A
Adjusted gross income (AGI)
Adjusted gross income is your income minus any adjustments, such as self-employment expenses, contributions to retirement accounts, student loan interest, and charitable contributions.
For more information on AGI and how it compares to MAGI, see our article.
Affordable Care Act (ACA)
The Affordable Care Act, also known as Obamacare, is a comprehensive healthcare reform law that was signed into law by President Obama and enacted in March 2010.
The ACA was created with three primary goals in mind:
- Increase the availability of affordable healthcare to more Americans
- Expand the Medicare program to cover more low-income adults
- Support innovative medical care delivery methods designed to lower healthcare costs generally.
Since its creation, the ACA has also paved the way for the Health Insurance Marketplaces, also known as the exchanges. See “Health Insurance Marketplace” for more.
Learn more about the ACA in our blog post.
Advance premium tax credit (APTC)
Premium tax credits, also known as health insurance premium subsidies, are a type of tax subsidy created by the U.S. government in 2014 to help lower-income Americans buy affordable individual or family health insurance coverage through the health insurance marketplaces, also known as exchanges.
You can receive premium tax credits on your federal income tax return or choose advance payment to help pay for monthly insurance premiums.
For more information, read our article.
Affordability
Affordability refers to the Affordable Care Act requirement that all applicable large employers (ALEs) offer affordable coverage to their employees. For 2023, in order for a health insurance plan to be considered affordable, employees can’t be expected to pay more than 9.12% of their income for health coverage. The safe harbor determination dictates that an employee must pay no more than $103.28 each month to be considered affordable.
The individual coverage HRA (ICHRA) is also subject to affordability rules. To learn more about calculating ICHRA affordability, see our article.
Ancillary benefits
Ancillary benefits are secondary or supplemental benefits not included in most traditional group health insurance plans. Ancillary benefits can help cover extra costs not fully covered by insurance, such as ambulance costs, medical supplies, and dental and vision coverage.
You can learn more about ancillary benefits in our article.
B
Benefit year
A benefit year refers to the calendar year that an employee benefit such as health insurance is active. For most benefits, the benefit year ends on December 31. Allowances, insurance deductibles, and other limits reset at the start of a new benefit year.
Boomerang employee
A boomerang employee is someone who leaves their current place of employment only to return to work for the same company later. The length of time a boomerang employee may be gone varies. It can be as little as a few weeks or as much as a few years.
For more information, read our article.
Burnout
Employee burnout is a psychological state of mental exhaustion and physical fatigue. It’s brought on by chronic workplace stress, extreme frustration, excessive work hours, or other issues. For example, a poor work environment, lack of support, or a heavy workload can contribute to burnout.
For more information, read our article.
Benefits administrator
A benefits administrator is an HR professional or employer who is responsible for keeping employees and/or employers informed about their employee benefits programs. Organizations can also choose a benefits administration software platform to help with administration and compliance.
You can learn more about how to choose a benefits administrator in our article.
Benefits administration software
Benefits administration software is an automated system for employers to manage their employee benefits in a easy, convenient place. PeopleKeep provides administration software for health reimbursement arrangements (HRAs) and employee stipends.
Benefits reconciliation
Benefit reconciliation is when premium bills are reviewed against a company’s payroll deductions to check for potential discrepancies. A company’s benefits specialist or accounting specialist typically performs the reconciliation at regular intervals, such as monthly or quarterly.
Benefits reconciliation aims to confirm that all payments are accurate, meaning that no charges are above or below the intended amount. Employers also check their employees’ enrollment status in their company’s health insurance plans and ensure no terminated employee still receives a premium payment.
You can learn more about how to choose a benefits administrator in our article.
Bronze health plan
A bronze health insurance plan is a type of plan offered on the federal and state health insurance marketplaces. The Affordable Care Act (ACA) uses four metallic tiers (bronze, silver, gold, and platinum) to describe how your healthcare costs are split between you and your insurance carrier.
A bronze plan has the lowest average monthly premium cost but a higher deductible than other tiers. To be considered a bronze plan, covered individuals must be expected to pay 40% of their medical expenses.
Learn more about the different metallic tiers of coverage in our article.
C
Cafeteria plan
See Section 125 Plan.
Catastrophic health plan
A catastrophic plan is a health insurance plan with a low monthly premium and a high deductible intended for those under the age of 30. To qualify, you must also have a low income and a hardship exemption. Having a catastrophic health plan makes you ineligible for premium tax credits.
Learn more in our article.
COBRA
The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows certain employees, former employees, spouses, and dependent children to temporarily continue their employer-sponsored health benefits. All employers with at least 20 employees who offer a group health plan (including ICHRAs) are subject to COBRA.
