community of healthcare plan participants. ACRs annually adjust subsequent year supplemental benefits or premiums to return any excess Medicare revenue above the ACR to enrollees.

Administrative Services Organization (ASO) – Any entity or insurance company that contracts with a company that is self-insured, and that performs administrative services only while the company assumes the cost of paying claims.

Admission Certification – Prescribed process for assessing patients and determining that only those who require hospital admission are admitted.

Adverse Event – An injury or illness imparted on a patient as a result of medical intervention.

Adverse Selection – A negative situation where insurance premiums do not cover the cost of the group insured due because there are too many participates who are sicker than the general population, and sicker than was anticipated when developing the budget for medical costs.

Affiliated Provider - A health care provider that is part of the HMO's network and has agreed to provide services to HMO members.

Affiliation – An agreement between two or more independent healthcare entities or individuals that defines their obligations to each other and to the health insurance plan’s participants.

Affiliation Waiting Period – The affiliation waiting period applies to some group HMO plans. Similar to an employer waiting period, this is a period of time that must pass before an individual is accepted into the plan. During this waiting period, employees don’t have to pay any premiums but also don’t have insurance coverage. HIPAA restricts affiliation periods to no longer than two months. If a group HMO has an affiliation period, they are not allowed to impose an exclusion waiting period for any pre-existing health conditions.

Age Discrimination - The act of discriminating against an employee based on her or his age instead of their actual knowledge and ability to perform the job. Age discrimination is unlawful under the Age Discrimination in Employment Act (ADEA).

Agent – A person who is authorized and typically licensed to act on its behalf of a purchaser to negotiate, sell, and service managed care contracts.

Allowable Charge – Also called maximum allowable and allowed amount, it is the maximum allowable charge that will be reimbursed for a given product or service.

Allowed Charge – The amount Medicare approves for payment to a physician for a given service.

Allowable Costs – The published allowable covered expenses within a given health plan that will be reimbursed to the insured.

Alternate Delivery Systems – HMOs, PPOs, IPAs, community health centers and other providers of health care services other than traditional inpatient, acute-care hospital and private practice physicians. Alternate delivery systems are designed to provide healthcare services in a more cost-effective manner.

Ambulatory Care – Also called outpatient care, ambulatory care is healthcare services provided not in a hospital including urgent care centers, clinics, hospital outpatient departments, physicians' offices and home healthcare services.

ADA - Americans With Disabilities Act - The Act makes it unlawful for any employer with 15 or more employees to discriminate against qualified individuals with a disability.

AMEX - American Stock Exchange

Amortization – The amortization of a debt is its systematic repayment through installments of principal and interest. An amortization schedule is a periodic table illustrating payments, principal, interest, and outstanding balance.

Ancillary Services – Services that are in addition to primary medical and hospital care such as laboratory services, radiology, physical therapy, etc.

Anniversary Date – The beginning day of an employer’s group health insurance plan year.

Annual Percentage Rate (APR) – The Annual Percentage Rate is the cost of credit expressed as a yearly rate. The APR is a means of comparing loans offered by various lenders on equal terms, taking into account interest rates, points, and other finance charges. The federal Truth-in-Lending Act requires disclosure of the APR.

Assignment of Benefits – Approval by a claimant that directs payments to be made directly to the health care provider by the health plan.

Annual Report 10-K - Public companies are required to file an annual report with the Securities and Exchange Commission (SEC). The financial report includes information about the company's assets, liabilities, earnings, profits, and other year-end statistics.

Annuitant – An individual who receives payments from an annuity. The person whose life the annuity payments are measured on or determined by.

Annuity – A contract between an insurance company and an individual which generally guarantees lifetime income to the individual or whose life the contract is based in return for either a lump sum or periodic payment to the insurance company. Interest earned inside an annuity is income tax-deferred until it is paid out or withdrawn.

Appraisal – An appraisal is an estimate of a property's value, usually real estate, at a specific point in time and as determined by a qualified professional appraiser.

Appreciation – Appreciation is the increase in value of an asset. The term "appreciation" may be applied to real estate, stocks, bonds, etc.

APTC - The Association of Publicly Traded Companies is an organization separate from FINRA, that offers publicly-traded companies a means of addressing regulatory and legislative issues that affect them.

Arbitrage - Arbitrage is the practice simultaneously purchasing a security and selling that security—or a derivative of it—in another market for the purpose of making a profit by exploiting the price difference.

Arm's Length – Acting at arm's length predicates that two parties negotiate with opposing economic interests.

Ask price – The price at which a seller is willing to sell a security or commodity.

Asset Allocation – A process where an investor spreads his or her investments across many asset classes such as stocks, bonds, real estate, gold, etc. in proportions that fit their unique tolerance for risk and return.

Assisted Living – Facilities that offer modest assistance for to individuals requiring limited medical or physical assistance, but who are not in need of entering a nursing home.

Assignment of Benefits – Approval by a claimant that directs payments to be made directly to the health care provider by the health plan.

Assisted Living – Facilities that offer modest assistance for to individuals requiring limited medical or physical assistance, but who are not in need of entering a nursing home.

At-Will Employment – Nearly every state operates under the accepted business law that provides for employers to employ individuals without guarantees of employment. At will employment also allows the employee the freedom to leave an employer at any time without cause and without notice.

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- B -


Balance Billing – The amount remaining after the insurance company has paid its portion of a healthcare bill and that is the responsibility of the insured to pay.

Balance Sheet – A balance sheet is a financial statement that is divided into three major parts: assets, liabilities and shareholders' equity.

Balloon Mortgage – The terms on a balloon mortgage are insufficient to completely amortize the loan. A balloon, or lump sum, payment is required at the maturity of the loan to completely pay off the remaining principal. Balloon mortgages often contain a contractual opportunity to refinance when the balloon payment is due at prevailing rates.

Bank Reserves – The amounts that banks are required to keep on deposit at a Federal Reserve Bank, as determined by reserve ratios. Funds in excess of these reserves are loaned out or invested by the banks.

Bankruptcy – A federal court proceeding in which a debtor who is unable to continue to meet his/her financial obligations may be relieved from the payment of certain debts. This action seriously affects the borrower's credit worthiness.

Basis – An amount usually representing the actual cost of an investment to the buyer. The basis amount of an investment is important in calculating capital gains and losses, depreciation, and other income tax calculations.

Basis Points – Basis Points is a term used by investment professionals to describe yields of bonds. One basis point equals one 100th of 1%, or .01%. A bond yield increase from 10.0% to 10.1% represents an increase of 10 basis points.

Bear Market – A prolonged decline in overall stock prices occurring over a period of months or even years.

Beneficiary – Any individual who receives benefits from or is covered by an insurance policy or other healthcare program.

Beneficiary Liability - The portion of the cost charged by healthcare individuals and facilities that is not covered by the insurance company and must be paid by the beneficiary (insured individual).

Benefit Design – The types and levels of insurance coverage that are determined by the purchasing employer that will be offered to employees.

Benefit Limitations – Any limits on the amount an insurance company will pay or on the type of services an insurance company will pay for as determined in advance by contract with the employer. Limitations are in addition to any exclusions within the plan.

Benefits – The specific types of services to be provided to the insured and the amounts that will be reimbursed i.e., major medical, prescription drugs, physical therapy, etc.

Beta – A statistically generated number that is used to measure the volatility of a security or mutual fund in comparison to the market as a whole.

Bid Price – The price that a buyer is willing to pay for a security or commodity.

Blue-chip Stocks – The equity issues of financially stable, well-established companies that usually have a history of being able to pay dividends in bear and bull markets.

Bonding Requirement – The individual(s) that are appointed to run the day-to-day operations of a qualified plan, as well as the trustee(s) and investment managers must be bonded. The bond is required to provide protection to the plan against loss due to fraud, theft, forgery or dishonesty.

Bonds - A loan in the form of a debt security issued by companies or municipalities. Issuers of bonds agree to pay purchasers of the bonds (lenders) a set amount of interest for a given period of time (maturity).

Book Value – The value that belongs to a company's owners or shareholders after total liabilities have been subtracted from total assets. Also called shareholders equity.

Broker – A professional who has obtained a state license to sell and service insurance contracts and who represents the buyer.

