Core Employee Benefits
Health Insurance Definitions
Advanced Premium Tax Credit (APTC)
A tax credit available only when applying through the individual health insurance exchange. It can be applied to the monthly cost of the health insurance plan enrolled for on the health insurance exchange. It is based on the income estimate during your application and must fall between 100%-400% of the federal poverty level for the applicant's household size.
Affordable Care Act (ACA)
The comprehensive health care reform law enacted in March 2010. Enacted state marketplaces, subsidies, mandated care parameters and other new healthcare laws.
Aggregate Stop-Loss
Provides a maximum claim liability for the entire group.
Annual Limit
The maximum that the insurance policy will pay out during one year (usually calendar year) for all treatments.
ASO (Administrative Services Only)
A type of contract to provide administrative services and no insurance protection to a self-funded employer.
Benefits
A general term for health care, or care, covered by a plan.
Cafeteria Plan (Section 125)
A flexible benefit plan, which complies with the requirements of IRS Section 125 and offers a choice of two or more benefits.
Catastrophic plan
A mandated option under ACA, typically only available to those under age 30 or with a hardship exemption. Typically, the lowest premium plans on the individual exchange but enrollee's are unable to use an APTC to lower the premium of a catastrophic plan. Catastrophic plans will have the highest out of pocket costs as compared to other plans on the marketplace
Claim
An itemized bill for services provided to the member
Claim Fund
The claim fund is the amount used from the employer to help pay for claims for a plan year.
Claims Corridor
The area above the expected claims risk. For alternate funded or level funded plans it is the corridor from expected claims to maximum claims.
Claim Lag
The period of time between when a claim occurred and when a claim is reported to the carrier and paid.
COBRA
This stands for the Consolidated Omnibus Budget Reconciliation Act of 1985. This federal act requires group health care plans to allow employees and covered dependents to continue their group coverage for a stated period of time following a qualifying event that causes the loss of group health coverage. Qualifying events include reduced work hours, termination of employment, death or divorce of a covered employee to name a few. It is generally required of groups of 20 or more employees in the prior year who have a plan.
Coinsurance
A percentage of a covered service that you are responsible for paying or the percentage paid by your plan.
Contract Type
Expressed as two parts, the contract period and the run-out period. Typical examples are 12/12, 12/15, 12/18, 12/24, 15/12, etc. The first number is the months for the contract period and the second is the number of months for the run-out period.
Contract Period
The time covered under a contract for when an incurred claims much have occurred to be paid.
Copay (copayment)
A fixed dollar amount that you are required to pay for covered service at the time you receive care.
Cost Sharing Reduction Plans (CSR Plans)
A discount that lowers the amount you have to pay for out-of-pocket for deductible, coinsurance and copays. to qualify you must enroll in the individual exchange, be between 100%-250% of the federal poverty level for household size and be enrolled in a silver plan.
Covered Service
A Service that is covered according to the terms of your health care benefits plan.
Credibility
An underwriting term used when looking at a groups experience to determine a predictability of future claims. Typically the more data (whether it be more years of experience or larger groups) helps provide a higher credibility.
Deductible
A Fixed amount of the eligible expenses you are required to pay before reimbursement by your health plan begins. (before any coinsurance percentage is applied)
Dependent
An eligible person, other than the member, who has health care benefits under the member's policy. Generally, a spouse or child.
Drug Formulary (or formulary)
A list of preferred drugs chosen by the pharmacy benefit manager or insurance company. Both generic and brand name drugs are included in the formulary.
Dual Choice (dual-option or multiple option)
More than one choice is offered to employees, can be health or other lines of coverage.
Emergency Medical Care
Services provided for the initial outpatient treatment of an acute medical condition, usually in a hospital setting. Most healthcare plans have specific guidelines to define emergency medical care.
Employer Responsibility (also called shared employer responsibility)
Starting in 2015, if an employer with at least 50 full-time equivalent full-time employees doesn't provide affordable health insurance and an employee uses a tax credit to pay for insurance through an individual health insurance marketplace, the employer must pay a fee to help cover the cost of the tax credits.
EOB (Explanation of Benefits)
A document that accompanies a claim that summarizes how the reimbursement and payment of a claim.
ERISA (Employee Retirement Income Security Act)
The 1974 federal stature that protects the retirement assets and health plans by establishing a set of rules that must be followed by fiduciaries to prevent misuse of plan assets.
Essential Health Benefits
Benefits that must be included in every health insurance plan. Beginning in 2014, most insurance plans will include mane benefits that are meant to make sure basic health concerns are covered. A set of 10 categories of services that include doctors' services, inpatient and outpatient hospital care, prescription drug coverage, pregnancy and childbirth, mental health services, pediatric dental and more.
Exclusions
Specific items or conditions that are not covered under a health plan
Exclusive Provider Network (EPO)
A managed care plan where services are covered only if you use doctors, specialists or hospitals in the plan's network (excluding emergency use).
