Glossary of employee benefits and healthcare terms

Accountable care organization

In an accountable care organization (ACO), healthcare providers from different specialties and settings work together to provide coordinated care to patients. The goal of an ACO is to improve the health outcomes of patients while reducing healthcare costs by avoiding unnecessary duplication of services. They focus on preventive care and effective management of chronic conditions.

Learn more about ACOs in our full blog.

Actuarial value

Actuarial value is the percentage of healthcare expenses a health insurance plan will pay. Insurers calculate AV based on the cost-sharing features for a set of covered benefits. These types of estimates are based on the average healthcare percentage of costs among the standard population, not your individual medical care expenses.

See our article to learn more.

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.

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.

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: 

1. Increase the availability of affordable healthcare to more Americans 
2. Expand the Medicare program to cover more low-income adults 
3. 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.

Affordability

Affordability refers to the Affordable Care Act requirement that all applicable large employers (ALEs) offer affordable coverage to their employees. For 2026, in order for a health insurance plan to be considered affordable, employees can’t be expected to pay more than 9.96% of their income for health coverage. The federal poverty level safe harbor determination dictates that an employee must pay no more than $129.90 each month in 2026 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.

Applicable large employer

An applicable large employer (ALE) is any organization with 50 or more full-time equivalent employees (FTEs). Even if an employer doesn't have 50 or more FTEs at all times, if they had an average size of 50 during the previous calendar year, they qualify as an ALE for the current calendar year. The ACA requires these employers to offer health coverage that satisfies the employer mandate.

If an employer has fewer than 50 FTEs, they aren't considered an ALE and therefore aren't required to offer health insurance coverage or subject to hefty penalties.

Read more about ALEs in our guide.

Association health plan

Association health plans allow small businesses with fewer than 50 employees and self-employed individuals to join together to buy large group health coverage, gaining access to more insurance plan options at an affordable price. Typically, this type of plan joins businesses within the same industry, profession, or region and can cover a wide range of employees, including 1099 employees, freelancers, and contract workers.

Learn more about association health plans in our blog.

Binder payment

A binder payment is the first month's premium you pay to your insurance company after you select and enroll in a new health plan. Your health insurance company and state can set their own deadlines, but you must pay the binder payment for your policy to take effect (known as effectuation). If you fail to pay or don’t pay by the deadline, your insurance company will cancel your application and won’t start your coverage.

For more information, read our blog.

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 an easy, convenient place. PeopleKeep provides administration software for health reimbursement arrangements (HRAs).

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 that no terminated employee still receives a premium payment.

You can learn more about how to choose a benefits administrator in our article.

Benefits specialist

Benefits specialists are professionals who manage and administer a company’s employee benefits and compensation programs, including disability insurance, retirement benefits, healthcare plans, life insurance, and more. They help attract and retain workers and ensure that employees understand their benefits package so they can get the most use out of their offerings.

Learn more about benefits specialists 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.

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.

The Children’s Health Insurance Program

The Children’s Health Insurance Program (CHIP) is a federal and state program that provides health insurance to specific groups of children whose family income is too high to qualify for Medicaid but too low to buy an individual health plan. Children and pregnant individuals must meet financial and non-financial criteria to be eligible for CHIP. Financial eligibility uses a person’s modified adjusted gross income (MAGI), and CHIP thresholds vary from 170% to 400% of the federal poverty level (FPL), depending on the state.

Learn how CHIP works with the individual coverage HRA (ICHRA) in our blog.

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.

Comprehensive health coverage

Comprehensive health insurance, also known as major medical health insurance, provides extensive protection across a wide range of medical services, from routine preventive care to major medical events. Unlike limited-benefit or supplemental plans, which only cover specific conditions or services, comprehensive plans aim to cover most essential healthcare needs.

Learn more about this type of coverage in our blog.

Concierge care

Concierge care, or boutique medicine, is a membership-based model that provides premium care to patients who can afford it. People pay an annual fee to receive greater access, medical attention, and patient care from a concierge primary care doctor. With smaller patient lists and more time on their hands, these doctors can focus on building long-term, personal relationships with their patients.

Learn more about concierge care in our article.

