GBA/RPA 3 Employee Benefits and Social Insurance

Comprehensive vocabulary flashcards covering employee welfare and pension regulations, fiduciary rules, healthcare analytics, Social Security, Medicare, and global benefit design.

Employee Retirement Income Security Act (ERISA)

A federal law that primarily regulates private-sector pension plans and employee welfare benefit plans.

Employee Benefit Plan

An arrangement recognized by a reasonable person through four identifiable facts: intended benefits, eligible beneficiaries, the financing source, and procedures for obtaining benefits.

Payroll-Practice Exclusion

An exclusion from employee welfare plan regulation covering normal compensation paid directly out of employer general assets during certain employee absences, such as short-term illness.

Voluntary-Benefit Safe Harbor

A regulatory exemption from ERISA welfare plan status that requires four conditions: no employer contributions, completely voluntary participation, no prohibited employer consideration received, and no employer endorsement.

Plan Administrator

The person or entity designated in the plan document to oversee plan administration, or the plan sponsor (usually the employer) by default if none is named.

Fidelity Bond

A mandatory form of coverage that protects an employee benefit plan against fraud and dishonesty, required for every individual who handles plan funds.

Wrapper Plan Document

A legal document that supplements insurance contracts or certificates by supplying missing required provisions and potentially combining several benefit options under a single plan.

Summary Plan Description (SPD)

An official participant disclosure explaining rights, obligations, benefits, and operations; it must be redistributed at least every $5\,\text{years}$ when material changes occur, or every $10\,\text{years}$ if no material changes have occurred.

Summary of Material Modifications (SMM)

A written notice used to inform participants of material changes to a plan, required generally within $60\,\text{days}$ following any material reduction in covered health plan benefits.

Summary of Benefits and Coverage (SBC)

A uniform, concise description of health coverage provided prior to enrollment or reenrollment, restricted to four double-sided pages and printed in at least $12\text{-point}$ font.

Summary Annual Report (SAR)

A participant-oriented summary of annual financial reporting information and participant rights; totally unfunded welfare plans paying benefits solely from employer general assets are generally exempt from distributing it.

Section 125 Cafeteria Plan

A benefit plan allowing employees to pay certain premiums on a pretax basis, requiring participants to choose between at least one taxable benefit (such as cash) and at least one qualified tax-free benefit.

Qualified Small Employer Health Reimbursement Arrangement (QSEHRA)

An employer-funded reimbursement arrangement that can be sponsored by eligible employers with fewer than $50$ full-time employees (including equivalents) that do not maintain a group major medical plan.

Health Savings Account (HSA)

A tax-exempt trust or custodial account established alongside a qualifying high-deductible health plan; catch-up contributions are allowed at age $55$ or older before Medicare enrollment, and excess contributions trigger a $6\%$ excise tax.

Health FSA Use-It-or-Lose-It Rule

The rule requiring unspent health flexible spending account balances to be forfeited at the end of the plan year unless the employer provides a limited carryover or a $2\frac{1}{2}\text{-month}$ grace period (which cannot be combined).

Applicable Large Employer (ALE)

An employer that employed an average of at least $50$ full-time employees (including full-time equivalents) during the preceding calendar year, triggering Affordable Care Act reporting on Form 1095-C.

Form 1095-C

The Affordable Care Act annual information return distributed by applicable large employers to report details of health insurance coverage offered to full-time employees.

Form 1095-B

The Affordable Care Act annual coverage statement generally filed and distributed by smaller self-insured employers to report coverage provision.

Investment Committee Charter

A foundational document establishing an investment committee's core responsibilities, authority, membership structure, and operational governance procedures.

Investment Policy Statement (IPS)

A widely recommended best-practice document setting out clear objectives, selection standards, performance measurement benchmarks, and ongoing review guidelines for plan investments.

Service Organization Controls (SOC) Report

An independent audit report evaluating the design and operating effectiveness of a service organization's internal controls that are relevant to a benefit plan's financial reporting.

Settlor Function

An employer business decision regarding plan design, formation, adoption, or termination, which is legally distinct from discretionary fiduciary plan administration.

Ministerial Function

A purely administrative, routine task in plan operations performed within an established framework of rules that involves no discretionary decision-making.