To receive continued coverage, employees must have voluntarily or involuntarily lost their job, see a reduction in hours, be transitioning between jobs, lost coverage due to the death of a family member, or been divorced (and consequently lost access to health coverage).
To learn more about COBRA, read our article.
Coinsurance
Coinsurance is the percentage of costs you pay each year toward covered health services, including your deductible and copay. For example, if a plan has a 30% coinsurance payment, health insurance companies will cover 70% of the charges for any covered medical services, leaving you responsible for the remaining 30%. Until your deductible is met, you must typically pay 100% of these expenses.
As with deductible amounts, health insurance plans with low premiums have higher coinsurance, and health coverage with higher premiums has lower coinsurance.
Learn more in our article.
Copayment
A copayment, or copay, is a flat dollar amount you’ll pay your primary care provider for a covered service. Generally, copays are small amounts and won’t count toward your deductible. Copays can vary depending on the kind of service you’re getting, what network providers you choose, and your plan type.
Learn more about copayments in our blog post.
Commuter benefits
Commuter benefits, also called transportation benefits, are perks and compensation provided to employees to help them offset the cost of traveling to and from work. There are various commuter benefit types, such as mass transit benefits, qualified parking benefits, rideshare or vanpool benefits, and more.
You can learn more about commuter benefits in our article.
D
Deductible
A deductible is the dollar amount you’re expected to pay on your own for any covered medical services before your health insurance company starts to pay. A plan can have a comprehensive deductible for all services or a separate deductible for specific essential coverage. However, plans often cover the cost of certain services even before you’ve paid your full deductible.
Generally speaking, plans with lower deductibles offer more comprehensive health insurance coverage but have higher premium costs. Plans with higher deductibles tend to have lower premium costs.
Learn more about deductibles in our blog post.
Defined contribution health plans
A defined contribution health plan is when an employer gives their employees a fixed dollar amount for healthcare expenses. Under a defined contribution plan, employees are free to select their own individual health insurance plan and pay for their healthcare costs upfront. They can then be reimbursed for their expenses. Examples of defined contribution plans include health reimbursement arrangements (HRAs) and health savings accounts (HSAs).
For more information, read our guide.
Dependent
Dependents are qualifying children or relatives of taxpayers as determined by the IRS. To qualify as a dependent, an individual must pass the IRS’s dependent taxpayer test, joint return test, and citizen or resident test.
For the purposes of medical expense deductions, someone generally qualifies as a dependent if they are your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or any descend of those individuals (such as grandchildren). They must satisfy any of the following: be under the age of 19 (or under age 24 if a full-time student), permanently or totally disabled, reside with you for more than six months out of the year, don’t file a joint return other than to claim a refund, or don’t provide more than half of their own support during the year.
If the individual is older than 18, they must not earn more than $4,200 in the previous year or file a joint return.
You can learn how HRAs work for dependents in our article.
Digital literacy
Digital literacy is the ability to use various technologies to find, analyze, and communicate information found on the internet or within a software application. As the name suggests, this process involves using digital devices like computers, tablets, smartphones, Bluetooth, or other virtual tools. The four major categories of digital literacy include digital tools and processes, software and devices, digital content, and social media.
For more information, read our guide.
E
Eligible employee
An eligible employee (EE) is someone who meets the eligibility criteria for an employee benefit plan.
You can learn more about EEs in our blog post.
Employee benefits
Employee benefits are any compensation or perks offered to employees in addition to their base pay (such as a salary or wage). Examples of employee benefits include health insurance, paid time off (PTO), retirement plans, and employee stipends.
You can read more about employee benefits in our article.
Employee stipends
Employee stipends, sometimes called fringe benefits, lifestyle benefits, or lifestyle spending accounts, are a fixed amount of money offered to employees to help pay for work, wellness, living expenses, and much more. Stipends are like a flat amount of money budgeted for each employee, which they can spend wherever they choose. However, employers can decide which expenses are eligible for reimbursement.
For more information, visit our guide.
Employer contributions
Employer contributions are any financial contributions to employer-sponsored benefits. This includes amounts paid to employees for their health reimbursement arrangements (HRAs), health savings accounts (HSAs), health insurance, retirement plans, and other benefits.
Employer of choice
Highly sought-after organizations where employees are excited to come to work are called employers of choice. Becoming an employer of choice means creating a positive work environment, building an outstanding brand, and crafting a fun and productive culture. Any employer–even a small one–can become an employer of choice by creating a strong culture and employee experience.
For more information, check out our blog.