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.

Dental coverage

Dental coverage is a type of insurance policy designed to help pay for the costs of oral health care, including preventive services, basic procedures, and sometimes major services. This coverage can be offered either as part of a comprehensive medical plan or by itself through a “stand-alone” dental plan.

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.

Direct primary care

DPC is a membership-based model where patients pay their physician directly through a monthly, quarterly, or annual fee rather than paying through an insurance provider. This fee covers primary care services, such as clinical and laboratory services, consultative services, and care coordination. The goal of this model is to give physicians consistent revenue without forcing them to spend time coding and billing, so they can spend more time with their patients.

Learn more about direct primary care in our article.

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 classes

If you have an individual coverage HRA (ICHRA), you can use employee classes to compliantly organize your workforce into job-based groups, such as full-time vs. part-time workers and salaried vs. hourly employees. This will allow you to set different allowance amounts or eligibility rules. All employees within the same class must receive the benefit on equal terms to satisfy federal nondiscrimination requirements.

Get the complete guide to ICHRA employee classes.

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.

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 health insurance plan to reimburse their employees up to $2,200 in 2026 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.

Explanation of benefits

An explanation of benefits (EOB) is a one- to three-page statement from your health insurance company. It summarizes the healthcare you recently received from a provider and details how you and your policy will share the cost of the service. You’ll typically get your EOB within a few weeks after you receive medical care. Your provider’s bill should match the out-of-pocket amount you’re listed as owing on your EOB.

Read more about how an EOB works in our blog.

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.

Field marketing organization

A field marketing organization (FMO), similar to an independent marketing organization (IMO) for health insurance, connects agents with insurance products. An FMO acts as a liaison between an insurance carrier and an independent insurance agent. Through a contract, an FMO allows independent agents and brokers, or insurance agencies and brokerages, to sell the carrier's range of products and earn a sales commission.

Learn more about FMOs 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 benefits

Flexible benefits are perks and other forms of compensation that employees can choose to participate in and customize according to their needs. Employees typically don’t pay extra for these perks, and depending on how you structure the benefit or plan, employees may receive a cash payout instead of opting into the perk.

Learn more in our full blog.

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 8941

Form 8941 is a required tax form that small employers must file with their annual tax credit to calculate and claim the small business health care tax credit. Along with filing Form 8941, you must also file Form 3800, which is a summary report of each general business credit an organization claims for that tax year.

For more information about Form 894, 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.

Fully-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 who 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.

Gap health insurance

Gap insurance helps employees cover out-of-pocket costs under high deductible health plans (HDHPs), up to the annual maximum limit. It's often referred to as "metal gap" because it can fill coverage gaps in the metallic tiers of healthcare coverage, especially small group or individual bronze and silver Affordable Care Act (ACA) plans, which often have lower premiums but higher out-of-pocket costs. You or your employees must cover premium payments for gap insurance, regardless of whether they need medical care.

Get more details about gap insurance by reading our blog.

Gold health plan

A gold 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.

The gold plan has an average actuarial value of 80%. Covered individuals only pay 20% of their expected medical expenses. Gold plans have high monthly premiums but lower out-of-pocket costs because they typically have very low deductibles.

Learn more about the different metallic tiers of coverage in our article.

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.

Guaranteed issue

Guaranteed issue is a term used to describe a health plan that allows you to enroll regardless of your health status, age, gender, financial situation, or any other factors that could influence the likelihood of you using health services. Due to the Affordable Care Act (ACA), all major health insurance policies sold on individual health insurance markets nationwide now come with guaranteed issue. This means your medical history doesn’t matter when you’re trying to sign up, nor can insurance companies deny you coverage if you have a pre-existing condition.

Learn more about guaranteed issue in our article.

Healthcare benefit allowance

A healthcare benefit allowance is any contribution from an employer for an employee's healthcare expenses. It's a broad name for plans such as employer healthcare arrangements or employer payment plans. One common type of benefit allowance that's considered a formal health plan is a health reimbursement arrangement (HRA).

Learn more in our blog.

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. 