Broker-Dealer - FINRA-registered firms that represent themselves as securities brokers or dealers on behalf of clients.

Bull Market – A prolonged increase in overall stock prices—usually occurring over a period of months or even years.

Buy-down – A buy-down refers to the payment of additional discount points in return for a below market interest rate (and therefore a lower monthly payment) on a home mortgage.

Buy-sell Agreement – An agreement between shareholders or business partners to purchase each others' shares in specified circumstances.


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- C -


Cafeteria Plan – An insurance plan that allows employees to choose from a predetermined list of healthcare services, allowing them to purchase the types and levels of service that best suit their individual needs.

Capital Markets – A general term encompassing all markets for financial instruments with more than one year to maturity.

Capital Stock – All ownership shares of a company, both common and preferred listed at par value.

Capitation - A payment process used primarily by health maintenance organizations (HMOs) to pay doctors and other providers, a periodic fee in exchange for the providers delivering all services required by the HMO’s insured members.

Captive Agents – Insurance agents that represent only one health plan or insurance company.

Carrier – An insurance company.

Case Manager –A nurse, doctor, or social worker who oversees patient treatment and who determines whether certain medicines or treatment are required.

Cash Equivalents – Assets that can be quickly converted to cash. These include receivables, treasury bills, short-term commercial paper, short-term municipal and corporate bonds and notes.

Cash Value – Permanent life insurance policies provide both a death benefit and in an investment component called a cash value. The cash value earns interest and often appreciates. The policyholder may accumulate significant cash value over the years and, in some circumstances, "borrow" the appreciated funds without paying taxes on the borrowed gains. As long as the policy stays in force the borrowed funds do not need to be repaid, but interest may be charged to your cash value account.

Catastrophic Health Insurance – An insurance policy that protects the insured against the possibility of high cost treatment for severe or lengthy illnesses.

CCN – Community Care Network.

CCP – Coordinated Care Plan.

CD-Certificate of Deposit - Short- or medium-term, interest-bearing, FDIC-insured investment offered banks and savings and loans. CDs offer a fixed rate of return in exchange for you tying up money for a fixed period of time (until maturity). Money removed before maturity is subject to a penalty.

Change Management - A management strategy, typically guided by HR professionals, that assists companies to change, and to control procedures and morale during times of change.

Charitable Remainder Trust (CRT) – The Charitable Remainder Trust is an irrevocable trust with both charitable and non-charitable beneficiaries. The donor transfers highly appreciated assets into the trust and retains an income interest. Upon expiration of the income interest, the remainder in the trust passes to a qualified charity of the donor's choice. If properly structured, the CRT permits the donor to receive income, estate, and/or gift tax advantages. These advantages often provide for a much greater income stream to the income beneficiary than would be available outside the trust.

CHC – Community Health Center.

Chronic Care – Long term care of individuals with persistent diseases or conditions.

Claim – A bill for healthcare services or medicines that is presented to the insurance company for payment.

Claimant – The person or entity submitting a claim.

Closed-end Fund – A fund whose value is held within a fixed number of shares. Until the fund is wound up, shares can be bought and sold on the stock exchange or the over-the-counter market.

Closed Plan – HMOs and other managed care plans that require insured individuals to use providers who participate in those plans and agree to the plans’ rules and pricing schedule.

Co-borrower – A co-borrower is individually or jointly obligated to repay a loan entered into with a third party. The co-borrower may or may not share in ownership of loan collateral.

COBRA – COBRA stands for the Consolidated Omnibus Budget Reconciliation Act, which became law in 1986. COBRA gives an insured individual who loses his or her job and employer-provided health insurance the right to temporarily keep their group health insurance benefits at their own cost.

Codicil – An instrument in writing executed by a testator for adding to, altering, explaining or confirming a will previously made by the testator; executed with the same formalities as a will; and having the effect of bringing the date of the will forward to the date of codicil.

Co-Insurance – A type of cost sharing where the insured party and insurer share payment of the approved charge for covered services in a specified ratio after payment of the deductible.

Collateral – Assets pledged as security for a loan. If the borrower defaults on payment, the lender may dispose of the property pledged as security to raise money to repay the loan.

Commission – The fee a broker or insurance agent collects for administering a trade or policy.

Commission-based Broker - A commission-based broker receives commission from the mutual fund, investment house, or insurance provider for referring the client’s business. The commission will sometimes be disclosed in the documentation, but not in all cases. Because this cost can be hidden rather than open and visible like the fee for a fee-based broker, it can seem like a free service to the customers, but is a cost investors should ask about.

Commodity – A commodity is a physical substance such as a food or a metal which investors buy or sell on a commodities exchange, usually via futures contracts.

Common Stock - A stock (equity) ownership that may pay a dividend to the owner and represents a portion of ownership in a corporation. The value of the common stock may increase or decrease with the value of the company.

Community Rating – Setting insurance rates based on the average cost of providing health services to all people in a geographic area, without adjusting for each individual's medical history or likelihood of using medical services.

Compounding – The computation of interest paid using the principal plus the previously earned interest.

Comprehensive Major Medical Insurance – An insurance policy that protects an individual against catastrophic healthcare expenses due to an accident or serious health problems.

Conduit IRA – An individual who rolled over a total distribution from a qualified plan into an IRA can later roll over those assets into a new employer's plan. In this case the IRA has been used as a holding account (a conduit).

Conforming Loan – A mortgage loan that conforms to Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC) guidelines. Currently, conforming first mortgages are under $275,000 ($413,000 in Alaska and Hawaii).

Consent – Authorization by a patient to allow treatment.

ConsentConsumer Debt – Debt incurred for consumable or depreciating non-investment assets. Items include credit card debt, store-financed consumer purchases, car loans, and family loans that will be repaid.

ConsentContrarian – An individual whose opinion is the opposite of the majority.

Contributory Program – Also called cost-sharing program, it is an insurance plan where the employee and the employer shares the cost of group coverage.

Conventional Mortgage – A conventional mortgage is not insured, guaranteed or funded by the Veterans Administration, the Federal Housing Administration, or Rural Economic Community Development.

Convertible Mortgage – A convertible mortgage is an adjustable mortgage (ARM) that allows the borrower to convert to a fixed rate mortgage during a specified period of time.

Convertible Term Insurance – Term life insurance that can be converted to a permanent or whole life policy without evidence of insurability, subject to time limitations.

Coordination of Benefits – When two or more insurance coverage providers are involved in a claim, coordination of benefits is the process of determining who is responsible for payment and ensuring that there is no duplication of billing or payments.

Co-Payment or Co-pay – The shared cost of healthcare where the insurance company typically pays the bulk of the cost for services and the insured pays a small portion.

Core Competencies - The basic skills and knowledge that employees of a company must possess to do their jobs, or that companies must possess to be competitive.

Corporation – A legal business entity created under state law. Because the corporation is a separate entity from its owners, shareholders have no legal liability for its debts.

Correction – A sudden decline in stock or bond prices after a period of market strength.

Cost Sharing – Payment method where a person is required to pay some health costs in order to receive medical care. The general set of financing arrangements whereby the consumer must pay out-of-pocket to receive care, either at the time of initiating care, or during the provision of health care services, or both. This includes deductibles, coinsurance and copayments, but not the share of the premium paid by the person enrolled.

Coupon Rate – The rate of interest paid on a bond, expressed as a percentage of the bond's par value.

Credit Cards – Cards such as Visa and MasterCard allow the holder to charge purchases rather than pay cash.

Credit Bureau Repositories – A credit bureau repository is an organization that compiles credit history information directly from lenders and creditors into credit summaries and reports. These reports are made available to lenders and creditors to assist them in gauging an individual's credit worthiness.

Critical Illness Insurance – Insurance protection designed to provide a lump-sum payment equal to the full value of the policy or a percentage of the policy depending upon the product design, to the insured/policy owner upon the diagnosis of a covered critical illness. Typical illnesses covered include heart attack, stroke, cancer, paralysis, renal failure and Alzheimer's disease. Many policies offer a partial payment for certain medical procedures such as coronary bypass surgery or angioplasty. Some policies offer a return of all premiums in the event of death of the insured, others pay the full benefit upon the insured's death.

