Abbott, Langer Association Surveys

Abbott-Langer & Associates Business Glossary

This glossary of business definitions contains over 2,000 business terms used in compensation and benefits administration. Continually updated, this specialized business dictionary focuses on definitions of Human Resources terms and business terms.

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Major Medical Insurance

A type of supplementary insurance, in addition to basic medical insurance, to provide for the costs of a major illness or injury.

Major Services

Relates to dental insurance for services that are the most costly.

Managed Care

A method by which insurance carriers attempt to manage healthcare costs by utilizing a pre-selected panel of physicians.

Managed Health Care

A healthcare approach that delivers medical services while controlling cost and quality.

Management By Objectives (MBO)

A process by which management and employees set specific goals with feedback on goal progress.

Managing General Agent (MGA)

An independent contractor that appoints personal general agents on behalf of an account, and who might represent numerous accounts.

Mandatary

A person that receives a mandate.

Mandated Benefits

Non-cash benefits that are required by state law to be covered by an insurance carrier.

Mandator

An individual who hires another to carry out the command or wishes of a mandate.

Mandatory Continuing Education (MCLE)

Mandatory Continuing Legal Education (also known as MCLE) are annual educational requirements for legal professionals. MCLE credits are governed by various related State Boards. Approximately 1/2 of all U.S. states have these annual requirements. The www.eridlc.com website refers to legal continuing education credit as CLE.

Mandatory Continuing Legal Education (MCLE)

Annual educational requirements for legal professionals. MCLE credits are governed by various related State Boards.

Mandatory Securities Valuation Reserve (MSVR)

A liability account that is supposed to incorporate realized and unrealized capitol gains and losses resulting from investments.

Manual Rates

A premium rate based on claims experience of an average group.

Margin

An error factor, usually a percentage of premium, margin is used by underwriters to set risk.

Marginal Tax Rate

The tax rate paid on the last dollar of income.

Market Adjustment

The adjustment that is necessary for an individual or an organization to bring the individual or organization to approximate market values.

Market Based Salary Increase Budget

An organizations budget to increase salaries that is estimated by their knowledge of the competition.

Market Basket

A combination of goods and services used to calculate a consumer price index.

Market Capitalization

The result of multiplying the number of outstanding shares by the price per share.

Market Compa-Ratio

The comparison of internal pay to competitive pay of a company or individual.

Market Cycle

A description of the various stages of a product or company as it growths or declines.

Market Index

An index that is used to calculate an individual or groups market pay by dividing the current pay of an individual by the market pay.

Market Rates

An organization's determination of rates for wages that are typical for a specific occupation.

Master Contract

A legally binding agreement between and insurance company and the policy holder, usually an organization.

Master Plan

A defined benefit or defined contribution plan, such as pension or other employee benefit plan, that has been developed by a sponsoring organization and that provides a single trust account in which all adopting employers must invest their plan contributions. The sponsoring organization must have the plan approved by the Internal Revenue Service.

Matching Contributions

Contributions that are made to an employee's 401K plan by their employer. The intent is to match the employee contribution to a pre-set dollar or percentage maximum.

Material Fact

In the insurance industry a fact that is considered applicable to an underwriter when considering rating or issuing a policy.

Material Misrepresentation

In the insurance industry any incorrect, misleading or false statement(s) by the applicant that would cause the insurer to accept this individual as a risk, when under truthful circumstances the insurer may have accepted the risk under other provisions, or may have declined the policy.

Materiality

In accounting, this idea represents that that relevant information concerning monetary transactions and/or condition of the organization it to be reported and explained separately.

Matters of Significance

Refers to the level of importance or consequence of the work performed.

Matured Endowment

In insurance, a type of life insurance that is payable if the insured is still alive on the date the policy has matured.

Maturity Curve

A maturity curve measures salaries based on years of directly related experience since the first educational degree/formal training requirements for job entry was earned.