Healthcare reimbursement

Healthcare reimbursement plans are employer-funded health benefits. With this type of plan, employers can reimburse employees for insurance coverage and out-of-pocket healthcare costs, like prescription drugs. Unlike traditional health insurance plans, employers provide their employees with an allowance to spend on medical care, including health insurance premiums.

Learn more in our blog.

Healthcare sharing ministry

A healthcare sharing ministry is a medical sharing plan or private healthcare system (PHCS). Members use their shared beliefs and values, typically founded on religious principles, as guidelines for the foundation of their medical expense distributions. Unlike the average health insurance plan purchased on the federal or state exchanges, individuals can sign up for a health sharing ministry anytime without waiting for the annual Open Enrollment Period or a qualifying life event.

Learn more about healthcare sharing ministries in 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 insurance subsidy

A health insurance subsidy is a credit from the federal or state governments. It lowers the amount of a consumer’s monthly premium or other out-of-pocket costs. If you qualify for a subsidy, your health insurance costs can be much more affordable. Subsidy eligibility typically depends on income, household size, and where you live.

Learn more in our blog.

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.

Hospital indemnity plan

Hospital indemnity plans help fill gaps in your health insurance by providing additional protection during hospital stays. They provide cash benefits for hospitalization and other medical services.

Learn more about indemnity plans.

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.

Individual mandate

The individual mandate was an Affordable Care Act (ACA) provision that required individuals to enroll in a health plan that provided MEC or pay a federal penalty when filing their annual tax return. In 2017, Congress repealed the individual mandate penalties on the federal level. However, five states and the District of Columbia have created their own individual mandates. All but one of these locations has penalties individuals must pay during tax season if they can afford but don’t enroll in health coverage.

Learn which states require individuals to have health insurance by reading our blog.

Inpatient care

Inpatient care is for patients with severe medical conditions who need close supervision of a physician within a hospital or inpatient facility. Typically, inpatient care involves a hospital stay of at least 24 hours, but that may vary in some cases. Patients may receive a treatment plan, meals, medication, and other services recommended by their doctor during their stay.

See how inpatient care compares to outpatient care in our blog.

Letter of medical necessity

Letters of medical necessity are formal notes written by a healthcare provider explaining why a specific type of care is medically necessary. Medical necessity means a doctor recommends that a patient receive a particular treatment method. Letters of medical necessity help detail a provider’s reasons why a treatment, equipment, drug, or service is vital to diagnose, prevent, or cure a patient’s medical condition.

Read more about these types of medical letters in this article.

Level-funded health benefits

A level-funded health plan is a policy where employers pay a fixed amount of money to an insurance company every month to cover administration fees, medical claim payments for employees, and stop-loss insurance premiums. They then share the risk of the plan alongside the insurer. Because you pay a fixed or “level” amount, these plans allow you to manage your budget better and save money.

Learn more about level-funded benefits here.

Low deductible health plan

A low deductible health plan is a health insurance plan with an individual deductible of less than $1,650 for self-only coverage or $3,300 for family insurance coverage in 2026. You would most likely benefit from a low-deductible plan if you’re older, have a chronic condition, or simply receive frequent medical care.

Medical expense reimbursement plan

A medical expense reimbursement plan (MERP) is any IRS-approved section 105 health plan or arrangement where an organization reimburses employees (tax-free if administered correctly) for out-of-pocket medical expenses incurred by employees or their dependents. A MERP can work alongside a group health insurance plan, or you can offer it as the primary health benefits plan, as an alternative to a group health insurance plan.

For more details, check out our blog.

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 MLR rule is a financial regulation created by the Affordable Care Act (ACA). It requires health insurance companies to spend a larger percentage of consumers’ premiums on medical claims and quality of care improvements than they keep for profit, marketing, and administration costs. 

Insurers that serve individual and small group markets must spend at least 80% of their premium income on medical-related expenses, leaving 20% for administration costs. Insurers that serve the large group market segment, which includes organizations with more than 50 FTEs under the ACA, must spend at least 85% on medical-related expenses, leaving 15% for administrative costs

You can learn more about MLR in our article.