ERISA
The Employee Retirement Income Security Act of 1974, or ERISA, is a federal law that regulates many aspects of employer-sponsored retirement and health insurance plans. ERISA ensures employees receive information about their benefits plan, including vesting, minimum participation standards, and more. It also gives employees the right to sue their employer for benefits and other breaches of fiduciary duty.
Essential health benefits
Essential health benefits are a minimum package of ten items and services that must be covered by all plans in the individual and small group market. This includes health plans offered on the ACA’s health insurance exchange and off-exchange.
Learn more about essential health benefits in our article.
Excepted benefit health reimbursement arrangement (EBHRA)
EBHRAs allow employers offering a group helath insurance plan to reimburse their employees up to $1,950 in 2023 for premiums paid toward excepted benefits and other eligible out-of-pocket medical expenses. Excepted benefits include things like non-health coverage, dental and vision care, specific disease or illness coverage, and other supplement benefits.
Learn more about EBHRAs in our article.
Exclusive provider organization (EPO)
An EPO is a type of group health insurance plan. They work similarly to an HMO, where members must use a network of doctors except in emergencies. Members also must have a primary care physician who provides referrals to in-network specialists.
Learn more about EPOs in our blog post.
Exempt employees
Exempt employees are individuals who are exempt from a minimum hourly wage, overtime regulations, and other Fair Labor Standards Act protections. Instead, exempt workers are given an annual salary figure. Exempt employees need to earn at least $684 per week.
Exempt employees tend to work in what are considered “executive” or “professional” jobs. However, job titles alone don’t determine exempt status. Your employee’s actual job duties and salary must meet specific Department of Labor exemption requirements.
To learn more about exempt employees, read our article.
F
Family and Medical Leave Act (FMLA)
The Family and Medical Leave Act (FMLA) is a federal law that gives eligible employees the right to take unpaid leave for certain family and medical reasons. The law applies to all organizations with 50 or more employees, though some states have their own version of the law.
You can learn more about the specifics of the law in our article on HR rules.
Federal poverty level (FPL)
The federal poverty level, or federal poverty guidelines, measures a household’s poverty status based on annual income. These numbers are updated yearly by the U.S. Department of Health and Human Services (HHS). These guidelines are used to determine eligibility for various state and federal programs, such as premium tax credits, Medicaid, and the Children’s Health Insurance Program (CHIP).
You can see the current FPL and learn more in our article.
Flexible spending account (FSA)
A flexible spending account (FSA), also called a flexible spending arrangement, is a type of spending arrangement where employees can use tax-advantaged money for various expenses. Employee contributions to FSAs are made through payroll deductions, and employers can also make contributions. However, employees forfeit the FSA funds not used by the plan year's end.
For more information, read our guide on FSAs.
Flexible work schedules
A flexible work schedule, or flex schedule, allows employees to begin and end their work hours in a way that best fits their personal lives. Flex schedules also allow for flexibility in terms of location. For example, flexible work arrangements can include remote work and hybrid work, which is a mix of time working in the office and at home.
Form 5500
Form 5500 is an annual report that ERISA plans, including HRAs, must file to the Department of Labor. It provides your benefit plan information to the federal government to help various agencies and Congress to assess employee benefits trends and ensure compliance.
For more information, read our article.
Form 720
IRS Form 720, also known as the Quarterly Federal Excise Tax Return, is used by organizations to report any federal excise taxes collected. For organizations that offer HRAs or other self-insured medical reimbursement health plans, Form 720 is used to pay an annual fee for the Patient-Centered Outcomes Research Institute (PCORI).
For more information, read our article.
Form 941
IRS Form 941, or the Employer’s Quarterly Tax Return, is a form employers use to report any federal income tax, Social Security tax, and Medicare tax withheld from their employees. This information is then used to calculate your employment taxes.
For more information, read our article.
Form 944
IRS Form 944 is used to report your organization’s federal income tax, Social Security tax, and Medicare tax you’ve withheld from your employees. This annual form is used by small businesses with $1,000 or less in annual tax liability instead of Form 941.
For more information, read our article.
Form W-3
IRS Form W-3, the Transmittal of Wage and Tax Statements form, summarizes your organization’s wages and employee contributions for the Social Security Administration (SSA). This allows employers to report wages, tips, withheld taxes, and employee benefits. You only need to complete one Form W-3 for your entire organization.
For more information, read our article.
Fringe benefits
Fringe benefits are a form of indirect or non-monetary compensation provided to employees in addition to their salary. This is an umbrella term for any non-traditional employee benefits. Examples of fringe benefits include health benefits, wellness programs, paid time off, tuition assistance, and commuter benefits.
For more information, see our guide.
