Health Benefits Glossary

A law enacted in 2010, the Affordable Care Act (ACA) provides qualifying individuals with subsidies in the form of premium tax credits when they purchase health insurance through marketplaces or exchanges.

Companies are advised to be aware that the ACA levies penalties on some employers whose employees receive subsidies — the exception being in situations where the employee portion of the premium falls under 9.83% of the employee’s current W2 wages from that employer.

Most traditional health insurance plans do not cover ancillary or secondary benefits. These can include medical expenses resulting from ambulance costs, hospital stays, related medical supplies, and dental, vision, and life insurance. 

While not required, employers typically offer ancillary benefits to supplement group health insurance and cover these extra costs. This supplemental coverage is usually set up as voluntary or employer-contributory. In an employer-contributory setup, the employee pays 50% to 100% of the costs. Under a voluntary system, the employer pays 0 to 49% of ancillary benefits costs.

Ancillary benefits are paid for with pre-tax dollars and can also be used for preventative care.

Established by employers, benefits waiting periods indicate the amount of time before a new employee becomes eligible to join the employer’s benefit plan.

Available to employees who lose their health benefits after leaving, retiring, or being laid off from their jobs, COBRA provides the option to continue health coverage for a designated period of time.  
  
Managing COBRA requirements, compliance, and potential risks can significantly drain human resources and time. SureCo’s enrollment platform virtually eliminates COBRA-related requirements and risks for employers by allowing employees to purchase and own their portable health plans.

After the health plan’s deductible has been paid, the percentage of costs for a covered healthcare service paid out of pocket is called coinsurance.  
  
For example, a health plan may cover $100 for a doctor’s office visit and require a coinsurance payment of 20%. Once the deductible has been paid, the health plan member must pay 20% — or $20 — for the coinsurance, and the insurance company pays the rest. If the deductible has not been paid, the member must pay the total allowed amount — in this case, $100. 
  
Coinsurance differs from a copay, which are predetermined amounts the plan member pays each time they use a service. Coinsurance is the percentage of costs the member pays after they’ve met the deductible. 
  
For people requiring extensive medical services, a plan with a lower copay and coinsurance amount make more sense, even if that means paying a higher monthly premium.

A copay is a predetermined or fixed amount a covered employee or plan member pays out of pocket for each doctor’s visit.

The deductible is a predetermined or fixed amount that a covered employee or plan member pays out of pocket every calendar year. Once the member has paid the deductible, the plan begins reimbursing costs for healthcare expenses that are non-preventative.

The defined contribution refers to the amount employers contribute to each employee toward the purchase of health benefits. With SureCo’s enrollment platform, employees choose their individual health plans through the platform marketplace, and the employer determines the amount to contribute or the defined contribution.

Employers may offer Excepted Benefit HRA (EBHRA) — a tax-advantaged health reimbursement offering — to pay for premiums and expenses for certain benefits, like dental and vision, that are not covered under the group plan. 
  
Employers can offer EBHRAs to their employees without meeting the same requirements as traditional HRAs. However, EBHRAs are limited in amount. Reimbursements for premiums cannot be provided for specific health insurance coverage, and the same terms must be made available to all employees.

Also referred to as fringe benefits, lifestyle benefits, or lifestyle spending accounts, employee stipends provide employees with fixed dollar amounts to help cover work, wellness, living, and more expenses. 
  
Similar to a monthly allowance, employee stipends can be spent by the employee however they choose. Employers determine which expenses they reimburse.

A federal law, ERISA requires pension and welfare employee benefit plans to provide participants with information about plan features, funding, and who manages and controls the plan. Under ERISA, participants also have the right to sue for benefits and lapses in fiduciary responsibilities.

Each family member covered by a health plan has an individual deductible they must pay out of pocket every year before the plan begins reimbursing healthcare costs. These individual deductibles are passed into the family deductible. 

Employers that provide self-insured health plans to their employees must complete and submit Federal Form 10-95-C, Part III, to report information on each enrolled employee, including spouse or dependent. 
  
