Annual Enrollment (also Open Enrollment) The annual period during which you may choose to make changes in your benefits (for example, change your medical coverage level or switch plans) for the next year. Enrollment is usually held two or three months before the beginning of the new plan year.
Before-Tax Contributions Contributions for benefit premiums or FSAs, which are deducted from your pay before any taxes are withheld.
Beneficiary The person(s) you name to receive certain benefits (such as life insurance) upon your death.
Benefits A term that is commonly used in two different ways: (1) “Benefits” refer to the full range of programs sponsored by your employer (that is, your medical, dental, vision, life & AD&D, disability, pension, savings, and all other plans). For example, you might say that your employer provides comprehensive benefits for employees. (2) Also, the word “benefits” is used to indicate what a specific plan pays toward your expenses. For example, “The medical plan pays benefits at 80% after you meet the deductible.
Brand-Name Drugs Prescription drugs that carry a specific trademark or brand name. Brand-name drugs may be significantly higher in cost than generic drugs, even though, by law, both must have the equivalent active ingredients.
Claim The invoice or receipt you submit, or your provider submits on your behalf, to the insurance company (under which you have plan coverage) to receive payment or reimbursement for eligible expenses incurred by you or a covered family member.
COBRA The federal law (Consolidated Omnibus Budget Reconciliation Act of 1985) that allows you and eligible dependents to continue your health care coverage (including medical, dental, and vision care), under certain circumstances, after the date it would otherwise end. If you elect to continue coverage under COBRA, you will pay the full premium cost.
Coinsurance The portion (percentage) of covered medical or dental expenses that you must pay. For example, if your plan pays 80%, you must pay the remaining 20%, which is your coinsurance.
Copay The flat dollar amount you’re required to pay at the time you receive a medical or dental service. Copayments may also apply to prescription drugs or other services.
Coverage Level or Type Under the health care program, the election you make regarding benefit coverage for yourself and your dependents. For example, many plans offer coverage for Employee Only (yourself), Employee + Spouse (you and your spouse or domestic partner), or Family (you, your spouse and one or more dependent children).
Deductible The amount of medical or dental expenses you must pay each year before your plan begins paying benefits. (For example, if your first claim of the year is $1,000, and your deductible is $500, you will pay $500, then the plan and you will share the remaining $500, according to the provisions of your plan.)
Dependent A person or persons, including your legal spouse and unmarried children under age 19 (or those who are full-time students, up to the specific age limit set by your plan), who are eligible for benefit coverage.
Dependent Care Flexible Spending Account (FSA) A before-tax account that lets you pay for qualified expenses incurred in caring for your eligible dependents while you work. (Eligible dependents include children under age 13 who qualify as a dependent for federal income tax purposes; and your spouse, elderly parent, or any other dependent who is physically or mentally incapable of self-care.) To participate, you must be single – or married with a spouse who works or is a full-time student. It's important to note that a "use it or lose it" rule applies to the FSA. Any money remaining in your account after year-end (December 31) will be forfeited; it cannot be rolled over or refunded to you.
Disability Any illness or injury that causes you to be unable to perform your job for an extended period of time.
Effective Date The date on which you and your dependents become eligible for benefits under a specific plan.
Eligibility The rules under a specific benefit program that determine who is eligible for coverage (employees and dependents) and when qualified participants can enroll in the options available to them.
Emergency Care Care for any illness or injury that, without immediate medical attention, could result in loss of life or limb, or cause serious harm to bodily functions (for example, an apparent heart attack, severe bleeding, loss of consciousness, or severe or multiple injuries).
ERISA A federal law (Employee Retirement Income Security Act of 1974, as amended), that sets minimum standards to protect participants in employer-provided benefit plans. Key provisions require that plans provide participants with important information about plan features and funding, and that they establish a grievance and appeals process for participants to obtain benefits from their plans.
Explanation of Benefits (EOB) The document you receive from the insurance company after your claim is filed and processed. The EOB shows how much of the expense the plan covered and how much you may be expected to pay. If part or all of the expense is not covered, the EOB should explain why.