FASB ASC Topic 960

The Financial Accounting Standards Board accounting standards topic establishing financial reporting and accounting rules specifically for defined benefit pension plans.

FASB ASC Topic 962

The Financial Accounting Standards Board accounting standards topic governing accounting and financial reporting standards for defined contribution pension plans.

FASB ASC Topic 965

The Financial Accounting Standards Board accounting standards topic governing the accounting and reporting framework for health and welfare benefit plans.

Statement on Auditing Standards (SAS) No. 136

An auditing standard established to improve employee benefit plan audit quality and clarify the distinct reporting responsibilities of plan management and independent auditors.

ERISA Section 103(a)(3)(C) Audit

The modern statutory title for what was previously designated as a limited-scope employee benefit plan audit.

Audit Engagement Letter

A formal contractual agreement between the plan sponsor and the independent auditor detailing the scope, objectives, management responsibilities, and auditor responsibilities for the plan audit.

Fraud Triangle

A classic auditing and behavioral model identifying the three elements present when fraud occurs: pressure or incentive, opportunity, and rationalization.

Material Weakness

A severe deficiency or combination of deficiencies in internal control that creates a reasonable possibility that a material misstatement will not be prevented or timely detected.

Significant Deficiency

An internal control deficiency or combination of deficiencies that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Management Representation Letter

A written declaration provided by plan management to independent auditors confirming management's responsibility for, and the accuracy and completeness of, the plan's financial statements.

Section 408(b)(2) Disclosure

A mandatory disclosure framework governing the transparency of direct and indirect compensation received by covered service providers to retirement plans.

Tibble v. Edison

A landmark United States Supreme Court ruling holding that ERISA fiduciaries have a continuing, ongoing duty to monitor plan investments separate from their duty of initial selection.

Third-Party Administrator (TPA)

A specialized service organization responsible for operational administration, including plan documents, compliance testing, reporting, distributions, and loans.

Recordkeeper

A service provider responsible for tracking participant accounts, processing investment elections and transactions, managing enrollments, and providing account communications.

Basis Point

A financial unit of measurement equal to $0.01$ percentage point (or $\frac{1}{100}$ of $1\%$), where $100\,\text{basis points}$ equals $1.00\%$ percentage point.

Qualified Default Investment Alternative (QDIA)

An approved category of default retirement investments (such as a target-date fund) that provides fiduciary relief when investing contributions for participants who fail to direct their investments.

Descriptive Health Analytics

A data analytics discipline focused on analyzing historical medical and claims data to answer the foundational question: 'What happened?'

Diagnostic Health Analytics

A data analysis stage that evaluates clinical and utilization patterns to answer the question: 'Why did it happen?'

Predictive Health Analytics

A branch of analytics that leverages historical and baseline health data to forecast future utilization, cost trends, and health risks, answering: 'What may happen next?'

Prescriptive Health Analytics

An advanced analytics stage that models potential interventions and actions to answer the strategic question: 'What should we do about it?'

White Space Health Care Data

Valuable unstructured or disparate health information existing outside core transactional administrative systems, such as spreadsheets, free-text clinical notes, and isolated files.

Administrative Claims Audit

A forensic examination of health claims processing conducted by self-funded employers to detect errors, improper eligibility, and billing mistakes, frequently uncovering $1\%\text{ to }3\%$ in recoverable claims spending.

Retirement Income Generator (RIG)

A deliberate structural strategy or financial product (such as systematic withdrawals or an annuity) used to convert accumulated defined contribution balances into regular retirement income.

Qualified Longevity Annuity Contract (QLAC)

A specialized deferred fixed annuity purchased within a qualifying retirement account that begins payouts as late as age $85$, is excluded from required minimum distribution calculations, and prohibits cash surrender values.

ERISA Section 3(21) Investment Fiduciary

An investment advisor who provides non-discretionary investment advice and recommendations to a plan, while the plan sponsor or named fiduciary retains ultimate decision-making control.

ERISA Section 3(38) Investment Manager

A qualified institutional fiduciary (such as a registered investment advisor, bank, or insurance company) that accepts discretionary authority in writing to manage, acquire, and dispose of plan assets.

Collective Investment Trust (CIT)

A tax-exempt pooled investment fund maintained by a bank or trust company exclusively for qualified retirement and employee benefit plans.