Maximum Benefit

In the U.S., the highest lifetime or annual benefit amount that can be paid by a qualified defined benefit plan to a plan participant legally. (Canada) The highest amount an insured may receive under an insurance plan.

Maximum Benefit Period

The longest amount of time that a disability insurance plan will continue to provide disability income payments.

Maximum Benefits For Related Confinements Provision

A limitation that is found within policies that refer to all hospital stays and all surgeries that are completed within a period of sickness or a surgery.

Maximum Reasonable Compensation

In the IRS determination of reasonable compensation for owner-managers, one of the main considerations is that of comparable wages. Maximum reasonable compensation would be the highest amount of compensation, both wages and bonus, which would be allowable to be used as a business expense for services rendered in comparable circumstances. Based on IRS cases, ERI developed the definition in terms of the standard error of the distribution of compensation for comparable executives. This measure is approximately plus/minus 3.01 standard error. Very similar to the standard deviation, the standard error represents the range of pay in which one might find 95% of the population.

Maximum Years of Experience

In ERI survey software data, maximum years is twice the normal career job incumbency period. This is two times the average number of years people hold this job (per Census and other survey reports). Beyond this point of maximum years you can expect to find very few people still performing the same job. This maximum years figure is the top number of years that accurately and reliably predicts pay differentials. The pay of those few who hold this job beyond the maximum year is not related to their total years of experience; i.e., if 5 years is the average, pay differentials are not reported beyond 10; the pay of those at 11, 12, 13 years, etc., remains best predicted by the 10-year level and has a spurious relationship with the years in excess of 10. Pay thereafter is related to some factor beyond years of total experience over the maximum.

McCarran Ferguson Act

The McCarran Ferguson Act allows employers to not include certain time and activities of employees, prior to and/or after work, as "work time." These activities are ones that are not required in order to accomplish the job. The most common of these is the time taken to commute to work. Examples of types of activities other than commuting that are non-compensable are: waiting to check in at the beginning of a workday or waiting in line for a paycheck at the conclusion of a shift.

Mean

A mean is the result of dividing the sum of two or more quantities by the number of quantities. See AVERAGE.

Median

One type of norm measure found by arranging the values in order and then selecting the one in the middle. Therefore, half of the numbers are less than the median, and half are higher than the median.

Median - Grouped Data

A special quantitative analysis technique is useful when analyzing a group of data in a frequency distribution.

Medicaid

An insurance plan funded by the government that provides medical coverage to individuals under age 65 who are low wage earners, and/or meet other criteria.

Medical Application

An application for medical insurance which also include a medical exam for which the results are reported the insurance company.

Medical Expense Insurance

A type of insurance plan designed to pay for various medical expenses.

Medical Information Bureau (MIB)

An organization that provides fraud protection from those that would try to hide or omit information when applying for various insurance coverage.

Medical Necessity Provision

A provision in most medical insurance plans that states that a medical service must be prevent harm to the patient or an adverse effect on the patient's quality of life, and in addition cannot be experimental in nature.

Medical Report

A report on a potential insured's health based on physical examination and questions by a physician for the purpose of a medical application.

Medical Savings (Spending) Account (MSA)

A savings account that can be used to pay for medical expenses that are not covered by insurance. The employee contributions to the plan are tax-deductible.

Medicare

A medical plan that is available to those over age 65 and those with specific disabilities via the U.S. government through the Social Security Administration. There are two plans available through Medicare. Part A, provides for inpatient hospital services and post-hospital care. Part B, pays for medically necessary doctors' services, outpatient hospital services and a number of other medical services and supplies not covered under Medicare Part A.

Medicare Risk HMO

An option to replace the traditional Medicare plans A and B with an HMO plan that is approved by Medicare.

Medicare Secondary Payor Rules

These rules determine when an employer, group medical insurance plan, would cover medical claims first. Amounts not covered by the employer's plan can then be submitted to Medicare.

Medicare Supplement

An insurance option available to Medicare eligible individuals to cover expenses that are not covered by Medicare.