Narrow network health plans

According to some research, narrow network plans cover less than 25% of the physicians in a given coverage area. A narrower network is more affordable than a larger network, but they limit coverage to a specific group of primary care physicians, specialists, and hospitals. Also, if you receive care outside your limited network, you're responsible for any out-of-pocket expenses.

Learn more in our complete blog.

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 

Nondiscrimination 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.

Open Enrollment period

The Open Enrollment Period is the dedicated time for Americans to enroll, renew, or make changes to their individual or small group health coverage. Currently, the annual enrollment window in most states starts on November 1 and ends on January 15. However, effective starting the 2026 Open Enrollment Period for 2027 coverage, the dates to enroll in coverage will begin on November 1 and end on December 15 for all states with public exchanges operating on the federal Health Insurance Marketplace. State-based exchanges will also have to shorten their annual enrollment period to end by December 31.

For more information, visit our article. 

Out-of-network provider

Out-of-network providers are healthcare professionals and medical facilities that don’t have a contract with a particular health insurer and, therefore, don’t have to provide care to individuals covered by that insurer at a pre-negotiated rate. Patients who receive out-of-network care will typically pay the full amount for health services, unless it’s for emergency care.

Read our blog to learn more.

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.

For more information, read our blog.

Out-of-pocket medical expense

An out-of-pocket medical expense is the amount a policyholder pays for a service or item their health insurance plan doesn’t cover. If you have a medical bill that includes an out-of-pocket expense, you’ll be responsible for paying the cost on your own. Depending on your plan and the care you receive, you could pay between 10% and 100% of the total cost of the item or service. In many cases, these expenses will count toward your plan’s out-of-pocket maximum.

Learn more in our article.

Outpatient care

Outpatient care, also called ambulatory care, is any medical service or treatment that doesn’t require a hospital stay or inpatient care. Instead, you may receive care at a walk-in clinic, emergency room, urgent care facility, or a doctor’s office. After you receive treatment, you can go home, provided you don’t have any complications or comprehensive care that may require inpatient treatment.

See how outpatient care compares to inpatient care in our blog.

Pay or play

See “employee mandate.”

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 Form 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.

Physician hospital organization

A physician hospital organization (PHO) is a formal alliance between hospitals and physicians. It aims to improve the coordination of healthcare services and enhance patients’ quality of care. PHOs function as a collaborative network that combines the resources and clinical expertise of healthcare providers. This allows them to deliver integrated and efficient medical care.

Read more about PHOs in 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 considered a plan document.

You can learn more about plan documents for QSEHRAs and ICHRAs in our articles. 

Platinum health plan

A platinum 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.

The platinum metal plan has an average actuarial value of 90%. Covered individuals pay only 10% of their expected medical expenses. It has the highest monthly premiums and the lowest annual deductibles of all the tiers.

Learn more about the different metallic tiers of coverage in our article.

Point of service (POS)

A point of service (POS) health plan is a type of managed care health insurance that combines elements from both health maintenance organizations (HMOs) and preferred provider organizations (PPOs). With a POS health plan, members can expect a wide range of coverage for healthcare services. Some services may require a copayment or coinsurance for medical care. Members can expect access to a network of healthcare providers, but may be able to visit out-of-network providers, if needed, at a higher out-of-pocket cost.

Learn more about POS plans

Portable benefits

Portable benefits are types of benefits that employees can retain and transfer when they change jobs. Unlike traditional benefits tied to a specific employer, portable benefits remain with the worker, providing financial stability and continuity regardless of employment changes. Health savings accounts (HSAs) are a common portable benefit.

Learn more in our blog.

Post-tax benefits

Post-tax benefit contributions, sometimes called after-tax deductions, are taken from an employee's paycheck after taxes have already been deducted. Since post-tax deductions reduce net pay rather than gross pay, they don't lower the individual's overall tax burden. Because you withhold taxes before withholding benefit contributions, all federal, state, and local taxes are already paid on the contributions.

Learn how post-tax benefits compare to pre-tax benefits in this article.

Preferred provider organization (PPO)

A preferred provider organization is a type of health insurance plan. PPO insurance plans allow plan participants to choose from a larger network of doctors and hospitals without needing a referral to see a specialist.

Learn more about PPOs

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.