White Label Retirement Fund

A customized investment option constructed specifically for a single retirement plan, combining multiple underlying managers or investment vehicles under a simplified, plan-selected name.

Top-Hat Deferred Compensation Plan

An unfunded, nonqualified deferred compensation plan maintained primarily for the purpose of providing deferred benefits for a select group of management or highly compensated employees.

De Novo Judicial Review

A standard of judicial review in benefit claim lawsuits where the court reviews the record and issues a ruling anew without granting any deference to the plan administrator's earlier decision.

Abuse-of-Discretion Judicial Review

A deferential standard of judicial review applied when a plan grants the administrator discretionary claim authority, under which courts uphold the administrator's reasonable benefit determinations.

ERISA Preemption

The legal doctrine whereby federal employee benefit law supersedes state laws relating to private employee benefit plans, subject to statutory exceptions such as the insurance savings clause.

Social Adequacy

A guiding principle of social insurance systems that establishes benefit levels designed to guarantee a basic floor of income protection and living standard, rather than mirroring individual contributions.

Individual Equity

A private insurance and pension principle under which benefits are actuarially and mathematically proportioned to reflect an individual's specific contributions.

Primary Insurance Amount (PIA)

The exact monthly Social Security retirement benefit amount payable to an insured worker who begins receiving benefits at their statutory full retirement age.

Average Indexed Monthly Earnings (AIME)

A worker's career earnings measure, computed by indexing wages to national wage trends across the highest $35\,\text{years}$ of earnings, used to derive the Primary Insurance Amount.

Delayed Retirement Credits

Credit adjustments that increase an individual's Social Security benefit by $8\%$ per year (prorated monthly) for every year claiming is delayed beyond full retirement age up to age $70$.

Substantial Gainful Activity (SGA)

The statutory standard applied to determine eligibility for Social Security disability, defined as the inability to perform significant, productive physical or mental work for remuneration.

Unemployment Insurance Experience Rating

A tax-setting system that assesses an employer's past record of unemployment claims, granting lower state unemployment payroll tax rates to employers with fewer layoffs and claims.

Medicare Part A

The hospital insurance component of Medicare that covers inpatient hospital stays, skilled nursing facility care, hospice care, and home health visits.

Medicare Part B

The supplementary medical insurance component of Medicare covering physician services, outpatient hospital care, medical supplies, and preventive health screenings.

Medicare Part C

The Medicare Advantage program allowing beneficiaries to receive Medicare benefits through approved private managed care plans.

Medicare Part D

The standalone outpatient prescription drug coverage program administered through approved private insurance carriers.

Medicare Benefit Period

A metric used to measure Part A hospital and skilled nursing care; it begins upon inpatient hospital admission and ends after the beneficiary has been out of a hospital or skilled nursing facility for $60\,\text{consecutive days}$.

Medicare Inpatient Lifetime Reserve Days

A lifetime total of $60\,\text{days}$ of additional hospital coverage that a beneficiary can draw upon when hospitalized for more than $90\,\text{days}$ during a single benefit period.

Diagnosis-Related Group (DRG)

A prospective payment classification system under which Medicare pays hospitals a fixed, predetermined amount per inpatient stay based on diagnosis and clinical factors.

Secondment

An international assignment arrangement in which an employee performs services for a foreign host organization while remaining an employee on the home country's payroll.

Tax Equalization

An expatriate tax policy ensuring that an employee on an international assignment pays approximately the same net tax they would have incurred had they remained in their home country.

Tax Protection

An expatriate compensation policy that reimburses the employee if their host-country tax exceeds their hypothetical home-country liability, but does not recoup any savings if taxes are lower.

Internal Revenue Code Section 3121(l)

A statutory tax provision enabling an American employer to execute an agreement with the IRS extending United States Social Security and Medicare coverage to U.S. citizens working abroad for foreign affiliates.

Totalization Agreements

Bilateral agreements between the United States and foreign governments designed to eliminate dual social security tax contributions and coordinate benefit coverage for mobile workers.

Multinational Pooling

The practice of aggregating insured employee benefit plans across various countries into a unified international account to achieve administrative cost savings and potential experience dividends.

Captive Reinsurance

A global risk financing approach where an employer utilizes its own wholly owned insurance subsidiary to reinsure portions of its worldwide employee benefit exposures.