C-Suite – A common term used to describe senior executives including the CEO, CFO, CIO, COO, etc.

Currency risk – The level of risk when investing in international markets, due to the fluctuations in exchange rates of the various world currencies. Investing in any foreign country should be preceded by a careful estimation of how well its currency is likely to do against the dollar.

Custodian – A financial institution, usually a bank or trust company, that holds a person or company's cash and or securities in safekeeping.

Cyclical Companies – Companies that report strong earnings when the overall economy is doing well and weaker earnings when the economy is in recession.

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Debit Cards – Debit cards allow the cost of a purchase to be automatically deducted from the customer's bank account and credited to the merchant.

Debt Markets – The fixed income sector of the capital markets devoted to trading debt securities issued by corporations and governments.

Debt to Income Ratio – The ratio of a person's total monthly debt obligations compared to their total monthly resources is called their debt to income ratio. This ratio is used to evaluate a borrower's capacity to repay debts.

Decedent – The term decedent refers to a person who has died.

Decreasing Term – A term life insurance featuring a decreasing death benefit. Decreasing term is well suited to provide for an obligation that decreases over the years such as a mortgage.

Deductibles – The agreed to amount that an insured must pay for any claim or period before his or her insurance begins paying.

Deed of Trust – A document used to convey title (ownership) to a property used as collateral for a loan to a trustee pending the repayment of the loan. The equivalent of a mortgage.

Deferral – A form of tax sheltering in which all earnings are allowed to compound tax-free until they are withdrawn at a future date. Placing funds in a qualified plan, for example, triggers deductions [not all qualified plans provide for tax deductions; contributions may, however, be excluded from gross income, i.e. 401(k) plans] for the current tax year and postpones capital gains or other income taxes until the funds are withdrawn from the plan.

Deferred Compensation – Income withheld by an employer and paid at some future time, usually upon retirement or termination of employment.

Defined Benefit Plan - A type of pension plan, which is not an individual retirement account, although both the employer and the employee may contribute to the plan, which provides a retired employee a specified periodic payment based on the employee’s earnings and years of service. The responsibility for investment results and payments is with the employer.

Defined Care – Contractual definitions and care options of an insurance plan.

Defined Contribution Plan – In a defined contribution plan, contributions are allocated to individual accounts according to a pre-determined contribution allocation. This type of plan does not promise any specific dollar benefit to a participant at retirement. Benefits received are based on amounts contributed, investment performance and vesting. The most common type of defined contribution plan is the 401(k) profit-sharing plan.

Defined Contribution Health Plan – Healthcare plans where the employer funds a fixed (as opposed to variable) dollar amount for healthcare benefits for its employees.

Deflation – A period in which the general price level of goods and services is declining.

Dependent – Person covered by someone else's health plan.

Depreciation – Charges made against earnings to write off the cost of a fixed asset over its estimated useful life. Depreciation does not represent a cash outlay. It is a bookkeeping entry representing the decline in value of an asset over time.

Derivative - A term used to describe a variety of investment instruments that “derive” their value by referencing an underlying asset or index of some form.

Direct Deposit – A means of authorizing payment made by governments or companies to be deposited directly into a recipient's account. Used mainly for the deposit of salary, pension and interest checks.

Disability Insurance – Insurance designed to replace a percentage of earned income if accident or illness prevents the beneficiary from pursuing his or her livelihood.

Disposable Income – After-tax income available for spending, saving or investing.

Diversification - Investment diversification is a strategy whereby the investor’s portfolio is spread amongst various types of investments such as stocks, bonds, and real estate to reduce exposure to risk of loss of principle.

Dividend - Payments to stockholders in the form of cash or additional stock. Individuals seeking to grow their assets may elect to reinvest these dividends while other individual may rely on these dividends as income in their retirement.

Dividend Reinvestment Plan (DRIP) – An investment plan that allows shareholders to receive stock in lieu of cash dividends.

Dividends – A distribution of the earnings of a company to it's shareholders. Dividends are "declared" by the company based on profitability and can change from time to time. There is a direct relationship between dividends paid and share value growth. The most aggressive growth companies do not pay a dividend, and the highest dividend paying companies may not experience dramatic growth.

Dollar Cost Averaging – Buying a mutual fund or securities using a consistent dollar amount of money each month (or other period). More securities will be bought when prices are low, resulting in lowering the average cost per share. Dollar cost averaging neither guarantees a profit nor eliminates the risk of losses in declining markets and you should consider your ability to continue investing through periods of market volatility and/or low prices.

Down payment – The down payment on a property is the amount of cash applied to the purchase, with the remainder of the purchase accomplished through a mortgage or other debt.

Due Diligence - The process of undertaking a thorough investigation of a company or investment opportunity prior to making a purchase.

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EAP - Employee Assistance Programs are designed to help companies identify employees who may have personal problems, and to assist those employees in resolving those problems.

Earnest Money – Similar to a deposit, earnest money is the money given by the buyer to the seller of a property as an assurance of their intentions to purchase the property.

Earnings Per Share (EPS) – Total net profits divided by the number of outstanding common shares of a company.

Economic Cycle – Economic events are often felt to repeat a regular pattern over a period of anywhere from two to eight years. This pattern of events ends to be slightly different each time, but usually has a large number of similarities to previous cycles.

EEOC Guidelines - Equal Employment Opportunity Commission (EEOC) guidelines to prevent workplace discrimination. These guidelines are not law, but are typically supported by courts.

Effective Tax Rate – The percentage of total income paid in federal and state income taxes.

Efficient Market – The market in which all the available information has been analyzed and is reflected in the current stock price.

Effective Date – The date that an insurance policy or plan goes into effect.

Election – An enrollee's decision to join or leave a health plan.

Electronic Data Interchange (EDI) – The automated exchange of data and documents in a standardized format.

Eligible Dependent – A dependent who is entitled to receive health benefits from someone else's health insurance plan.

Eligible Employee – Employee who qualifies to receive benefits.

Elimination Period – The period of time that a new employee must wait, also called the “waiting period” before he or she is eligible to participate in an employer’s health insurance plan.

Employee Handbook - A formal document outlining a company's policies and procedures.

Employee Leasing - An arrangement where a company contracts with a professional employer organization (PEO) to provide specific HR functions including compliance, compensation, payroll, record-keeping and taxes. Employers pay the PEO the total amount of payroll plus a service fee (a lease payment) and the PEO then pays the company’s employees.

Employee Stock Ownership Plan (ESOP) – An ESOP plan allows employees to purchase stock, usually at a discount, that they can hold or sell. ESOPs offer a tax advantage for both employer and employee. The employer earns a tax deduction for contributions of stock or cash used to purchase stock for the employee. The employee pays no tax on these contributions until they are distributed.

Enrollment – The process of applying for and being accepted into a health insurance plan.

EPLI – Employment Practices Liability Insurance that provides employers protection against employment claims such as wrongful termination and sexual harassment.

ERISA – Employee Retirement Income Security Act (of 1974) establishes strict rules for the administration of employee benefit programs including profit sharing, pension plans and health care benefits.

ESOP – Employee Stock Ownership Plan is a type of defined contribution plan established by a company where company contributions are used to buy company stock on behalf of the company’s employees.

Estate – A decedent's estate is equal to the total value of their assets as of the date of death. The estate includes all funds, personal effects, interest in business enterprises, titles to property, real estate, stocks, bonds and notes receivable.

Estate Planning – The orderly arrangement of one's financial affairs to maximize the value transferred at death to the people and institutions favored by the deceased, with minimum loss of value because of taxes and forced liquidation of assets.

Excess Distributions – An individual may have to pay a 15% tax on distributions received from qualified plans in excess of $150,000 during a single year. The tax, however, does not apply to distributions due to death, distributions that are rolled over, and distributions of after-tax contributions.

Exclusions – Conditions or situations not covered under contract or plan and therefore not paid by the insurance carrier.

Exclusion Waiting Period – If you have a pre-existing medical condition when you enroll in a health insurance plan, that plan may exclude coverage of your condition for a pre-determined period of time. This applies whether you are applying for an individual health insurance play or an employer’s group health insurance plan.

Executor – The person named in a will to manage the estate of the deceased according to the terms of the will.