Full-insured health plan
A fully-insured health plan is a traditional route of insuring employees. Employers pay a fixed premium to an insurance company for the employees that are enrolled in a health plan, and the company covers those employees’ medical claim expenses.
Fully-insured health plans offer financial predictability, making them an attractive benefit option for employees. However, they can come with higher taxes, possible rate hikes, and tough carrier negotiations.
For more information, visit our article.
Full-time equivalent employee (FTE)
The number of full-time equivalent employees at an organization is made up by a combination of full-time and part-time employees. To get your total number of FTEs, you’ll add the number of full-time employees (those with 30+ hours per week) to the full-time equivalent of part-time workers (part-time hours worked divided by 120).
If you have more than 50 FTEs on average during the calendar year, you’re considered an applicable large employer (ALE) and must offer health insurance to your employees.
For more information, see our article.
G
Group coverage HRA (GCHRA)
See integrated HRA.
Group health insurance
A group health insurance plan is an employee benefit plan created and maintained by an employer or organization that provides medical care for employees and their dependents directly or through insurance or reimbursement.
See our article on group plans.
H
Health benefits navigator
A health benefits navigator is an individual or entity trained to help consumers and small businesses shop for health coverage options through the Marketplace and fill out their eligibility and enrollment forms during the application process. By law, navigators must be unbiased when offering their services, which are free to all consumers as a federal benefit.
For more information, visit our article.
Healthcare consumerism
Healthcare consumerism pushes the entire healthcare industry to provide better information and transparency. This ensures everyone can make educated decisions about their health and health benefits. Some examples of these changes that address consumer behavior include introducing hospital reviews, telehealth, and other remote healthcare choices.
For more information, visit our article.
Health Insurance Marketplace
The Health Insurance Marketplace, also known as simply “the Marketplace” or the “federal exchange,” is designed to help individuals, families, and small businesses purchase affordable health insurance coverage.
The Marketplace allows eligible people to shop for health coverage, compare plans, receive financial subsidies, and enroll in healthcare through the Healthcare.gov website, call centers, and in-person assistance. Each state has one Health Insurance Marketplace, either run by the state, the federal government, or a combination of the two.
For more information, visit our article.
Health reimbursement arrangement (HRA)
A health reimbursement arrangement (HRA) is an IRS-approved, employer-funded health benefit used to reimburse employees, tax-free, for their healthcare expenses, including health insurance premiums, out-of-pocket medical expenses, or a combination of the two.
For more information, visit our guide.
Health savings account (HSA)
Health savings accounts are special savings accounts where money can be contributed on a pre-tax basis to be used to pay for medical services and other qualifying out-of-pocket expenses. HSAs can be opened by an individual or offered by an employer alongside an HSA-qualified high-deductible health plan (HDHP). The individual employee always owns the account, and employee and employer contributions remain in the HSA indefinitely until used.
For more information, visit our guide.
Human resources (HR) metrics
HR metrics are key figures for tracking an organization’s human capital, people strategy, and the effectiveness of HR programs. These metrics offer valuable insight into your organization’s HR efforts.
For more information, see our guide.
Health maintenance organization (HMO)
An HMO is a type of health insurance plan where a network of providers contracts exclusively with the HMO. Members must choose a primary care physician and obtain a referral from their PCP to see a specialist. Generally, HMOs have lower out-of-pocket costs.
You can learn more about the types of health insurance in our article.
High deductible health plan (HDHP)
A high-deductible health plan is a health insurance plan with an individual deductible of at least $1,500 and a family deductible of at least $3,000. While HDHPs have higher deductibles than other plans, they are also more affordable due to lower premiums. And an HDHP is required if you choose to contribute to an HSA.
Learn more about HDHPs in our article.
HIPAA
The Health Insurance Portability and Accountability Act of 1996, or HIPAA, provides federal protections for protected health information (PHI). This includes patient names, contact information, medical record numbers, and other individually identifiable information.
You can learn more about HIPAA and PHI in our article.
I
Indirect compensation
Indirect compensation is a type of payment to an employee that doesn't involve directly paying a wage or salary.
Examples of indirect compensation include:
- Health insurance
- Life insurance
- Employee stipends
- Social Security
- Paid time
For more information, visit our article.
Individual coverage HRA (ICHRA)
An individual coverage HRA (ICHRA) is a formal group health plan that allows organizations of all sizes to reimburse their employees, tax-free, for their individual health insurance premiums and potentially other qualifying medical expenses.
For more information, visit our article.
Individual health insurance plan
An individual health insurance plan is coverage that you purchase on your own, for you or your family, as opposed to having coverage through your employer or a government-run program. You can buy these health plans directly from a health insurance company or on a public or private health insurance exchange.
