Health benefits glossary
Plain-language definitions for the terms you'll encounter when evaluating your company's health benefits.
- ACA Affordable Care Act
- Federal law requiring employers with 50+ full-time employees to offer health coverage or face penalties. Sets minimum coverage standards and reporting requirements.
- COBRA Consolidated Omnibus Budget Reconciliation Act
- Federal law allowing employees to continue their group health coverage for a limited time after leaving a job, at their own expense.
- ERISA Employee Retirement Income Security Act
- Federal law governing employer-sponsored benefit plans, including health insurance. Sets fiduciary standards and reporting requirements like Form 5500.
- Form 5500
- Annual report filed with the Department of Labor for employer-sponsored benefit plans. Required for most plans with 100+ participants.
- Fully funded
- Traditional health insurance where the employer pays a fixed premium to a carrier, which assumes all claims risk. Premiums are set based on group demographics and claims history.
- HDHP High Deductible Health Plan
- A health plan with a higher deductible than traditional plans. Required to pair with an HSA. Annual deductible minimums are set by the IRS.
- HRA Health Reimbursement Arrangement
- An employer-funded account that reimburses employees for qualified medical expenses. The employer controls the design and funding level.
- HSA Health Savings Account
- A tax-advantaged savings account for medical expenses, available to people enrolled in a qualifying HDHP. Contributions are tax-deductible, growth is tax-free, and withdrawals for medical expenses are tax-free.
- ICHRA Individual Coverage Health Reimbursement Arrangement
- A type of HRA that allows employers to reimburse employees for individual health insurance premiums and medical expenses. Employees choose their own plan on the individual market.
- Level-funded
- A hybrid plan structure where the employer pays a fixed monthly amount covering expected claims, administrative fees, and stop-loss insurance. If actual claims come in below projections, the employer may receive a refund.
- PEO Professional Employer Organization
- A company that provides HR services including health benefits by co-employing your workers. The PEO pools employees across multiple businesses to access larger-group plan pricing.
- PEPM Per Employee Per Month
- A pricing model where fees are charged for each enrolled employee per month. Common for TPAs, brokers, and ancillary benefit providers.
- QSEHRA Qualified Small Employer Health Reimbursement Arrangement
- An HRA specifically for small employers (under 50 employees) who don't offer a group health plan. Allows tax-free reimbursement for individual health insurance premiums.
- Self-funded Self-insured
- A plan structure where the employer pays claims directly rather than paying premiums to a carrier. Typically paired with stop-loss insurance to cap maximum exposure. Offers greater transparency and potential cost savings.
- Stop-loss insurance
- Insurance purchased by self-funded employers to limit their financial exposure. Specific stop-loss caps claims per individual; aggregate stop-loss caps total plan claims for the year.
- TPA Third-Party Administrator
- A company that processes claims and handles plan administration for self-funded and level-funded health plans. The TPA does not assume risk; the employer retains the claims risk.
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