Extended Care Facility (ECF) – A nursing, long-term, or convalescent home offering skilled nursing care and rehabilitation services on a 24-hour basis.

Extension of Benefits – Insurance policy provision under COBRA that allows medical coverage to continue past termination of employments.

Equities – Also called stocks, equities are certificates (physical or electronic) that represent a percentage of ownership in a corporation. Owning a share in a company offers the stock owner a share in its profits or losses.

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Face Amount – The face amount stated in a life insurance policy is the amount that will be paid upon death, or policy maturity. The face amount of a permanent insurance policy may change with time as the cash value in the policy increases.

Fair Market Value – The fair market value of a property or other asset is the price that a buyer and seller can establish in an arms-length transaction where neither one is compelled to buy or to sell.

Family Trust – Trust designed to allow a parent to transfer assets to his or her children directly and prevent assets from being automatically inherited by a spouse. A trust established with family members as beneficiaries.

FDIC-Federal Deposit Insurance Corporation – An independent agency of the US federal government that insures deposits in member banks and savings and loan companies up to $100,000.

Federal Housing Administration (FHA) – The Federal Housing Administration (FHA) is a government agency that sets standards for underwriting residential mortgage loans made by private lenders and insures such transactions.

Federal National Mortgage Association (FNMA or Fannie Mae) – FNMA is a private corporation that acts as a secondary market investor in buying and selling mortgage loans.

Fee-based Asset Management – Management of assets where the broker of investment advisor charges a set fee based on the value of the assets under management rather than by receiving commissions on investment products being sold.

Fee-based Broker – A fee-based broker charges customers a flat fee for most services including research, recommendations, trades and other activities. Typically, the broker charges clients a percentage of assets under management that is on a sliding scale depending on the size of the account. The more assets you have in the account, the lower the percentage.

Fee-For-Service (FFS) – Traditional method of payment for healthcare services where payment is made for specific services as they are delivered.

Fee Schedule – A listing of fees for services that healthcare insurance company agrees to pay and a physician agrees to accept.

Fiduciary – Under the regulation of ERISA, a fiduciary is an individual who accepts a legal and ethical responsibility to make decisions and take actions, such as making investment decisions, on behalf of another individual or company. In a fiduciary relationship, a fiduciary is expected to foster trust and confidence at all times.

Financial Planner – A person who helps you plan and carry out your financial future.

FINRA-Financial Industry Regulatory Authority - A self-regulatory organization that assists the SEC in regulating financial markets, notably exchanges and companies that deal with securities. Among other duties, FINRA enforces rules, arbitrates disputes, and provides training and licensing services. Contrary to the belief of some, it is not a government agency. It was created in 2007 with the merger of the National Association of Securities Dealers and the NYSE regulatory board.

Fixed Investment – Any investment paying a fixed interest rate such as a money market account, a certificate of deposit, a bond, a note, or a preferred stock. A fixed investment is the opposite of a variable investment.

Fixed Rate Mortgage – With a fixed rate mortgage, your interest rate will remain the same for the entire term of the loan. Although the rate will begin slightly higher than a comparable adjustable rate mortgage (ARM), the interest rate you pay can never go up for as long as you have the mortgage.

Flexible Benefit Plan – A health insurance plan offered by employers where employees may choose among a number of healthcare benefit options. Also called a Cafeteria Plan.

Flexible Spending Account (FSA) – A plan provision that allows employees to save a specific amount each year, pre-tax, to be used for healthcare expenses.

FLSA – Fair Labor Standards Act establishes employment guidelines for exempt and non-exempt employment status, minimum wage, overtime, child labor, etc.

Fluctuation – A variation in the market price of a security.

FMLA – Family and Medical Leave Act (1993) provides for employees who have worked at least 1,250 hours over 12 months, to take up to 12 weeks of unpaid leave per year for health issues, birth of a child and other qualified reasons.

FOIA – Freedom of Information Act is a federal law that ensures the public of access to government information.

Foreclosure – A foreclosure is the legal process by which a borrower losses their ownership interest in a collateralized property due to default on the attached loan.

FSA – Flexible Spending Account within a health care plan that allows employees to put pre-tax earnings in an account to be used for qualifying medical expenses tax free. All moneys not used each year are forfeited.

Fund Manager – A person who manages the assets of a mutual fund.

Fundamental Analysis – Fundamental analysis is a technique of estimating a stock's future value based on the in-depth study of the stock's underlying financial statements. Fundamental analysis is the opposite of technical analysis.

Future Value – The future worth of a payment, or stream of payments, projected at a given interest rate for a given period of time.

Futures Market – A market in which contracts for future delivery of a commodity are bought and sold.

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Generally Accepted Accounting Principles (GAAP) – Conventions, rules and procedures that define accepted accounting practices in the U.S.

Generic Drug or Generic Equivalent – A drug that is exactly or very nearly the same as a brand-name drug and which costs substantially less.

Generic Substitution – Substituting a lower cost generic drug for an identical brand-name drug that has lost its patent protection.

Grace Period – A period (usually 31 days) following each premium due date, other than the first due date, during which an overdue premium may be paid, and during which time all policy provisions remain in force and effect.

Group Health Plan – A health plan that provides health coverage to employees, former employees, and their families, and is supported by an employer, employee organization or other organized group.

Group Insurance – Any insurance policy that is issued to a company that covers a group of employees and can include their families.

Growth Stock – The common equity of a company that consistently grows significantly faster than the economy.

Guaranteed Eligibility – A defined period of time (3-6 months) that all patients enrolled in prepaid health programs are considered eligible for Medicaid, regardless of their actual eligibility for Medicaid.

Guaranteed Investment Certificate (GIC) – A type of debt security sold to individuals by banks and trust companies. They usually cannot be cashed before the specified redemption date, and pay interest at a fixed rate.

Guarantor – A third party who agrees to repay any outstanding balance on a loan if you fail to do so. A guarantor is responsible for the debt only if the principal debtor defaults on the loan.

Guardian – A person or persons named to care for minor children until they reach the age of majority. A will is the best way to ensure that the person or persons whom you wish to have care for your minor children are legally empowered to do so in the event of your death.

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Hazard Insurance – Hazard insurance protects the insured from losses arising due to physical property damage associated with catastrophic hazards such as flood, fire, earthquake, tornado, etc. Hazard insurance will often be required by a lender to protect their collateral from such risks.

Health Care Provider – Typical healthcare providers include clinics, hospitals, doctors, dentists, psychologists and other healthcare professionals.

Health Insurance Portability and Accountability Act of 1996 (HIPAA) – A Federal law that allows persons to qualify immediately for comparable health insurance coverage when they change their employment relationships.

HIPAA – Health Insurance Portability and Accountability Act (1996) provides protection for employees moving from one company to another, helping to ensure that their health insurance is “portable” and protecting employees against being refused health insurance with a new employer due to preexisting conditions.

Health Maintenance Organization (HMO) – An organization that provides insurance coverage of defined health services for a fixed, prepaid premium.

HIPAA – Health Insurance Portability and Accountability Act (1996) provides protection for employees moving from one company to another, helping to ensure that their health insurance is “portable” and protecting employees against being refused health insurance with a new employer due to preexisting conditions.

Home Equity Line of Credit (HELOC) – A home equity line of credit allows a homeowner to borrow against the equity in their home with specific limits and terms. This is an open end loan which allows the borrower to borrow and repay funds as needed.

Home Equity Loan – A home equity loan is a collateralized mortgage, usually in a subordinate position, entered into by the property owner under specific terms of repayment.

Home Health Care – Full range of medical and other health related services delivered by healthcare professionals in the home of a patient.

Hospice or Hospice Care – A facility that provides expert and compassionate care for the terminally ill.

HSA – Health Saving Account is a unique tax-free account that allows an employee to set aside up to a specific amount each year for use to pay qualified medical bills. Money in the account grows year after year, with interest, and accumulates tax free for use to pay future medical expenses.

Human Capital – The value to a company of its employees’ knowledge, skill, abilities and presence.

Human Resources – A business function dealing with the policies, procedures and administration associated with employing people.

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Illiquid – The description of a security for which it is difficult to find a buyer or seller. An illiquid investment is an investment that may be difficult to sell quickly at a price close to its market value. Examples include stock in private unlisted companies, commercial real estate and limited partnerships.