Insurance broker
An insurance broker acts as an intermediary between a client and an insurance company to help clients find and purchase the best insurance policy that suits their needs. They can specialize in one insurance type, like life insurance or group health insurance plans, but they often offer advice on several forms of insurance. A broker can work independently or within an insurance brokerage firm, but they don’t work for insurance companies.
For more information, visit our article.
Integrated HRA
An integrated HRA, also known as a group coverage HRA, is a type of health reimbursement arrangement that’s specifically designed to work alongside a group health insurance plan, such as a high-deductible health plan (HDHP). An integrated HRA is a tax-free reimbursement method for employers to cover the eligible healthcare expenses not fully paid for by the group plan, such as deductible expenses, coinsurance, and copayments.
For more information, visit our guide.
IRS Publication 502
IRS Publication 502 outlines the medical expenses eligible for deduction on Schedule A (Form 1040). These qualifying medical expenses are also eligible for tax-free reimbursement under a health reimbursement arrangement (HRA).
For more information and to see the list, see our eligible expense tool.
J
Job description
A job description conveys the job title, summary, responsibilities, required qualifications and skills, and employee benefits of an open position at an organization. While many job descriptions only include requirements and responsibilities, excellent job descriptions showcase your organization’s culture and benefits package.
You can learn how to make your job description stand out with tips from our article.
K
Key employee
Under FMLA statutes, a key employee is defined as a salaried employee who is among the highest-paid 10 percent of all workers employed by the employer within 75 miles of the employee's worksite. The IRS defines a key employee for employer-sponsored retirement plans as a plan participant who is a highly compensated officer or company owner.
Learn more about key employees in our blog post.
L
Lifestyle spending account (LSA)
Lifestyle Spending Accounts (LSA) are a means for employers to help their employees pay for health and wellness expenses and sometimes other costs that aren’t typically covered under a group health plan.
Employers who offer an LSA choose what expenses get reimbursed and how much each employee gets. Unlike other spending accounts, such as flexible spending accounts (FSAs), employers fund the LSA with money that is taxable to the employee after they spend it.
See our article on LSAs.
M
Mandatory benefits
Mandatory benefits, sometimes called required benefits, are benefits or perks required by federal, state, or local law. While federally mandated benefits are the same for everyone, state regulations can vary.
For more information, read our article.
Medicare
Medicare is a federally funded health insurance program for people age 65+ or people with disabilities. The original Medicare plan has two parts. Part A is a hospital insurance plan that covers hospital services, hospice, inpatient care, and skilled nursing care. Medicare Part B is medical insurance coverage for physician services, medical supplies, and clinic care.
With this type of plan, you typically will receive the following:
- All your Medicare-covered healthcare through the plan
- Prescription drug coverage
- Extra benefits without additional charges, such as medical transportation, vision, hearing, and dental coverage, or health and wellness programs
- Lower out-of-pocket medical expenses than the original Medicare plan
Medicaid
Medicaid is a public health insurance program for those with low income. All Americans who meet the eligiblity requirements are guaranteed coverage by the federal government, though eligibility differs by state.
To be eligible for Medicaid, you must:
- Meet the financial eligibility requirements established by the Affordable Care Act
- Eligiblity is determined by your modified adjusted gross income (MAGI)
- If you are 65+ or have a disability, your financial eligibility is based on the SSI program
- Children under an adoption assistance program are automatically eligible
- Meet the non-financial requirements
- You must be a resident of the state where you are receiving Medicaid
- You must be a U.S. citizen or a qualified non-citizen
- Eligibility may be limited by age or pregancy or parenting status
Minimum essential coverage (MEC)
Under the Affordable Care Act (ACA), "minimum essential coverage" (MEC) is any type of insurance coverage that meets the individual shared responsibility requirement, also known as the individual mandate.
The three types of coverage that satisfy the individual mandate are:
- Employer-sponsored coverage
- Individual health coverage
- Coverage under government-sponsored programs
For more information, visit our article.
Minimum value
Minimum value is a standard for measuring job-based coverage to ensure it provides at least the minimum coverage mandated by employer-shared responsibility provisions (ESPR).
Employer-provided health coverage meets minimum value if both of these apply:
- The plan pays at least 60% of the total cost of medical services for the standard population.
- The plan benefits include substantial coverage of physician services and inpatient hospital services.
For more information, read our article.
Modified adjusted gross income (MAGI)
MAGI is your adjusted gross income (AGI) with any tax-exempt interest income and certain deductions added back in. The IRS uses your MAGI in many ways to determine if you’re eligible for certain deductions and credits, like student loan interest deductions and the Child Tax Credit.