Expected Claims
The dollar amount of claims anticipated to be paid based on experience and the plans design.
Explanation of Benefits (EOB)
An EOB is created after a claim payment has been processed by your health care plan. It explains the actions taken on a claim such as the amount that will be paid, the benefit available, discount, reasons for denying payment and the claims appeal process.
Federal Poverty Level (FPL)
A Level of income issued annually by the Department of Health and Human Services - used to determine eligibility for certain programs and benefits. FPL will be used to determine the amount of tax credit you qualify for to offset the cost of purchasing health insurance (premium tax credit).
Fixed Costs
Set fees included in a plan. Typically consists of administration costs, commissions, aggregate & specific stop-loss insurance, other costs.
FMLA (Family Medical Leave Act)
The FMLA, as it relates to benefit plans, requires an employer with 50 or more employees within a 75mi radius up to 12 weeks of unpaid leave per 12 months in certain circumstances. During which the employee must continue to be treated as an active employee under the benefit plan. Upon return from FMLA all eligibility periods and exclusions will be waived unless such provisions would have applied had the person not gone on FMLA.
Form 5500
An annual report required by the IRS for most employers who maintain or administer a pension or welfare benefit plan covered by ERISA.
Fully Insured Plan
A benefit plan which is purchased by the employer where the insurance company bears the risk.
Generic Drug
A Prescription drug that is the generic equivalent of a brand name drug listed on the drug formulary and costs less than the brand name drug.
Grandfathered health plan
A health plan that was in place when the Affordable Care Act was passed into law. A grandfathered plan is exempt from some requirements of the new law.
Guaranteed Issue
Used to describe that a policy is offered to any eligible applicant without regard to health status or pre-existing conditions.
Health Maintenance Organization (HMO)
A Type of health insurance plan that usually limits coverage to care from doctors who work for or contract with the HMO. It generally won't cover out-of-network care except for in an emergency.
Health Savings Account (HSA)
With a health savings account you can set aside money into an account before taxes. When you visit a doctor or go to the hospital, you can pay for qualified expenses from your HSA. To be eligible to open a HSA account you would need to be covered under a qualified high deductible health plan.
HIPAA (Health Insurance Portability and Accountability Act)
A Federal law that outlines the rules and requirement insurance plans, companies, managed care organizations and providers must follow to provide health insurance coverage and protection for individuals and groups. Helps to keep protected health insurance (PHI) of individuals and groups protected and how it can be used and disclosed.
IBNR
Incurred but not reported claim(s).
IBNP
Incurred but not paid claim(s).
In-network
Services provided by a provider or other health care provider with a contractual agreement with the insurance company and paid at a higher benefit level than a service not in-network.
Inpatient Services
Services provided when an insured is registered as a bed patient and is treated as such in a health care facility such as a hospital.
Lag Report
Report used for plan accounting/audit to determine potential future claims liability.
Laser
An additional form of risk to the employer. Attributed to larger claimants which may be ongoing and have expected claims in excess of the specific stop-loss. Can be a member specific laser or a members specific medical condition laser. The employer is responsible for funding claims on a laser in addition to specific and aggregate stop-loss.
Lifetime Limit
The maximum a policy will pay out over the lifetime of the policy. A health plan may not have a lifetime dollar limit on most benefits related to essential health benefits.
Marketplace, Health Insurance Marketplace or Exchange
The marketplace is a website to shop, compare and buy plans offered by participating health insurance companies. In Idaho this is the www.yourhealthidaho.org website. It is the only place where coverage is allowed to have an APTC or CSR Plans.
Medicaid
A joint federal and state funded program that provides health care coverage for low-income children and families and for certain ages and disables individuals.
Medicare
The federal program established to provide health coverage for eligible senior citizens and certain eligible disabled persons under age 65.
Metal Categories
Categories of health insurance plans: Platinum, Gold, Silver and Bronze that are grouped together based on estimated average split costs from the company and insured: Platinum, the insurance plan pays around 90% of all costs; Gold, the insurance plan pays around 80% of all costs; Silver, the insurance plan pays around 70% of all costs; Bronze, the insurance plan pays around 60% of all costs.
MEWA (multiple Employer Welfare Arrangement)
An arrangement between two or more employee unrelated employers, that is not maintained pursuant to a collective bargaining agreement, to provide benefits to their employees.
Minimum Attachment (minimum aggregate attachment)
A plan provision which sets a minimum claim attachments in the even a groups enrollment shrinks a significant amount. This allows insures and client to control costs and risk. Usually based on a percentage of beginning plan year enrollment (85%, 90%, etc)
Minimum Essential Coverage (MEC)
The type of health coverage an individual needs to maintain throughout the year in order to meet the individual responsibility requirement under the Affordable Care Act.
Monthly Aggregate Accommodation
A contract feature that helps swings in monthly claim funding due to higher claims in any given contract month. If claims exceed what the claim fund has been funded, but under the aggregate maximum, the plans provides claim costs that are recouped in the following month(s).