Illustration – A life insurance illustration, or ledger, is a reference tool used to illustrate how a given life insurance policy underwritten by a specific insurer is expected to perform over a period of years. The insurance illustration assumes that conditions remain unchanged over the period of time that the policy is held.

Income Averaging – Income averaging allows individuals who were age 50 before January 1, 1986 to pay tax on a lump sum distribution as though it had been received over a five or ten year period, rather than all at once. By using income averaging individuals may be able to pay income tax at a more favorable rate.

Income Statement – A financial statement that shows the components of profit, such as sales, expenses, taxes and net profit.

Income Stocks – Stocks that have a consistent, stable, above-average dividend yield.

Independent Agents – Insurance agents that represent several health plans or insurers and are not obligated to any one company. Independent agents are free to select the best companies and coverages for their clients.

Independent Asset Management – Independent asset managers manage their client’s assets according to their own convictions, free from third-party influence. The asset manager acts on behalf of the client through a power of attorney.

Individual Investor – An individual who buys or sells assets to build an investment portfolio. Also called a retail investor.

Individual Plans – Insurance plans available to individuals and their dependents who are not eligible for coverage through employer group coverage.

Inflation – A term used to describe the economic environment of rising prices and declining purchasing power.

In-force Policy – An in-force life insurance policy is simply a valid policy. Generally speaking, a life insurance policy will remain in-force as long as sufficient premiums are paid, and for approximately 31 days thereafter. (See Grace Period)

IPA – Independent Practice Association.

IPO – Independent Practice Organization.

Institutional Investor – Any mutual fund, pension fund, or other institution that buys and sells securities in very large volumes.

Insurability – Insurability refers to the assessment of the applicant's health and is used to gauge the level of risk the insurer would potentially take by underwriting a policy, and therefore the premium it must charge.

Insured – A life insurance policy covers the life of one or more insured individuals.

Interest Rate – The simple interest rate attached to the terms of a mortgage or other loan. This rate is applied to the outstanding principal owed in determining the portion of a payment attributable to interest and to principal in any given payment.

Interest Rate Risk – Is the uncertainty in the direction of interest rates. Changes in interest rates could lead to capital loss, or a yield less than that available to other investors, Putting at risk the earnings capacity of capital.

Intestate – A term describing the legal status of a person who dies without a will.

Investment Banker – A firm that engages in the origination, underwriting, and distribution of new issues.

Investment Company – A corporation or trust whose primary purpose is to invest the funds of its shareholders.

Investment Considerations – Choosing which investments are right for you will depend on a number of factors, including; your primary objectives, your time horizon and your risk tolerance.

Investment Portfolio – A term used to describe your total investment holdings.

Investment Risk – The chance that the actual returns realized on an investment will differ from the expected return.

Investment Strategy – The method used to select which assets to include in a portfolio and to decide when to buy and when to sell those assets.

Independent Retirement Account (IRA) – An Individual Retirement Account (IRA) is a personal savings plan that offers tax advantages to those who set aside money for retirement. Depending on the individual's circumstances, contributions to the IRA may be deductible in whole or in part. Generally, amounts in an IRA, including earnings and gains, are not taxed until distributed to the individual.

IRA Rollover – An individual may withdraw, tax-free, all or part of the assets from one IRA, and reinvest them within 60 days in another IRA. A rollover of this type can occur only once in any one-year period. The one-year rule applies separately to each IRA the individual owns. An individual must roll over into another IRA the same property he/she received from the old IRA.



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Jumbo Loan – A loan that is larger than the limits set for conventional loans by the Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corportation (FHLMC). This limit is currently set at $300,700.

Junk Bonds – A bond that pays an unusually higher rate of return to compensate for a low credit rating.

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Keogh – A Keogh is a tax deferred retirement plan for self-employed individuals and employees of unincorporated businesses. A Keogh plan is similar to an IRA but with significantly higher contribution limits.

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Large Group – A large pool of individuals, typically employees of a company, for which health insurance coverage is provided by the group sponsor.

Leverage – Using "leverage" is the process of investing using borrowed funds. Leveraging your investments magnifies your returns, both positive and negative.

Leveraged Buyout (LBO) – Leveraged buyouts are deals in which a company is bought with mostly borrowed money, money frequently raised through selling high-yield and high-risk junk bonds.

Liability Risk – The risk that the legal system may assess punitive damages against you if property damage or personal injuries can be attributed to your carelessness or negligence.

Lien – A lien represents a claim against a property or asset for the payment of a debt. Examples include a mortgage, a tax lien, a court judgment, etc.

Life Expectancy – Life expectancy represents the average future time an individual can expect to live. Life expectancies have been increasing steadily over the past century and may continue to increase in the future. As people are living longer the cost of retirement is increasing.

Life Insurance – A contract between you and a life insurance company that specifies that the insurer will provide either a stated sum or a periodic income to your designated beneficiaries upon your death.

Life Settlement – Occurs when a person who does not have a terminal or chronic illness sells his/her life insurance policy to a third party for an amount that is less than the full amount of the death benefit. The buyer becomes the new owner and/or beneficiary of the life insurance policy, pays all future premiums, and collects the entire death benefit when the insured dies. Some states regulate the purchase as a security while others may regulate it as insurance.

Limit Order – An investment strategy where an investor buys or sells a security at a price specified in advance.

Liquidity – Liquidity is the measure of your ability to immediately turn assets into cash without penalty or risk of loss. Examples include a savings account, money market account, checking account, etc.

Living Will – If you become incapacitated this document will preserve your wishes and act as your voice in medical decisions, if you are unable to speak for yourself as a result of medical reasons.

Loan-to-value Ratio – A loan-to-value ratio represents the relationship between all outstanding and proposed loans on a property and the appraised value of the property. For example, an $80,000 loan on a $100,000 property would represent an 80% loan-to-value ratio. This ratio assists a lender in determining the risk associated with the loan. The higher this ratio is, the riskier the loan.

Long Position – A long position in an investment indicates a current ownership in that investment which would increase in value as the underlying asset(s) increase in value, opposite of a short position.

Long-term Care (LTC) – Healthcare delivered by a range of healthcare professionals to a person who has typically lost functional capacity and requires extensive medical care over a long period of time.

Long-term Care Insurance – Insurance designed to pay for some or all of the costs of long term care.

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Major Medical Expense Insurance – Policies designed to help offset potentially high medical expenses resulting from catastrophic or prolonged illness or injury.

Malpractice Insurance – Insurance that is secured by healthcare services providers to protect them against losses from lawsuits as a result of negligence or procedural error.

Managed Care – A process to control the use of health care services including determining medical necessity, incentives to use certain providers, and case management, etc.

Managed Care Organization (MCO) – A health plan that focuses on managing costs by contracting with health care providers to deliver health care services on a fixed rate per member basis.

Margin – A FINRA-governed brokerage account wherein investors purchase securities on credit extended by the brokerage.

Margin Account – A special account set up by a broker for a client who wants to buy and sell securities using margin.

Margin Call – A call from a broker to a client asking for more money to back up a security purchased on margin when such a security has declined in value. If more money is not supplied, the broker usually sells the security.

Market Maker – A firm that has access to the markets and matches buyers and seller of securities, thus “making the market.” Market Makers process buy-sell orders for their own customers as well as for other brokers-dealers.

Market Order – An order to buy at the lowest price going, or sell at the highest price possible.

Market Risk – Every investment carries some element of market risk, the risk that the entire market will decline, reducing the investment's value regardless of other factors.

Medical Power of Attorney – This special power of attorney document allows you to designate another person to make medical decisions on your behalf.

Medical Savings Account (MSA) – Also called Health Savings Account (HS), these types of accounts allow individuals to accumulate money to pay for medical care or insurance. They are often tax advantage.

Medicare Coverage – Made up of two parts: Hospital Insurance (Part A) and Medical Insurance (Part B). The term of coverage does not include Medicare Drug Plans (Part D). See Medicare Part A and Medicare Part B.

Medicare Part A – The Medicare component that provides basic hospital insurance to cover the costs of inpatient hospital services, confinement in nursing facilities or other extended care facilities after hospitalization, home care services following hospitalization, and hospice care.