Mental Health

In medical insurance these benefits are related to emotional problems and sometime substance abuse issues.

Mental Health Parity Act Of 1996

Insurance plans that provide mental health benefits are not allowed to impose lifetime or annual dollar limits for mental health benefits that are less than those imposed on medical or surgical benefits. Substance abuse treatment is not included in these guidelines.

Merger

The combining of two or more entities into one, therefore all administration is under one corporation.

Merit Bonus

An incentive award based upon an individual's performance.

Merit Increase

A raise in an employee's salary due to goal achievement and/or other criteria.

Merit Matrix

A process by which an individuals salary increase is determined by using performance and pay within the salary range.

Merit Pool

Total amount of dollars available for salary increases.

Merit Progression

A process by which an employee progresses through a wage range due to performance or other measurable criteria.

Merit Rating

A process of evaluating the performance of an employee. This is usually is used to determine work assignments, promotions and salary increases.

Metropolitan Statistical Areas (MSA)

A geographic area consisting of a large population nucleus together with adjacent communities having a high degree of economic and social integration with the nucleus. Where metropolitan areas are combined to form Consolidated Metropolitan Areas (CMSA's), the component metropolitan areas are designated Primary Metropolitan Statistical Areas (PMSA's). Metropolitan areas that are not combined to form CMSA's are designated Metropolitan Statistical Areas (MSA's). More information on metropolitan areas is available from the U.S. Census Bureau website: www.census.gov/population/www/estimates/metroarea.html.

Midpoint

The salary that is in the middle of a range of salaries.

Military Service Payments

A salary payment agreement between an employee and employer when the employee is involved in such temporary duties as the National Guard or Reserve. The arrangement may include the employer paying full regular salary or the difference between that when involved in active status and regular duty.

Minimum Age

The federal law states the minimum age for employment is 17, however a minor under the age of 17 may also work if the conditions of the occupation meet certain criteria and are not dangerous.

Minimum Age Requirement

A requirement in planning pensions that an employee must be a certain age prior to being permitted to participation in the employer's pension plan.

Minimum Continuing Legal Education (MCLE)

Annual educational requirements for legal professionals. MCLE credits are governed by various related State Boards.

Minimum Deposit Arrangement

An agreement where an insured can apply the first year cash value to the initial premium amount.

Minimum Deposit Business

A policy owner will request the premium be paid out of the policy's cash value, and the insurance company is only to bill the policy owner if the cash value is not enough.

Minimum Distribution Rules

When an employee reaches the age of 70.5 a minimum distribution is required. The amount is determined by the amount in the employee's account and the employee's life expectancy.

Minimum Participation Requirements

A rule that requires all plans to have at least 50 employees or 40 % of the total employees enrolled.

Minimum Premium Plan (MPP)

A health insurance plan that is partly self -insured by the employer, however is fully administered by the insurance carrier. The employer pays all claims up to an agreed amount, and the carrier pays the rest.

Minimum Service Requirement

Certain insurance plans require a that an employee wait a specific period of time before they are eligible to participate in the particular plan.

Minimum Wage

The lowest allowable hourly-wage that an employer can pay an employee.

Minor

Laws regarding work hours, work conditions and occupations for certain ages under 18 years of age.

Misrepresentation

To be dishonest and provide false information to sell insurance plans. To be dishonest and provide false information when applying for insurance.

Misstatement Of Age Provision

Usually related to life insurance if at the time of the insured's death it is determined that the insured did not state the correct age on the application, and resulted in incorrect premium being charged for the amount of insurance that the insured received.

Mix

An outline of parts of pay generally stated in percentages of a total amount.

Mode

In a set of observations the worth that is most prevalent.

Mode Of Premium Payment

The frequency that premiums are paid.

Model Bill

Legislation created by NAIC that can be used exactly as is or as a guideline by states or provinces to create their own laws.