Pre-tax benefits

Pre-tax benefits allow employers to deduct the value of the benefit from an employee's gross pay before federal income and employment taxes are applied. By withholding paycheck deductions before you withhold taxes, you lower an employee's total taxable income, reducing the amount of federal income tax the employee has to pay. Common pre-tax benefits are health insurance plans, health savings accounts (HSAs), pre-tax retirement plans, and commuter benefits.

Learn how pre-tax benefits compare to post-tax benefits in this article.

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.

Learn more about premiums.

Premium tax credits

See “advance premium tax credits.”

Private health insurance exchange

Private health insurance companies and brokerage firms run private health insurance exchanges. They usually offer more private coverage options for individuals and companies of all sizes. Private insurance exchanges can sell individual health plans to consumers and traditional group health plans to employers. While public exchanges only offer ACA-compliant health plans, private exchanges can offer ACA-compliant and other health insurance plans.

See how private exchanges compare to public exchanges in our guide.

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.

Public health insurance exchange

A public health insurance exchange is a marketplace operated by the federal government, a state government, or a government-contracted entity. These government exchanges allow individuals to browse various qualified health plans from different insurance companies. Popular public exchanges include the federal Health Insurance Marketplace and state-based Marketplaces.

See how public exchanges compare to private exchanges in our guide.

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 a new health benefit
• Household changes
• 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. 

Reference-based pricing

Reference-based pricing (RBP), also known as reference pricing or metric-based pricing, is a type of self-funded benefit. Under this type of plan, an employer will set the maximum dollar amount, based on a benchmark, that the plan will reimburse providers for each type of healthcare service. Once the employee receives care, the employer or administrator reimburses the provider at the predetermined price.

Learn more in our blog.

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.

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.

Spousal benefits

Spousal benefits are company benefits that an employer extends to their employees’ legally married spouses (and sometimes domestic partners) as part of their overall compensation package. Most commonly, spousal benefits refer to employer-sponsored health benefits, but they can also include other perks and voluntary benefits.

Learn more about spousal benefits in our blog.

Statutory employee benefits

Statutory benefits are benefits that the U.S. federal government or state governments mandate employers provide to employees, such as Social Security, Medicare, and Unemployment insurance. Statutory benefits help protect employees’ financial well-being, mitigate economic hardship, and cover liabilities. Employers must offer mandatory benefits, or they may be subject to steep tax penalties and fines.

For more information, see 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. 

Tax exclusions

A tax exclusion reduces the amount of money you report as your gross income, ultimately reducing the total taxes you owe for the year. For example, employer contributions to a health reimbursement arrangement (HRA) are exempt from payroll taxes. Additionally, the IRS doesn’t consider employees' HRA reimbursements for medical expenses as taxable income.

Taxable health benefits

Taxable health benefits are those that are subject to federal taxes. These types of benefits can increase an employee's taxable income, potentially leading to a higher tax liability. However, they can still provide value, especially when combined with tax-free benefits. Common examples of taxable health benefits include fringe benefits, such as employee stipends. 

Tax-free health benefit

Tax-free health benefits are benefits that aren't subject to federal taxes. This means that both the employer and the employee don't have to pay taxes on the contributions made toward the health benefit.

Additionally, employer contributions to tax-free health benefits are also generally tax-deductible for the employer. Common types of tax-free health benefits are health reimbursement arrangements (HRAs), health savings accounts (HSAs), flexible spending accounts (FSAs), and traditional group health insurance.

Tax-deferred health benefit

Tax-deferred health benefits are a type of benefit where contributions aren't taxed when they're contributed, but are taxed when they're withdrawn. This means that employees only pay taxes on the contributions made toward the health benefit once they withdraw the funds. A common example of a tax-deferred health benefit is a health savings account (HSA).

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 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. 

Value-based insurance design

A value-based insurance design (VBID) aims to lower or remove financial barriers to essential, high-value clinical services using financial incentives to encourage the use of cost-efficient healthcare services and informed consumer choices.

Learn more about VBID in our full guide.

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.

Wellness program

Workplace wellness programs are provided for employees to help them avoid illness and stress while improving overall employee well-being. 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.