Monthly Aggregate Report
A monthly report from the carrier of the claims paid from the claim fund.
Network
A group of providers who has contracted to provide medical care to it's members. These providers are called "network providers" or "in-network providers." Can be doctors, hospitals, pharmacies or other medical service providers.
Non-Discrimination
The general requirement that plans not provide significantly greater benefit to highly compensation or key employees, and not provide benefits on a case-by-case basis.
Obamacare (see Affordable Care Act)
Open Enrollment
The period of time set up to allow you to choose from available health insurance plans. It usually only occurs once a year.
Out-of-Network
Services provided by doctors or facilities who have not contracted with your health plan.
Out-of-Pocket Maximum
The most you will have to pay out of pocket for expenses covered under your insurance plan during the year. Deductibles, copays, coinsurance and other expenses contribute to the out-of-pocket maximum. There can be a separate in-network and out-of-network maximum that accrue separately.
Outpatient Services
Treatment that is provided to a patient who is able to return home after care without an overnight stay in a hospital or other outpatient facility.
Plan Year
The 12 month period for which deductible and coinsurance accumulate towards the members out-of-pocket maximum.
Pharmacy Benefit Manager (PBM)
A separate company that handles your health plan's pharmacy benefit. A PBM processes and pays for your prescription drug claims on the terms of your pharmacy benefit.
Point of Service (POS)
A type of plan where you pay less if you use doctors, hospitals or other health care providers that belong to the plan's network. POS plans require that you get a referral from your primary care doctor in order to see a specialist.
Preauthorization
The process by which members or their physician notify the health insurance company in advance of a treatment plan or prescription. Regularly occurs for non-emergency surgeries, hospital admissions or complex diagnostic testing.
Pre-existing condition
A condition, disability or illness that you have been treated for or a prudent person would have sought treatment for before applying for new health coverage.
Preferred Provider Organization (PPO)
A type of plan where you pay less if you use providers in a plan's network. You can use doctors, hospitals and providers outside the network without a referral for an additional cost.
Premium
The ongoing amount that must be paid for your health insurance or plan. You and/or your employer usually pays it as a monthly amount. Does not include deductible, copays or out-of-pocket costs.
Prescription Drug
Prescriptions drugs must be ordered by a doctor and obtained at a pharmacy. They are reviewed and approved by a formal process by the USDA.
Preventive Care Services
Routine health care that includes screening, check-ups, immunizations and patient counseling to prevent illnesses, disease or other health problems.
Primary Care Physician (PCP)
The physician you choose to be your primary source for medical care. Your PCP coordinates all your medical care including hospital admissions and referred to specialists. Not all health plans require a PCP.
Qualified Health Plan
An insurance plan that is certified by the Health Insurance Marketplace, provides essential health benefits, follows establish limits on cost-sharing and meets other requirements.
Qualified High Deductible Health Plan
A plan with a higher deductible than a traditional insurance plan. It will generally have lower premiums but higher out of pocket costs. Can be paired with a Health Savings Account. The minimum deducible and out of pocket requirements are set yearly by the IRS.
Reinsurance Carrier
This is the stop-loss insurance carrier providing aggregate and/or specific stlop-loss insurance.
Run-in
A contract provision that provides for paying claims that were incurred before the start of the contract year.
Run-out
A contract provision that provides a period of paying claims that were incurred during the contract year but not yet paid.
Self-funded health plan
A method of funding claims by which the employer shares all or part of the claim responsibility.
Shock Claim (Shock-Loss)
A large loss that significantly effects the true claim experience of a group. Generally a claims that exceeds $10,000 or the specific stop-loss of the plan.
Specialist
A Health care professional whose practice is limited to a certain branch of medicine, including specific procedures, specific body systems or certain types or disease.
Special Enrollment Period
A time outside open enrollment during which you can sign up for a health insurance plan. You generally qualify for a special enrollment period of 60 days following certain life events that changes your family status (life marriage or birth of a child) or involuntary loss of other coverage. For coverage through the health insurance exchange there may be other situations that would open up a special enrollment period as well.
Specialty Drug
A prescription drug used to treat complex health conditions. These drugs are usually given as a shot or infusion, but may be taken topically or orally as well.
Specific Stop-Loss (individual stop-loss)
Provides a maximum amount of claim limited to one individual member on a group.
Subrogation
The right of choice by the plan to recover benefits paid to a covered member through legal suit, if the expenses incurred by the covered person and paid by the employer's plan are the fault of another party or individual. Also the right of the plan to be substituted in legal action against any party the covered person may recover from.
TPA (Third Party Administrator)
A third party/entity administering a plan. an coordinate pieces of plan such as PPO network, disease management, reinsurance, etc.
Waiting period
A period of time before which an employee will be eligible to enroll in an employer's health plan. This can vary from no waiting period up to 60 days after the full time hire date.