Model Life Insurance Solicitation Regulation

In a 1976 a regulation that was implemented by the NAIC that states insurance companies are to provide information detailing what life insurance plan may best suit their needs, an understanding of the plan provisions, and the ability to conduct an analysis of various plans.

Model Rules Governing The Advertisement Of Life Insurance

Life insurance guidelines set by NAIC regarding advertising for annuity contracts and life insurance.

Model Unfair Trade Practices Act

A NAIC law that contains prohibition against any form of insurance advertisements that are misleading, untrue or deceptive.

Modified Net Premiums

Premiums that are net rather than level.

Modified-Premium Whole Life Insurance

A version of a whole life insurance policy where the insured pays less premium than usual for an agreed upon amount of time. After that period of time the premium payments increase to an agreed upon amount that is higher than usual for the life of the policy.

Money Market Fund

A mutual fund that only makes investments in money markets.

Money Purchase Plan

A kind of defined contribution plan that utilizes a formula to determine the employer's contribution to the employees account. The formula and contribution are not related to profitability.

Monthly Debit Ordinary Insurance

Ordinary life insurance that is paid for in monthly premium payments, typically paid directly to the agent.

Moral Hazard

The risk that a potential insured might purposefully try to hide or falsify information that would affect the underwriter's decision to accept the risk of insuring this individual.

Morbidity

A diseased state. The occurrence of disease, or of all diseases in a population.

Morbidity Rate

The chance that an individual at a certain age will become ill or disabled. In health insurance a persons premium is somewhat based on the morbidity rating for their specific age group.

Morbidity Table

A chart that indicates the prevalence of illness among various age groups.

Mortality Charge

The cost that is charged for the insurance protection element of a universal life insurance policy. The cost takes into account various such as the amount at risk, the insured's current age and the insured's risk factor at the time the policy is purchased.

Mortality Curve

A graph that depicts the change in mortality rates throughout life.

Mortality Experience

Several definitions: 1) The rate that participants in a pension plan have died. 2) The effect of actual deaths while on the plan that then has a financial effect for the plan.

Mortality Rate

The frequency that death occurs among a specific group of people. The premium paid for a life insurance policy is partly established by the mortality rate by that person's age.

Mortality Table

A list if mortality history by age group.

Mortgage Redemption Insurance

A decreasing term insurance plan that insures the life of a person that takes out a mortgage. The policy proceeds will estimate the rest of the mortgage in the event of death.

Moving And Relocation Expenses

These expenses are paid for up front or reimbursed to an employee by the employer when the company needs to have that employee's skills utilized in another location.

MSA

Metropolitan Statistical Areas are U.S. geographic area consisting of a large population nucleus together with adjacent communities having a high degree of economic and social integration with the nucleus. Where metropolitan areas are combined to form Consolidated Metropolitan Areas (CMSA's), the component metropolitan areas are designated Primary Metropolitan Statistical Areas (PMSA's). Metropolitan areas that are not combined to form CMSA's are designated Metropolitan Statistical Areas (MSA's). More information on metropolitan areas is available from the U.S. Census Bureau website: www.census.gov/population/www/estimates/metroarea.html.

Multi-Company Representation

A life and health insurance agent is permitted to represent more than one insurance company.

Multi-Employer Plan

A employee benefit plan or pension plan that that has more than one employer.

Multinational Pooling

An arrangement that links together the benefit plans of a multinational company.

Multiple Employee Welfare (MEWA)

An employee benefit plan that is maintained by two or more employer groups to provide health and welfare benefits to the employees.

Multiple Employer Trust (MET)

Group benefit plans that cover medical, dental and pension plans, typically for smaller employers, that have joined together under one master policy.

Multiple Line Agency System (MLA)

Full-time agents that sell life and health, and property and casualty insurance to groups of financially related or managed companies.

Mutual Insurance Company

An insurance company that is owned by individual or group policyholders, not stockholders.

Mutualization

The process that occurs while a stock insurance company changes to a mutual company.