Medicare Part B – The Medicare component that provides benefits to cover the costs of physicians' professional services, whether the services are provided in a hospital, a physician's office, an extended-care facility, a nursing home, or an insured's home.

Medicare Part D – See Medicare Prescription Plan, below.

Medicare Prescription Drug Plan (PDP or MPDP) – A stand-alone drug plan offered by private insurers to beneficiaries that receive their Medicare Part A and/or B benefits through the original Medicare plan.

Medigap – Private health insurance plans that supplement Medicare benefits by covering some of the costs not paid for by Medicare.

Minimum Distributions – An individual must start receiving distributions from a qualified plan by April 1 of the year following the year in which he/she reaches age 70 ½ . Subsequent distributions must occur by each December 31st. The minimum distributions can be based on the life expectancy of the individual or the joint life expectancy of the individual and beneficiary.

Money Market – A means of investing cash that is safe, although typically pays very little interest. Money market investments are short-term securities that invest in a host of investments such as bonds, Treasury Bills, CDs, etc.

Municipal Bonds – Bond securities issued by local, state or federal governments to fund capital projects. Municipal bonds are exempt from federal taxes as well as local taxes where the investors reside.

Money Purchase Plan – A Money Purchase Plan has contributions that are a fixed percentage of compensation and are not based on the employer's profits. For example, if the plan requires that contributions be 10% of the participant's compensation, the plan is a Money Purchase Pension Plan. With this type of plan, the employer is committed to making contributions each year even if the employer has no profits or is experiencing cash flow problems. Employee contributions are limited to 25% of compensation. Employer contributions are limited to the smaller of $30,000 or 25 percent of a participant's compensation.

Mortality – Mortality is the risk of death of a given person based on factors such as age, health, gender, and lifestyle.

Mortgage – A legal instrument providing a loan to the mortgagee to be used to purchase a real property in exchange for a lien against the property.

Mortgage Broker – A mortgage broker acts as an intermediary between a borrower and a lender. A broker's expertise is to assist the borrower in identifying mortgage lenders and products that they might not identify otherwise.

Mortgage Insurance – Mortgage insurance protects the lender against the default of higher risk loans. Most lenders require mortgage insurance on loans where the loan-to-value ratio is higher than 80% (less than 20% equity).

Mutual Funds – A mutual fund is a pooling of investor (shareholder) assets, which is professionally managed by an investment company for the benefit of the fund's shareholders. Each fund has specific investment objectives and associated risk. Mutual funds offer shareholders the advantage of diversification and professional management in exchange for a management fee.

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NASD – The National Association of Securities Dealers established in 1939 and later forming to become the Financial Industry Regulatory Authority (FINRA), self-regulatory organization that assists the SEC in regulating financial markets, notably exchanges and companies that deal with securities.

NASDAQ – The National Association of Securities Dealer Automated Quotation system. NASDAQ lists more than 3,800 companies, typically small–stock companies, derivatives, commodities, bonds, and ETFs.

Net Asset Value – The value of all the holdings of a mutual fund, less the fund's liabilities (also describes the price at which fund shares are redeemed).

Net Worth – Your net worth is the difference between your total assets and total liabilities.

Network – Physicians, hospitals and other providers who work together to provide health care services to the beneficiaries of a specific managed care organization.

Non-conforming Loan – A loan that does not conform to Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC) guidelines. Such loans include jumbo loan, sub-prime loans and high risk loans.

Non-Participating Physician or Provider – A doctor or hospital that does not agree to sign a contract to participate in a health plan because they prefer not to accept lower reimbursement rates.

Note – A note is a legal document that acknowledges a debt and the terms and conditions agreed upon by the borrower.

Nurse Practitioner (NP) – A registered nurse qualified to provide primary care in homes and in ambulatory care facilities, long-term care facilities, and other health care institutions.

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Odd Lot – An uneven number of securities that represents less than a board lot.

Offer Price – The price that a buyer is willing to pay for an investment.

Open Access – The ability of a member of a group insurance plan to see a healthcare specialist or preferred physician without a referral.

Open-end Fund – An open-end mutual fund continuously issues and redeems units, so the number of units outstanding varies from day to day. Most mutual funds are open-end funds. The opposite of a closed-end fund.

Open Enrollment Period – A period of time each year when a participant of a health insurance plan has the opportunity to select from the various options offered in the plan, usually without waiting periods or evidence of insurability.

Option – An investment instrument that provides the right to buy or sell a specific number of share of a security at a specified price and within a specified time. If the sale or purchase is not made in that specified time, the option lapses.

Origination Fee – The origination fee on a mortgage is usually the amount charged by the lender for originating the loan. Origination fees vary by lender and are expressed in points where one point is equal to 1% of the original loan balance.

OSHA – Occupational Safety and Health Act establishes laws for regulating work conditions to ensure worker safety.

Out of Area Benefits – Benefits provided to a patient by a managed care organization when the patient outside the network area. Also called Out of Network Benefits.

Out of Pocket Expenses, Out of Pocket Costs – All money spent by an insured individual on healthcare services.

Outpatient Care – Care given a person who is not bedridden. Also called ambulatory care.

OWBPA – Older Workers Benefit Protection Act prohibits discriminating against older workers by ensuring equal expenditures are made for younger and older workers on benefits.

Over-the-counter (OTC) Market – Market created by dealer trading as opposed to the auction market, which prevails on most major exchanges.

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PACE – Programs of All-Inclusive Care for the Elderly.

Paper Gain (loss) – Unrealized capital gain (loss) on securities held in portfolio, based on a comparison of current market price to original cost.

Par Bond – A bond selling at par.

Participating physician or Participating Provider – Healthcare professionals who provide services under contract with a health plan.

Pension 401(k) Plan – An employer-sponsored retirement plan, also called a defined contribution plan. It allows employees to make pre-tax contributions to the plan, up to a specified amount each year. Many employers choose to match up to a certain percentage of employee contributions. The plan gets its name from Section 401(k) of the Internal Revenue Code.

Pension 403(b) Plan – A 403(b) plan, also known as a tax-sheltered annuity (TSA) plan, is a retirement plan for certain employees of public schools, employees of certain tax-exempt organizations, and certain ministers. Individual accounts in a 403(b) plan can be any of the following types: An annuity contract, which is a contract provided through an insurance company, a custodial account, which is an account invested in mutual funds, or a retirement income account set up for church employees. Generally, retirement income accounts can invest in either annuities or mutual funds.

PEO – Professional Employer Organization is company that contracts with employers to assume responsibility of various HR functions and employment law compliance, and leases the employers’ employees back to the employers.

PHO – Physician-Hospital Organization.

PHP – Prepaid Health Plan.

Plan Sponsor – An employer, union, or some other entity that contracts with an insurance company to offer group health insurance.

Points – Points are charges added to a mortgage loan by the lender and are based on the loan amount. One point is equal to 1% of the original loan balance.

Policy – A contractual arrangement between the insurer and the insured describing the terms and conditions of the life insurance contract.

Policy Loan – The policy owner can borrow from the cash value component of many permanent insurance policies for virtually any purpose. Any policy loans that are outstanding at the time of death of the insured will be deducted from the benefit paid to the beneficiary.

Political Risk – Political risk is the risk that stock prices may decline dramatically during periods of political unrest or crisis.

Portability – Requirement that health plans guarantee continuous coverage without waiting periods for persons moving between plans. See also HIPAA.

Portfolio – The collective holdings of investment vehicles such as stocks, bonds, commodities, etc., or of an array of services such as the broad array of services available from BCG, BHL and WHS known as Premier AdvantageTM.

Practical Nurses – Practical nurses provide nursing care and treatment of patients under the supervision of a licensed physician or registered nurse.

Power of Attorney – A legal document authorizing one person to act on behalf of another.

Practical Nurses – Practical nurses provide nursing care and treatment of patients under the supervision of a licensed physician or registered nurse.

Pre-Authorization – A requirement of group medical policies that requires the insured to contact the insurer for authorization before being admitted to a hospital or undergoing surgery.

Preferred Stock – A stock security that typically pays a defined dividend to the owner of the stock, and is superior to common stock.

