Complete Employee Benefits Glossary

A

Advisor - A licensed insurance professional who provides specialized guidance and advice

B

Beneficiary - An individual who is entitled to benefits from a health insurance plan.

C

Cafeteria Plan - A Cafeteria Plan, also known as a section 125 Plan, is a written plan that allows employees to receive part of their compensation as an employee benefit, paid for with pretax dollars.

Claim (HRA) - An HRA claim is an employee's formal request to be reimbursed for premiums and medical expenses

COBRA - COBRA stands for Consolidated Omnibus Budget Reconciliation Act. It's a federal law that was created in 1985 that gives individuals who experience a job loss or other qualifying event the option to continue their current health insurance coverage for a limited amount of time. Employers outside the federal government with more than 20 employees are required to offer COBRA coverage to those who qualify.

Coinsurance - Generally your employees health insurance pays a higher and you lower percentage of your claims

Co-payment - You pay a fixed amount e.g. towards a doctor, specialist, emergency, urgent care, hospital stay or prescription.

D

Deductible - The amount you pay before your health insurance will pay claims

Defined Contribution Program – a consumer-driven health care arrangement in which employers choose a set dollar amount of contribute towards an employee’s healthcare.

Dental/Vision Health Reimbursement Arrangement - Designed exclusively for employers who want to reimburse for Dental and Vision expenses. Can roll over year to year.

Dependent - Any individual who qualifies as as and IRC Section 152 tax dependent. Generally a child or spouse.

E

Effective Date - the date which the plan or HRA starts

Employee Class - A group of one or more employees that are similar with respect to job title, geography, hire date, part-time or full-time status, collective bargaining status or other objective business criteria. 

Excepted Benefit Health Reimbursement Arrangement (EBHRA) - Must be offered in conjunction with a traditional group health insurance plan, although employees are not required to be enrolled in the group health insurance to participate in the EBHRA. An EBHRA can reimburse for dental and vision coverage and short term coverage. It can also reimburse for other medical expenses

F

Flexible Spending Arrangment (FSA) - FSAs allow employees to make contributions toward health care and dependent care expenses on a pretax basis.

Formulary - A list of prescription drugs covered by the health plan, often structured in tiers that subsidize low-cost generics at a higher percentage than more expensive brand-name or specialty drugs.

Full Flex Plans - With Full Flex Plans, employers make contributions for all plan-eligible employees, and employees use those contributions to buy various benefits. Employees can then make pre-tax contributions towards any benefit that the employer contributions do not fully cover.

Fully Insured - is a traditional way to structure an employer-sponsored health plan

G

Group Coverage Health Reimbursement Arrangement (GCHRA) - Also called an Integrated HRA. Must be offered in conjunction with a traditional group health insurance plan – usually a high-deductible plan. It reimburses for employees tax-free to help cover their deductibles, co-insurance amounts, and other approved medical expenses. Can roll over year to year.

H

High Deductible Health Plan - A HDHP features higher annual deductibles than traditional health plans, with the exception of preventative care, covered employees must meet the annual deductible before the plan pays benefits. HDHPs, however may have significantly lower premiums than other plans. 

Health Reimbursement Arrangement - Allows employers to make a tax free contribution of for individual health insurance and for other qualified medical expenses.

Health Savings Account - an HSA allows employees to make a tax free contribution to an account to be used for qualified health expenses. 

High Deductible Health Plan - A group health plan with a high deductible. While this may seem like the more expensive option these plans usually have lower monthly premium rates.

HIPAA - is a federal law that required the creation of national standards to protect sensitive patient health information from being disclosed without the patient's consent or knowledge. Learn more at CDC.gov  

I

Individual Coverage Health Reimbursement Arrangement -  Allows employers of any size to make a tax free contribution of any size for individual health insurance and for other qualified medical expenses. ICHRA’s satisfy the ACA employer mandate for ACA compliance if set up correctly.

In-network - refers to a list of health-care providers that have a contract with your insurance company to provide medical care at a pre-negotiated rate to those enrolled in plans offered by that insurance company.

L

Level funded - a type of health insurance that combines the cost savings and customization of self-funding with the financial safety and predictability of fully funded plans.

O

Out-of-network - refers to health-care providers that do not have a contract with your insurance company to provide medical care at pre-negotiated rates. Using an network provider will most often cost more.

Out-of-pocket limit - The maximum amount an employee could pay during a coverage period their share of the costs of covered services, including co-payments and co-insurance.

P

Plan administrator -The Company, who has full authority, discretion, and responsibility to manage and direct the operation and administration of the Plan, or the third party, entity, or person whom the Company designates to direct one or more elements of such operation and administration.

Premium - The amount that must be paid for a health insurance plan by covered employees, by their employer, or shared by both. A covered employee's share of the annual premium is generally paid monthly and deducted from his or her paycheck.

Premium-only Plans (POPs) - POPs, allow employees to choose between receiving their full salary in cash or using a share of that salary to pay group insurance policy premiums on a pretax basis.

Q

Qualified Small Employer Health Reimbursement Arrangement (QSEHRA)  - Allows small employers under 50 employees to reimburse tax free for individual health insurance and also for coverage under a spouse’s group health Insurance plan, short term medical plans, and sharing ministry plans. A 2020 contribution cap of $5,250 for single employees and $10,600 for families exists.

R

Retiree HRA - Designed to help retired employees pay for plan-eligible medical expenses during retirement. Retirement expenses can include COBRA premiums, and premiums for Medicare Part A, B, and D, and a Medicare Advantage Plan or Medicare Supplement plan.

S

Section 125 - Part of the IRS Code that allows employees to convert a taxable cash benefit (salary) into non-taxable benefits.

Section 125 Plan - A Section 125 Plan, also known as a Cafeteria Plan, is a written plan that allows employees to receive part of their compensation as an employee benefit, paid for with pretax dollars.

Self-insured - (self-funded), usually larger employers operate their own health plan as opposed to purchasing a fully insured plan from an insurance carrier.

SPD - A Summary Plan Description describing the terms or the Plan

Spouse - An individual who is legally married to an employee as determined under applicable state law. 

W

Waiting Period - A period of time as determined by the employer an employee must wait to become eligible for the companies health benefits. This duration must not exceed 90 days.