If your MAGI is above the income levels set by the IRS for certain credits or deductions, you won’t be able to qualify for them.
For more information, visit our article.
Medical loss ratio (MLR)
The medical loss ratio (MLR) is a rule put in place by the federal government to ensure insurance companies spend more money on medical expenses than other business expenses. Individual and small group markets are expected to spend 80% of their premium income on medical-related expenses, while the large group health insurance market is expected to spend 85% or more on medical-related expenses.
You can learn more about MLR in our article.
N
Network
Also called a "network plan" or "network of providers,” a network is the facilities, providers and suppliers a health insurer or plan contracts with to provide healthcare services.
No Surprises Act
The No Surprises Act was created to increase protections for consumers covered by group and individual health plans from surprise medical bills under certain circumstances, such as emergency care at out-of-network facilities or for out-of-network care at in-network facilities. It mandates that a patient is only liable for care at in-network cost-sharing amounts, meaning particular non-emergency out-of-network ancillary care can’t be billed more than their in-network cost-sharing amount, even if the patient received notice or consented to the service.
For more information, visit our article.
Non-discrimination testing
Non-discrimination testing (NDT) is a series of tests established by the IRS to help employers evaluate how fair their organization’s employee benefits are. This ensures that an organization’s benefits are accessible to all eligible employees, not just highly-compensated employees (HCEs). These tests apply to all 401(k) plans, certain Section 125 plans, and certain Section 105 plans.
For more information, visit our article.
Non-exempt employees
Non-exempt employees are workers who earn at least the federal hourly minimum wage, qualify for overtime pay, and aren’t exempt from FLSA regulations. Non-exempt employees tend to be supervised by higher-level employees and managers. While they’re typically paid hourly wages, it’s not required. Non-exempt employees can also be paid on a commission or salary basis, as long as the compensation meets minimum wage requirements.
For more information, visit our article.
O
Onboarding
Employee onboarding is the formal process for new employees to acquire the necessary knowledge and tools to succeed at their new job. An effective onboarding program prepares employees for their new roles while making them feel welcome.
For more information, see our article.
Open enrollment period
Open enrollment period is the dedicated time for Americans to enroll, renew, or make changes to their health coverage. While the exact dates vary depending on your state, the open enrollment period generally starts at the beginning of November and ends in mid-January. However, some states allow residents to enroll in coverage until late January.
For more information, visit our article.
Out-of-pocket maximum
An out-of-pocket maximum is the maximum amount of money you’ll pay for covered services during a period of time, typically a full benefit year.
The maximum will vary from plan to plan, but it includes copays, deductibles, and coinsurance costs. However, your out-of-pocket maximum doesn’t include your premium cost, out-of-network services, or any medical expenses your plan doesn’t cover. Once you’ve paid the full amount toward your out-of-pocket maximum, your insurance will pay 100% of the allowed amount for your covered medical expenses, as long as it’s considered essential coverage and in your network of providers.
P
Paid time off (PTO)
PTO describes any time employees are paid when they’re not working. PTO rolls all paid leave categories—such as vacation, sick time, personal time, holidays, and more—into one category. PTO can structured as a set amount of days per year, as on a accrual basis, or in an unlimited amount. It can also be set to allow for rollover days from year to year.
For more information, visit our article.
Pay transparency
Pay transparency is the practice of employers being open about salary and pay information at their organization. It can include how employees can find compensation information for open job positions, company beliefs surrounding pay, how salary ranges are determined, and how compensation is discussed with applicants and employees.
For more information, visit our article.
PCORI fee
The PCORI fee was introduced by the Affordable Care Act. Sponsors of self-insured health plans pay a fee to fund the Patient-Centered Outcomes Research Institute to help healthcare consumers make more informed decisions for their needs. All employers offering a health reimbursement arrangement (HRA) must pay this fee by July 31 each year using Form 720.
To learn more about From 720 and PCORI fees, see our article.
Pet insurance
Pet insurance is coverage designed to reduce the cost of a pet’s health care throughout their life. It’s most beneficial to get pet insurance early on in a pet’s life so they’ll have coverage in case they develop health conditions later on. Pet insurers offer three levels of coverage: Accident-only plans, accident and illness plans (also known as comprehensive coverage), and wellness plans.
For more information, see our article.
Plan documents
The Employee Retirement Income Security Act of 1974 (ERISA) requires employer-sponsored benefits programs to include a written document that details the plan participants’ rights, describes their benefits, and the terms and conditions for the plan.
Health reimbursement arrangements (HRAs) are subject to ERISA, and are therefore required to have a plan document. A summary of benefits or summary plan description (SPD) is not consider a plan document.