Premier Advantage™ – The unique advantage available to all BCG, BHL and WHS clients of having one of the largest portfolios of business and individual services assembled under one roof. The benefits include a reduction in time and cost associated with relying on an array of different independent advisors.

Premium – The periodic payment made to an insurance carrier for providing insurance protection.

Prepaid Health Plan (PHP) – An organization that receives payment for healthcare services on a pre-paid basis.

Present Value – The current worth of a future payment, or stream of payments, discounted at a given interest rate over a given period of time.

Primary Care - Basic or general healthcare usually rendered by general practitioners, family practitioners, internists, obstetricians and pediatricians known as primary care physicians.

Primary Care Network (PCN) - A group of primary care physicians who share the risk of providing care to members of a given health plan.

PTO – Paid Time Off benefit program that ensures employees of a specific number of paid personal and vacation days as defined by the employer in advance of each year.

Principal – The principal amount of a loan or mortgage is the outstanding balance, excluding interest.

Private Mortgage Insurance – Private mortgage insurance protects the lender against the default of higher risk loans. Most lenders require private mortgage insurance on loans where the loan-to-value ratio is higher than 80% (less than 20% equity).

Probate – The process used to make an orderly distribution and transfer of property from the deceased to a group of beneficiaries. The probate process is characterized by court supervision of property transfer, filing of claims against the estate by creditors and publication of a last will and testament.

Profit Sharing Plan – A Profit-Sharing Plan is the most flexible and simplest of the defined contribution plans. It permits discretionary annual contributions that are generally allocated on the basis of compensation. The employer will determine the amount to be contributed each year depending on the cash-flow of the company. The deduction for contributions to a Profit-Sharing Plan cannot be more than 15% of the compensation paid to the employees participating in the plan. Annual employer contributions to the account of a participant cannot exceed the smaller of $30,000 or 25 percent of a participant's compensation.

Prohibited IRA Transactions – Generally, a prohibited transaction is any improper (self-dealing) use of the IRA by the account owner. Some examples include borrowing money from an IRA, using an IRA to secure a loan and selling property to an IRA.

Prospectus – A detailed statement prepared by an issuer and filed with the SEC prior to the sale of a new issue. The prospectus gives detailed information on the issue and on the issuer's condition and prospects.

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Qualified Beneficiary – Employees, their spouses and dependent children covered under a group health plan.

Qualified Retirement Plan – A qualified retirement plan is a retirement plan that meets certain specified tax rules contained primarily in section 401(a) of the Internal Revenue Code. These rules are called "plan qualification rules". If the rules are satisfied the plan's trust is exempt from taxes.

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Referral – The practice of the primary care physician referring a patient to another medical professional or organization as required by the health plan in which the patient and the physician participate. Refinance – To refinance one's mortgage is to retire the existing mortgage using the proceeds of a new mortgage and using the same property as collateral. This is usually done to secure a lower interest rate mortgage or to access equity from the property.

Registered Nurses (RN) – Registered nurses must have graduated from a school of nursing approved by the state board for nursing and have passed a state board examination.

Registered Representative – A registered representative is licensed with the NASD (National Association of Securities Dealers), through association with an NASD member broker / dealer, to act as an account representative for clients and collect commission income.

Reinsurance – An insurance contract that the primary insurance company purchases to protect itself against part or all of the losses it might incur in the process of paying the claims of its policyholders.

Renewal – Continuance of coverage for a new policy term.

RFP – Request for Proposal is a document that thoroughly details the items to be quoted and delivered to the buyer. An RFP is distributed to a select list of capable companies or individuals who will follow the RFP to provide their pricing.

Revolving Debt – A debt or liability that does not have a fixed principal balance or payment. Examples include credit cards, home equity lines of credit, etc.

Rider – A life insurance rider is an amendment to the standard policy that expands or restricts the policy's benefits. Common riders include a disability waiver of premium rider and a children's life coverage rider.

Risk – Investment risk is the chance that the actual returns realized on an investment will differ from the expected return.

Roll-over – A investment rollover typically refers to the process of “rolling over” one type of tax-deferred investment into a different type of tax-deferred investment such as from a qualified 401(k) plan into an Individual Retirement Account (IRA). By rolling over money from one institution to another without taking the money in hand, the investor avoids having to pay a penalty and taxes until they are legally allowed to withdraw the money.

Rule of 72 – A way to determine the effect of compound interest. Divide 72 by the expected return on your investment. If your expected return is 8%, assuming that all interest is reinvested, you will double your money in 9 years.

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Safe Harbor – A Safe Harbor 401(k) Plan is a unique type of tax advantaged plan that provides employers more flexibility by reducing concerns about not meeting discrimination testing for highly compensated employees that defined contribution 401(k) plans face. Safe Harbor 401(k) plans require that all contributions by fully and immediately vested, and that the company declare with ample notice any intended matching investment.

Safety of Principal – Safety of principal is an objective that emphasizes the security of the invested principal.

Salary Reduction Simplified Employee Pension (SARSEP) – A simplified alternative to a 401(k) plan. It is a SEP that includes a salary reduction arrangement. Under this special arrangement, eligible employees can elect to have the employer contribute part of their before-tax pay to their IRA. This amount is called an "elective deferral".

SEC – The main regulatory body regulating the securities industry is called the Securities and Exchange Commission.

Second Mortgage – A mortgage on real property in a junior position to a primary or first mortgage. The increased risk associated with a second mortgage is often reflected in a higher interest rate and a shorter term of repayment.

Secondary Care – Services provided by medical specialists to whom a patient that was referred by his or her primary care physician.

Secondary Coverage – A health plan that pays any costs not covered by the primary coverage under coordination of benefits rules such as insurance that supplements Medicare coverage.

Securities – Stocks and bonds are traditionally referred to as securities. More specifically, stocks are often referred to as "equities" and bonds as "debt instruments."

Securities and Exchange Commission (SEC) – The main regulatory body regulating the securities industry is called the Securities and Exchange Commission.

Service Area – The area in which a health insurance plan will cover patient care.

Short Position – A short position in an investment indicates a position in an investment that would increase in value as the underlying asset(s) decrease in value. Opposite of a long position.

Short Sale – The sale of stock that you do not yet own in order to take advantage of an expected share price decline. If the stock declines in price, the stock is purchased at the now lower price and the short position is closed.

Simplified Employee Pension (SEP) – A SEP provides employers with a "simplified" alternative to a qualified profit-sharing plan. Basically, a SEP is a written arrangement that allows an employer to make contributions towards his or her own and employees' retirement, without becoming involved in a more complex retirement plan. Under a SEP, IRAs are set up for each eligible employee. SEP contributions are made to IRAs of the participants in the plan. The employer has no control over the employee's IRA once the money is contributed.

SIPC- Securities Investor Protection Corporation – A non-profit membership corporation established by Congress which insures securities and cash in customer accounts up to $500,000 (up to $100,000 on cash) in the event of brokerage bankruptcy. The SIPC does not insure against investment losses.

Small Cap – A small cap stock is one issued by a company with less than $1.7 billion in market capitalization.

Smart Card – A card with an embedded computer chip which stores more information, performs more functions and is more secure than a credit card or debit card.

Spousal IRA – An individual can set up and contribute to an IRA for his/her spouse. This is called a "Spousal IRA" and can be established if certain requirements are met. In the case of a spousal IRA, the individual and spouse must have separate IRAs. A jointly owned IRA is not permitted.

Stock Dividends – The investor's share of the income earned by the company issuing the stock.

Stock Exchange – A market for trading of equities, a public market for the buying and selling of public stocks.

Stocks – Stocks, also called equities, are certificates (physical or electronic) that represent a percentage of ownership in a corporation. Owning a share in a company offers the stock owner a share in its profits or losses.

Stop-loss Order – This is when you tell your broker to sell the stock if it drops to a certain price.

Strategic HR – Involves employing sophisticated HR programs and strategies with a long-term approach to contributing to a company’s business objectives.

Subscriber – Employment group or individual that contracts with an insurer for medical services.

Succession Planning – Planning for a business to pass to the next generation of owner/managers.

Surrender Value – When a policy owner surrenders his/her permanent life insurance policy to the insurance company, he or she will receive the surrender value of that policy in return. The surrender value is the cash value of the policy plus any dividend accumulations, plus the cash value of any paid-up additions minus any policy loans, interest, and applicable surrender charges.

