Benefits jargon, translated into plain English.
Insurance shouldn't require a decoder ring. Here are the terms you'll actually encounter — defined simply, the way we'd explain them to you in person.
A
AD&D
Accidental Death & Dismemberment insurance — pays a benefit if a covered accident causes death or the loss of a limb, sight or other specified injury.
Affordable Care Act (ACA)
The 2010 federal health-care reform law (also called PPACA or Obamacare) that sets coverage standards, required notices and employer responsibilities for group health plans.
C
Cafeteria Plan (Section 125)
An IRS-approved plan that lets employees pay for certain benefits with pre-tax dollars, lowering taxable income for the employee and payroll taxes for the employer.
COBRA
A federal law that lets employees and dependents temporarily continue group health coverage after a qualifying event such as job loss, usually at full premium plus a small fee.
Copay
A fixed dollar amount you pay for a covered service (for example, $30 for an office visit), separate from your deductible.
D
Deductible
The amount you pay out of pocket for covered services before your plan begins to pay its share.
E
EAP
Employee Assistance Program — a confidential benefit offering counseling and support for personal or work-related issues, often at no cost to the employee.
ERISA
The Employee Retirement Income Security Act — federal law that governs group benefit plans, including fiduciary duties, disclosures and reporting.
F
Formulary
The list of prescription drugs a plan covers, usually organized into cost tiers. Formularies can change each year.
FSA
Flexible Spending Account — a pre-tax account for eligible medical or dependent-care expenses; funds are generally use-it-or-lose-it within the plan year.
Fully Insured Plan
A group plan where the employer pays a fixed premium and the insurance carrier assumes the risk for claims.
H
HIPAA
The Health Insurance Portability and Accountability Act — federal law protecting the privacy and security of health information.
HMO
Health Maintenance Organization — a plan that uses a defined network and typically requires a primary care physician and referrals; out-of-network care is generally not covered except emergencies.
HRA
Health Reimbursement Arrangement — an employer-funded account that reimburses employees for qualified medical expenses.
HSA
Health Savings Account — a tax-advantaged savings account paired with a qualified high-deductible health plan; funds roll over year to year and belong to the employee.
I
In-Network
Providers and facilities that have contracted with your plan to offer services at negotiated rates. Staying in-network keeps your costs lower.
M
Medicare Advantage (Part C)
A Medicare plan offered by a private company that replaces Original Medicare's administration, usually with networks, copays and often built-in Part D and extra benefits.
Medicare Supplement (Medigap)
A plan that works alongside Original Medicare to pay much of the cost Medicare leaves to you; it does not include drug coverage.
O
Open Enrollment
The set window each year when employees can enroll in or change their benefit elections, or when Medicare beneficiaries can change plans.
Out-of-Pocket Maximum
The most you'll pay for covered in-network services in a plan year; after you reach it, the plan pays 100% of covered costs.
P
Part D
Medicare prescription drug coverage. Plans vary in cost and covered drugs, and a late-enrollment penalty can apply if you delay when first eligible.
PPO
Preferred Provider Organization — a plan that offers lower costs in-network but still covers out-of-network care at a higher cost, without requiring referrals.
S
SBC
Summary of Benefits and Coverage — a standardized document that explains a plan's benefits and costs in a consistent format for easy comparison.
Self-Funded Plan
A group plan where the employer pays employee claims directly (usually with stop-loss protection) instead of paying fixed premiums to a carrier.
Short-Term Medical
Temporary health coverage designed to bridge gaps, such as between jobs; benefits and protections differ from ACA plans.
Stop-Loss Insurance
Coverage that protects a self-funded employer from unusually high claims by capping the employer's liability per person or in total.
V
Voluntary Benefits
Coverage employees can choose and typically pay for through payroll, such as accident, critical illness, or additional life insurance.
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