Flexible Spending Account (FSA) A special before-tax account that lets you pay for certain qualified expenses tax-free. There are two types of flexible spending accounts: the Dependent Care FSA, which lets you pay for expenses incurred in caring for your eligible dependents while you work; and the Health Care FSA, which you can use for health care costs (medical, dental, and vision) not covered under your plan. It’s important to note that the FSAs have a “use it or lose it” rule: Any money remaining in your account at year-end (December 31, for the Dependent Care account; March 15 of the following year, for the Health Care FSA) will be forfeited.
Formulary A list of prescription medications, as maintained by your health plan, which are determined to be safe and effective. These drugs are regularly reviewed and the formulary updated to reflect current medical standards of drug therapy. Generally, there are three types of drugs on the formulary: Generic (lowest cost), Preferred Brand (mid-range cost), and Non-Preferred Brand (highest cost).
Generic Drugs Prescription drugs that meet the same standards for safety, purity, strength, and quality as their brand-name counterparts. These drugs, however, bear only a chemical or general-classification name – not a brand name.
Health Care Flexible Spending Account (FSA) An account that lets you pay for qualified expenses not covered by your health plan – tax-free. These expenses include deductibles, copayments, and coinsurance, as well as over-the-counter medications. It's important to note that you must use all of the money in your account by March 15 of the following year. Any money remaining in your account after that date will be forfeited; it cannot be rolled over or refunded to you.
Health Maintenance Organization (HMO) A medical plan that offers services through specific physicians, hospitals, and other health care professionals. To receive HMO plan benefits, you must use participating HMO doctors and facilities.
Health Reimbursement Account (HRA) An account, funded with employer contributions, that an employee can use to help pay for medical expenses not covered by the health care plan, such as deductibles and coinsurance. HRA payments for eligible health expenses are tax-free to the employee. At year-end, any money remaining in the account simply rolls over to the next (there’s no “use it or lose it” provision). Although an HRA is often provided in conjunction with a high-deductible health plan, it is not required to be linked to such a plan.
Health Savings Account (HSA) A special savings account, linked to a high-deductible health plan. You contribute before-tax dollars to your account, and then use your savings to pay eligible health care expenses tax-free. Any money left in your HSA at year-end simply rolls over into the next. So, you can use your account to pay current health expenses – or save to meet potentially higher medical costs at retirement.
High-Deductible Health Plan (HDHP) A plan with a high annual deductible (generally, an amount above $1,000 for individual coverage and $2,000 for family) that you must meet before any benefits are paid.
HIPAA (Health Insurance Portability and Accountability Act of 1996) A federal law that addresses the privacy of patient health information and the portability of insurance plans as employees change jobs. The “privacy” regulations give patients greater access to their own medical records and more control over how their personal health information is used. Also, the law defines the obligations of health care providers and health plans to protect patient records. With regard to “portability,” HIPAA guarantees that an individual with a pre-existing condition, who has had continuous health coverage for 12 months, can leave a job and not be turned down for health insurance at a new job.
In-Network Services Under a PPO, care or treatment you receive from physicians, hospitals, or other health care professionals that participate in the network. In the PPO, in-network services receive the highest level of coverage.
Life Event Significant events (such as marriage, birth, adoption, divorce, and death) that create major changes in a person’s life. Generally, when one of these events occurs, you will need to review and make appropriate changes in your benefits. (For example, you may want to add a new baby to your health coverage, drop your ex-wife from coverage after the divorce, or change your beneficiary in the event of your spouse’s death.)
Long-Term Care (LTC) An optional insurance policy that provides a daily benefit amount for services required when the covered individual becomes incapable of self-care. Benefits generally cover care in a nursing home or skilled nursing facility.
Long-Term Disability (LTD) An insurance policy that can replace a percentage of your income (usually 60%), under certain circumstances, if you are ill or injured, and unable to work. Generally, for eligible conditions, benefits can begin after you have been off from work for 180 days.