Employers that provide employer-sponsored, self-insured health plans to their employees must complete and submit Federal Form 1095-C, Parts I, II, and III, for each enrolled employee regardless of whether they are full-time or not. 
  
Employers are not required to complete and submit Federal Form 1095-C for any employee who was given the option of coverage but declined to enroll.  
  
Employers who offer health coverage to employees through an insured, multi-employer health plan, or other coverage that is not under a self-insured plan, must provide information about health coverage to any enrolled employees.

A formulary is a list of prescription drugs covered by a health plan. Formularies often include different tiers of drugs, ranging from subsidized generic prescription medication available at a lower cost to brand prescription drugs that typically cost more.

Employees with paused salaries while on furlough may still retain health insurance benefits. A furloughed employee must continue covering their share of the contribution toward the cost of healthcare services, but the employer may decide to defer the contribution until the employee can return to work.

In a healthcare FSA, employees can set aside pre-tax dollars to cover eligible healthcare-related expenses including medical, vision, dental, copays, deductibles, and out-of-pocket costs.

HDHPs have higher annual deductibles than Preferred Provider Organizations (PPO), Health Maintenance Organizations (HMO), and other traditional health plans but may also have significantly lower premiums. Employees covered by HDHPs must meet the annual deductible before the plan benefits kick in.

This employer-sponsored benefit enables employers to reimburse their employees’ health insurance and out-of-pocket medical expenses by providing employees with a tax-free monthly allowance. In an HRA, employees purchase healthcare, and the employer reimburses the employee until the monthly allowance cap is reached.

HRIS software helps improve the productivity and efficiency of HR departments by automating basic HR activities, including recruitment, performance management, learning and development, and personnel data management.  
  
SureCo’s enrollment platform integrates seamlessly with HRIS so that HR managers and staff can access and manage benefits simultaneously.

Employees can use HSAs to pay for eligible medical expenses tax-free. To qualify for an HSA, employees must belong to a High Deductible Health Plan (HDHP) and have no coverage from any other health insurance. Employees with an HSA cannot be eligible for Medicare or claimed as a dependent by someone else.

In this agreement, employers contract with an outside third-party service provider to manage activities and services related to HR, benefits, or employee training. 

A new type of health reimbursement arrangement, ICHRA, enables employers to reimburse some or all the premiums employees pay for self-purchased health insurance using tax-advantaged dollars. With an ICHRA, employers have the flexibility to determine how much they are willing to reimburse employees.

Insurance plans have agreements with medical providers, hospitals, and clinics that care for the plan’s members at a negotiated rate. Those providers and facilities under an agreement are considered “in-network.” Health plans typically cover more costs for services provided by in-network providers since those services have been negotiated at a lower price.

Medicare is the federal health insurance program available for people 65 or older and some individuals with disabilities and End-Stage Renal Disease (ESRD). Employers with Medicare-eligible individuals who are employed or have COBRA or other types of coverage should be aware of the potential cost impacts of Medicare on their workers. 
  
For example, individuals who wait to enroll in Medicare until later may end up paying higher premium costs even after they retire. This can also result in gaps in coverage. Benefits administrators should familiarize themselves with the implications of Medicare for current employees and retirees and ensure their employees are informed.

Non-preferred healthcare providers fall outside the network of providers who deliver healthcare services to members of a health plan per contract or agreement. Members typically pay more for services provided by professionals outside of the network. Health insurance policies differ on whether members can see all providers within the network or whether they have a tiered network that requires members to pay more to see certain providers.

During the yearly Open Enrollment period, individuals may enroll in a health insurance plan for the coming calendar year. The Open Enrollment period typically occurs in the fall. For 2023 plans, Open Enrollment dates extend from November 1, 2022, to January 15, 2023. Individuals must enroll by December 15, 2022, to secure coverage that starts on January 1, 2023.