You can learn more about plan documents for QSEHRAs and ICHRAs in our articles.
Pre-existing condition
A pre-existing condition is any disease, disability, or health condition you have before enrolling in health coverage with an insurance company.
Before the ACA, health insurers in the individual market used medical underwriting in nearly every state to examine individuals’ medical histories. Now, denying coverage for pre-existing conditions reflected in your medical records is illegal in most cases, although there are a few types of health insurance where it’s still allowed.
Premium
A premium is the dollar amount you pay to the health insurance company to maintain active coverage. Most people pay theirs monthly, but depending on your type of health plan, your payments could be once a quarter or once a year. When you’re researching health plans, it’s usually the first cost you’ll see and consider when budgeting your monthly medical costs.
Premium tax credits
See “advance premium tax credits.”
Protected health information
Protected health information (PHI) is the demographic information, medical histories, laboratory results, physical and electronic health records, mental health conditions, insurance information, and other data that a healthcare professional collects to identify an individual and determine appropriate care.
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) provides federal protections for PHI and outlines regulations for keeping individuals’ PHI safe and undisclosed to those not authorized to view it.
For more information, visit our article.
Q
Qualified health plan
A qualified health plan is a health insurance plan that meets the requirements established by the ACA. These plans are certified by public health insurance marketplaces and provide minimum essential coverage (MEC).
According to the ACA, a typical health plan that’s considered a QHP must:
- Cover the ten essential health benefits, including primary care, mental health services, prescription drugs, and emergency care.
- Limit the amount qualified individuals spend on deductibles, copays, annual out-of-pocket maximums, and other healthcare expenses.
- Prohibit lifetime benefit limits.
- Include a reasonable number of in-network providers determined by each state.
- Meet other requirements of the ACA.
For more information, visit our article.
Qualifying life event
A qualifying life event is an event in your life that makes you eligible for a special enrollment period so you can enroll in health coverage outside of the annual open enrollment period at the end of the calendar year. A special enrollment period generally lasts 60 days before or after the qualifying life event.
There are four basic types of qualifying events:
- Loss of health coverage
- Offer of new health benefit
- Changes in household
- Changes in residence
For more information, visit our article.
Qualified small employer HRA (QSEHRA)
A qualified small employer HRA (QSEHRA), or the small business HRA, is a formal, IRS-approved health benefit. It allows small businesses with fewer than 50 full-time equivalent employees to offer tax-free reimbursements to their employees for their health insurance premiums and other qualifying health expenses.
For more information, visit our article.
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Retention rate
An employee retention rate shows organizations how effective their retention strategies are. A high retention rate correlates with higher employee morale. Standard retention rates are anywhere from 70%-85%, but they vary but industry and location. Subtract the number of terminated or lost employees from the total number of employees for that period. Divide this number by the number of employees at the beginning of the time period and multiply by 100 to get your retention rate.
For more information, see our article.
Renewal period
The time of year when a business or individual reviews and renews their health plan beyond the original time frame of the contract.
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Section 105 plan
A Section 105 plan is an IRS-approved health benefit that allows the tax-free reimbursement of medical and insurance expenses, as described under Section 105 of the Internal Revenue Code (IRC).
Employers use Section 105 plans in a variety of ways. For example, a common type of Section 105 plan is a self-funded health benefit, where the employer reimburses employees for qualified health expenses rather than paying premiums to an insurance company.
For more information, visit our guide.
Section 125 plan
A Section 125 plan, also known as a cafeteria plan, is an employee benefits plan that allows employees to take a taxable portion of their compensation, such as their salary, and receive it as a qualified pretax benefit. Qualified benefits include health insurance premiums, retirement deposits, adoption assistance, group-term life insurance, and health savings accounts (HSAs).
To learn more, read our article.
Self-insured health plan
With a self-insured or self-funded plan, employers run their own health plan and assume all financial risk for providing benefits to their employees. Self-funded plans are more flexible than fully-insured plans, and they can provide you with additional savings on premium costs. However, they come with more financial risk and administrative burden, particularly for small employers.
For more information, visit our article.
Special enrollment period
A special enrollment period is when you can make changes to your health insurance plan even though it's not an open enrollment period as defined by the ACA. Certain qualifying events will trigger a special enrollment period, allowing you to change your health coverage for a certain period after the event.
Generally speaking, you'll have 60 days following the event to enroll in a new health plan through the federal or state-based marketplaces. If you don't make the necessary changes to your health insurance during the special enrollment period, you'll have to wait until the next open enrollment period to make any changes.
For more information, visit our article.