Maintenance Drug A prescription drug that must be taken on an ongoing basis. These drugs are used to treat chronic medical conditions, such as congestive heart failure, glaucoma, hypertension, and thyroid disease.
Maximum Annual Benefit The maximum amount the plan pays for specific health care services (such as dental or chiropractic) for a covered individual, each plan year.
Maximum Lifetime Benefit The maximum amount the plan will pay in covered charges for any one individual over his or her lifetime.
Medically Necessary Services and supplies, including tests and examinations, that the insurance company determines to be consistent with generally accepted practices for the diagnosis of an illness or injury, or the medical care of a diagnosed illness or injury. Only medically necessary services and supplies are covered by the plan.
Network Medical providers and facilities that agree to provide quality services at reduced costs. In-network services are therefore both less expensive and covered at a higher rate. Out-of-network services, on the other hand, are not discounted, so they’ll cost you more.
Open Enrollment See Annual Enrollment.
Out-Of-Pocket (OOP) Maximum The highest amount you have to pay for covered medical expenses in any single calendar year. Once you’ve reached this amount, the plan generally pays 100% of eligible expenses for the remainder of the year.
Out-Of-Network Services Under a PPO, care of treatment you receive from physicians, hospitals, or other health care professionals who are not participating in the PPO network. In the PPO, out-of-network services are covered, but at a lower level.
Outpatient Hospital Care A hospital stay (usually less than 24 hours) for which no room and board charge is made by the hospital.
Over-The-Counter Drugs Medications that do not require a prescription, which you can buy at a local pharmacy or other retail store. Over-the-counter drugs include pain relievers (such as aspirin and ibuprofen), antacids, cough and cold remedies, and eye drops, as well as vitamins and dietary supplements.
Plan Year The period of time on which plan coverage and records are based. It may be a calendar, fiscal, or policy year, as specifically defined by your plan. (For example, the annual deductible, annual out-of-pocket maximum, and maximum annual benefit all apply to expenses incurred during the plan year.)
Preauthorization Of Treatment Advance approval of specific care or treatment, as may be required by the plan.
Preferred Brand-Name Drugs Brand-name medications on the formulary’s preferred drug list, based on their clinical effectiveness and cost. These drugs cost you more than generic, but less than non-preferred brand drugs.
Preferred Provider Organization (PPO) A medical plan that offers benefits for both in-network and out-of-network services. Generally, in this type of plan, you can choose any doctor – but you’ll pay significantly less inside the network.
Premiums (or contributions) The amount you pay for your health care coverage and other benefits, usually through payroll deductions.
Preventive Care Medical or dental treatment, such as examinations, inoculations, and tests, to help promote good medical and dental health and prevent illness.
Primary Care Physician (PCP) An HMO doctor chosen by you (and each family member) to coordinate your health care. If you participate in an HMO, you generally see your Primary Care Physician first. He or she will provide treatment or refer you to an HMO specialist.
Self-Referral In an HMO, physicians in certain specialties (such as dermatology, obstetrics/gynecology, and psychiatry) do not require a referral from your primary care or personal physician. You may see those specialists, as needed, on your own.
Short-Term Disability (STD) An insurance policy that continues to provide you with all or part of your salary while you are unable to work due to a qualifying illness or injury. Benefits could continue for up to 26 weeks.
Term life insurance An insurance policy that provides a specific dollar benefit to a designated beneficiary upon the policyholder’s death.
Urgent care An illness or injury that requires immediate, but not emergency, care (that is, the condition is neither life- or limb-threatening). Examples include high fever, flu, earaches, sprains, nausea, and headaches.
Voluntary benefits Optional benefit plans sponsored by the employer, but fully paid for by employees who elect coverage. These benefits are generally available at special group rates or discounts, making them more cost-effective than employees could obtain on their own. Examples include vision benefits, life insurance, disability insurance, long-term care insurance, legal services, and college savings plans.
Wellness benefits A broad range of employer-sponsored programs and activities designed to promote the good health of employees. Wellness benefits may include physical fitness programs, preventive care tests and screenings, smoking cessation, health risk appraisals, and stress management.