Out-of-network refers to medical providers, hospitals, and clinics that do not participate in a health insurer’s provider network because they have not signed a contract agreeing to the insurer’s negotiated prices.  
  
Health plans may charge extra, impose a higher deductible, or increase the out-of-pocket limit for services provided by out-of-network professionals or facilities. Out-of-network providers may also bill patients for the remaining charges after the insurance company has paid its share.

Out-of-pocket expenses are not covered by health insurance and may include deductibles, coinsurance, copays, and other services not covered by a health plan. Most health insurance plans will limit how much their members spend out of pocket each year for covered health expenses. Once that limit is reached, the plan covers 100% of eligible expenses.

When health insurance premiums are paid with after-tax or post-tax money, no tax break is provided because premiums are deducted after taxes are withheld from the employee’s paychecks. However, premiums paid with pre-tax funds result in tax advantages because premiums are deducted before taxes are withheld from the employee’s paychecks. SureCo’s enrollment platform offers tax advantages with a pre-tax deduction through payroll.

A premium is an amount paid for a health insurance plan, which can be covered by employees, their employers, or shared by both. In a shared scenario, the employees’ portion is deducted from their paychecks, typically monthly.

Primary care refers to a range of health services that cover prevention, wellness, and treatment of common conditions. Primary care providers are typically a patient’s first point of contact for medical care that may include routine physicals, prescription services, minor illnesses and injuries, and regular healthcare screenings. Primary care providers often maintain long-term relationships with their patients and coordinate care with other specialists as needed.

A Qualifying Life Event represents a significant life change, such as a change in marital status, children and dependents, or a family member’s benefits eligibility under another plan due to job loss, Medicare enrollment, or other circumstances. Individuals who experience a QLE may be able to modify their health plan benefits outside the annual Open Enrollment period.

Also called a small business HRA, this health benefit approved by the IRS enables employers with 50 or fewer full-time employees to provide tax-free reimbursements for employees’ health insurance premiums and eligible expenses. 
  
With a QSHERA, employees pay for the insurance company or medical bill themselves, then submit claims for these expenses to be reimbursed by the employer. Because these payments are considered reimbursements, they are usually tax-free for both the employee and employer.

Generic prescription drugs, or Rx, may include brand-name drugs and are more expensive than drugs classified as preferred generics.

Health plan members can expect to pay more for non-preferred prescription drugs. Generic drug equivalents typically cost less.

Preferred brand prescription drugs are covered by the health plan and may not have a generic equivalent.

Preferred generic drugs offer a lower-cost alternative to brand-name drugs with similar active ingredients and efficacy.

Mainly prescribed for chronic health conditions, specialty prescription drugs are often ordered through a specific pharmacy and usually need special handling.

Typically resulting from a qualifying life event (QLE) such as a change in marital or parental status, special enrollment periods allow individuals and their eligible dependents to enroll in health plans or modify employee benefits outside of the Open Enrollment period. Special enrollment periods usually last around 30 days.

For certain types of more complex, severe, or chronic conditions and symptoms, patients may be referred to a specialist for a visit. Specialists include physicians and professionals with specialized training and expertise in a specific area of medicine, such as neurologists, radiologists, cardiologists, psychiatrists, and oncologists

A plan SBC is a Summary of Benefits and Coverage. Every health plan has an SBC that explains the details of the plan. 

SUB and state unemployment benefits provide additional financial assistance to employees who have been laid off or let go. Typically negotiated as part of collective bargaining agreements, SUB can fall into two categories: 
  

1. Extended layoff benefits are offered to temporarily laid-off employees due to cost-cutting activities. 
2. Furlough benefits are offered to employees who are asked to reduce their work hours. In this case, SUB (Supplemental Unemployment Benefits) payments are not considered part of employee wages.

Voluntary benefits are supplemental and optional benefits offered by employees. These might include life insurance, dental insurance, vision insurance, or disability income. Typically, employees pay for voluntary benefits through payroll deductions at a lower group price, but the costs can also be shared with the employer through payroll deductions.