Summary plan description (SPD)
The Employee Retirement Income Security Act of 1974 (ERISA) requires plan administrators of ERISA-covered retirement and health benefits such as HRAs to supply a summary plan description to all participants. This document tells participants what their benefits plan provides, how they can participate, how to file claims, and how it operates.
For more information about SPDs, see our article.
Supplemental health insurance
Supplemental insurance is an ancillary benefit that you can purchase to help your employees pay for services and out-of-pocket expenses that aren't fully covered by your group health plan.
Some supplemental insurance policies help pay for out-of-pocket cost-sharing expenses while some cover services that medical plans don't include, like dental and vision expenses. These plans aren't a substitute for comprehensive health coverage because most don't meet minimum essential coverage (MEC).
For more information, visit our article.
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Talent shortage
A talent shortage occurs when there’s a significant disparity between the skills employers need for their organizations to thrive and the number of available employees or job seekers with those skills. This often occurs on an organizational basis, where a particular company doesn’t have enough specialized talent. However, these shortages can also affect industries or the entire global economy.
For more information, visit our article.
Telemedicine
Telemedicine is a way of receiving medical care or counseling from a physician virtually through telecommunications instead of through an in-person office visit. Using telemedicine, you can discuss symptoms or health concerns with your physician or a nurse practitioner on your computer, tablet, or phone. You can often receive a diagnosis, review treatment options, and get any necessary prescriptions during your appointment.
For more information, visit our article.
Third-party administrator (TPA)
A TPA is an organization that processes insurance claims or certain aspects of employee benefit plans, like an HRA, for a separate entity. TPAs are frequently used by insurance companies and employers with a self-funded health plans.
Core services are TPA services that every employer uses, such as claims processing and enrollment. Non-core services are supplemental, separately charged services, such as medical management, mental health administration, and others.
For more information, visit our article.
Total rewards strategy
Employee total rewards is a recruitment and retention strategy that focuses on providing and improving direct, indirect, and non-monetary compensation.
Many traditional employee benefits packages focus on total compensation. With this business strategy, organizations offer their employees competitive salaries, bonuses, commissions, and other financial benefits. However, total compensation methods don’t focus on non-monetary employee benefits and perks.
For more information, visit our article.
Turnover
Employee turnover is when employees leave an organization for any reason, typically searching for better opportunities. However, it also includes the number of employees the organization let go. Employee turnover rate accounts for how many employees leave a company in a specified period.
Voluntary employee turnover occurs when an employee chooses to leave the organization. Involuntary turnover, meanwhile, is when you choose to part ways with an employee, either through layoffs or other terminations due to poor performance.
For more information, visit our article.
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Unemployment compensation
Unemployment insurance is a state and federal government program that compensates those now unemployed due to no fault of their own or saw a significant reduction in their hours. Employees can apply for unemployment benefits through their state’s unemployment portal.
V
Vision coverage
A type of health benefit that at least partially covers vision care, like eye exams and glasses. This coverage can be offered either as part of a comprehensive medical plan, or by itself through a “stand-alone” vision plan.
Voluntary employee beneficiary association (VEBA)
A voluntary employee beneficiary association (VEBA) is a tax-exempt trust fund mainly for retirees established by an employer or a group of employees to pay for eligible medical expenses and other benefits to its members, their dependents, or beneficiaries.
VEBAs are common within specific industries, particularly steel, utilities, telecommunications, schools, and car manufacturers.
For more information, visit our article.
Voluntary benefits
Mandatory benefits, sometimes called required benefits, are benefits or perks required by federal, state, or local law. While federally mandated benefits are the same for everyone, state regulations can vary.
For more information, read our article.
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Waiting period
A waiting period is the amount of time that an employee must wait before their coverage or benefits begin. For example, employers may make employees wait up to 90 days after enrolling in their benefits program for it to begin.
Wellness program
Workplace wellness programs are provided for employees to help them avoid illness and stress while improving overall employee wellbeing. There are many different wellness programs, with some focusing more on physical fitness and others focusing on mental health.
Employers usually sponsor them, but some insurance plans or payroll services offer them directly to organizations.
For more information, read our article.
Workers’ compensation
Workers' compensation is the first benefit you’re required to offer your employees. This form of coverage reimburses your employees for medical care, treatment, rehabilitation, leave, or missed income if they miss work due to a critical illness or injury they experience while at work or performing their job duties.
While government-mandated, workers' compensation is handled mainly on a state-by-state basis, meaning additional coverage requirements will vary based on location.
Workplace culture
An organization's work culture encompasses all of its work environment's activities, beliefs, social norms, customs, and behaviors. Employers, employees, company policies, interactions, the physical work environment, and more can influence culture. As such, workplace cultures are constantly shifting and evolving.