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Tax Credit – An income tax credit directly reduces the amount of income tax paid by offsetting other income tax liabilities.

Tax Deduction – A reduction of total income before the amount of income tax payable is calculated.

Tax-deferred – The term tax deferred refers to the deferral of income taxes on interest earnings until the interest is withdrawn form the investment. Some vehicles or products that enjoy this special tax treatment include permanent life insurance, annuities, and any investment held in IRAs.

Tax-sheltered Annuity (TSA) – Tax deferred annuity retirement plan available to employees of public schools and colleges, and certain non-profit hospitals, charitable, religious, scientific and educational organizations.

Technical Analysis – Technical analysis is a technique of estimating a stock's future value strictly by examining its prices and volume of trading over time. Technical analysis is the opposite of fundamental analysis.

Tenants in Common – Two or more people who own the same piece of property, with the inherent condition that if one of the tenants die, his interest automatically passes on to his heirs.

Term Insurance – Term insurance is life insurance coverage that pays a death benefit only if the insured dies within a specified period of time. Term policies do not have a cash value component and must be renewed periodically as dictated by the insurance contract.

Termination Date – Date that a group contract expires or an individual is no longer eligible for benefits.

Testamentary Trust – A trust created under the terms of a will and that takes effect upon the death of the testator.

Third Party Administrator (TPA) – An independent organization that provides administrative services including claims processing and underwriting for other entities, such as insurance companies or employers.

Ticker Symbol – A ticker symbol is a combination of letters that identifies a stock-exchange security.

TIMS-The Investment Management System – Available through Benefit Consulting Group, has access to more than 500 no-load mutual funds. Assets within a TIMS account can be easily moved between funds and fund families.

Title – A legal document establishing property ownership.

Title Search – A detailed examination of legal records to determine the history and legal ownership of a property.

Top Heavy Plans – Each year, a qualified plan must be tested to determine whether it is "top-heavy". Generally, a "top-heavy" plan is one in which more than 60 percent of the benefits under the plan are for key employees (usually owners and officers). Additional requirements apply to a top-heavy plan such as faster vesting and mandatory employer contributions.

Total Disability – In order to make a disability claim a person must meet the definition of disability set forth in the insurance contract. There are two general definitions of disability used in today's contracts. The first definition is that the insured is unable to perform all of the substantial and material duties of his/her own occupation. The second, and more restrictive, definition is that the insured is unable to perform any occupation for which he/she is reasonably suited by education, training, or experience.

Treasury Bill – Treasury bills, often referred to as T-bills, are short-term securities (maturities of less than one year) offered and guaranteed by the federal government. They are issued at a discount and pay their full face value at maturity.

Treasury Bond – Treasury bonds are issued with maturities of more than 10 years and are offered and guaranteed by the U.S. Government. They are issued at a discount and pay their full face value at maturity.

Treasury Note – Treasury notes are issued with maturities between one and 10 years. These notes are offered and guaranteed by the U.S. Government. They are issued at a discount and pay their full face value at maturity.

Triage – The categorizing of patients according to severity of illness or injury to determining who needs services first.

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Unbundling – The practice of breaking the components of a medical procedure into parts and charging for each part. Because it increases cost and complexity, unbundling is often disallowed by managed healthcare plans.

Underwriter (banking) – A person, banker or group that guarantees to furnish a definite sum of money by a definite date in return for an issue of bonds or stock.

Underwriter (insurance) – The one assuming a risk in return for the payment of a premium, or the person who assesses the risk and establishes premium rates.

Underwriter (investments) – In the bond/stock market means a brokerage firm or group of firms that has promised to buy a new issue of bonds/shares from a government or company at a fixed discounted price, then arranges to resell them to investors at full price.

Universal Life Insurance – An adjustable Universal Life insurance policy provides both a death benefit and an investment component called a cash value. The cash value earns interest at rates dictated by the insurer. The policyholder may accumulate significant cash value over the years and, in some circumstances, "borrow" the appreciated funds without paying taxes on the borrowed gains (taxes may be required if policy is surrendered). As long as the policy stays in force the borrowed funds do not need to be repaid, but interest may be charged to your cash value account. Premiums are adjustable by the policy owner.

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Variable Investment – A variable investment is any investment whose value, and therefore returns, fluctuates with market conditions such as a common stock, a plot of raw land, and a hard asset.

Variable Universal Life Insurance – A Variable Life insurance policy provides both a death benefit and an investment component called a cash value. The owner of the policy invests the cash value in sub accounts selected by the insurer. The policyholder may accumulate significant cash value over the years and "borrow" the appreciated funds without paying taxes on the borrowed gains (taxes may be required if policy is surrendered). As long as the policy stays in force the borrowed funds do not need to be repaid, but interest may be charged to your cash value account.

Variable Rate Mortgage (VRM) – A Variable Rate Mortgage offers an initial interest rate that is usually lower than a fixed rate, but that adjusts periodically according to market conditions and financial indices. The rate may go up and/or down, depending on economic conditions. To limit the borrower's risk, the VRM will almost always have a maximum interest rate allowed, called a "rate cap."

Venture Capital – A common term for funds that are invested by a third party in a business either as equity or as a form of secondary debt. In the event of failure or business wind-up, these funds rank behind all other secured creditors.

Vesting – A process that recognizes and rewards employee’s for their service to a company by providing access to company-paid money in a pension fund that increases with each year of service up to a specific number of years. When an employee has worked for a predetermined number of years, he or she achieves being fully vested.

Viatical Settlement – Occurs when a person with terminal or chronic illness sells his/her life insurance policy to a third party for an amount that is less than the full amount of the death benefit. The buyer becomes the new owner and/or beneficiary of the life insurance policy, pays all future premiums, and collects the entire death benefit when the insured dies. Some states regulate the purchase as a security while others may regulate it as insurance.

Virtual Vault – A secure location on a network server where documents may be stored and accessed over the Internet, at any time, from any location in the world where an Internet connection is available. The data is secured and accessible only by entering a password.



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Waiting Period – The length of time an individual must wait to become eligible for benefits to treat a specific pre-condition. Also, the period that must pass before an employee or dependent is eligible to becomes covered under the terms of an employer’s group health plan.

Waiver of Premium – A waiver of premium rider on an insurance policy sets for conditions under which premium payments are not required to be made for a time. The most popular waiver of premium rider is the disability waiver under which the owner of the policy (also called the policyholder) is not required to make premium payments during a period of total disability.

Warrant – A warrant is a call option issued by a company on its own stock. The company specifies the exercise price and maturity date. Once issued, the warrant can be traded on exchanges.

Welfare Plan – A plan provided by an employer designed to enhance its employee’s health and welfare, and includes medical coverage and other benefits.

Wellness Program – An approach where the patient and healthcare professionals work to keep the patient well versus treating a health problem after it arises. Maintaining good health is a win-win situation for patient, insurer and medical professional.

Whole Life Insurance – A traditional Whole Life insurance policy provides both a death benefit and a cash value component. The policy is designed to remain in force for a lifetime. Premiums stay level and the death benefit is guaranteed. Over time, the cash value of the policy grows and helps keep the premium level. Although the premiums start out significantly higher than that of a comparable term life policy, over time the level premium eventually is overtaken by the ever-increasing premium of a term policy.

Will – The most basic and necessary of estate planning tools, a will is a legal document declaring a person's wishes regarding the disposition of their estate. A will ensures that the right people receive the right assets at the right time. If an individual dies without a will they are said to have died intestate.

Workers' Compensation – A state-mandated program providing insurance coverage for work-related injuries and disabilities.

Wrap Account – An account offered by investment dealers whereby investors are charged an annual management fee based on the value of invested assets.

Write-off – Any loan not expected to be recovered and is recorded as a loan loss.

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Yield – The yield on an investment is the total proceeds paid from the investment and is calculated as a percentage of the amount invested.



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Zero-coupon Bond – A zero-coupon bond is a bond sold without interest-paying coupons. Instead of paying periodic interest, the bond is sold at a discount and pays its entire face amount upon maturity, which is usually a one year period or longer.



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