Healthcare Terms Every HR Professional Should Know
By Lyssa Test
ACA, HRA, PPO—sometimes it feels like employee benefits has its own language. If you’ve ever scratched your head at a benefit acronym, it’s likely that your employees have too. We’ve put together a glossary of the most popular, albeit confusing, employee benefits and healthcare terms every HR professional should know so you can find all the answers you need.
Affordable Care Act (ACA)
The Patient Protection and Affordable Care Act, often shortened to the Affordable Care Act and colloquially referred to as Obamacare, was a landmark health reform legislation passed in 2010. The act was designed to make health insurance more accessible and affordable to Americans, while also expanding the Medicaid program.
The maximum amount that an insurance plan will cover for a service. If a health care provider charges more than the plan’s allowed amount, the patient will be responsible for paying the difference. May also be called eligible expense, payment allowance, or negotiated rate.
Also known as an automatic contribution arrangement. Automatic enrollment allows an employer to enroll an employee in an employer’s plan unless the employee elects otherwise. A common example is an automatic salary deduction for 401(k) or SIMPLE IRA plan. Employees can decide not to contribute or to increase or decrease their contribution rate.
The difference between what a health care provider charges for a service and the insurance carrier's allowed amount.
Paid or unpaid leave taken by an employee to grieve the loss of a close family member, relative, or friend.
Once the deductible is reached, you and your insurance company share the remaining cost of a healthcare service. Your portion is a percentage of the total cost. A 80/20 coinsurance would mean your insurance company covers 80 percent of the cost and you would be liable for 20 percent.
A fixed amount you pay for a covered healthcare service, like a $15 co-pay for an annual checkup.
Employees earn full access to company benefits on a specified date, not after a period of time as would be the case with gradual vesting. At a company with a two-year cliff vesting schedule, an employee wouldn’t own employer 401(k) contributions until they’ve worked at the company for at least two years.
Many companies offer employees the option to buy equity in the company as a form of additional compensation.
The amount a patient covers for a healthcare service before the insurance plan begins to pay. Deductibles may not apply for all services, check your plan details for what services are covered.
Durable Medical Equipment (DME)
Equipment and/or supplies for everyday or extended use, like oxygen equipment, wheelchairs, crutches, and blood testing strips.
Retiring before the age of 65. Individuals aren’t eligible for Medicare until age 65, so they will have to find alternative health insurance coverage until they meet the age minimum.
Emergency Medical Condition
A serious illness or injury that requires immediate medical attention to avoid severe harm.
Employee Assistance Programs (EAPs)
A voluntary, employer-funded program offering free and confidential assessments, counseling, outside referrals, and follow-up services to employees.
Exclusive Provider Organization (EPO)
An insurance plan where healthcare providers must be “within network.” You cannot go to out-of-network providers, except in emergencies.
Healthcare services that your insurance doesn't cover. You will have to cover 100 percent of the costs yourself.
Family Leave, Paid
Currently, four states offer paid family leave—California, New Jersey, New York, and Rhode Island. Employees can take time off to care for a family member and still collect wages.
Family Leave, Unpaid
Under the Family and Medical Leave Act (FMLA), employees can take up to 12 weeks of unpaid leave a year to care for a family member.
The traditional way to structure employer-sponsored insurance plans. An employer pays a premium to the insurance provider who in turn supplies employees health care benefits. While a fully-insured plan is often more expensive for an employer, it is less risky than a self-insured health plan.
A prescription drug with the same active ingredients, dosage, and effects as a brand-name drug and usually come at a cheaper price.
A vesting schedule in which an employee gains a percentage ownership of employer contributions overtime. Common for retirement plan accounts, pensions, and stock options.
Health services that help one keep or improve skills and functioning for daily living. These include physical and occupational therapy, speech therapy, and treatments for a variety of other disabilities.
Health Maintenance Organization (HMO)
A type of insurance combining a range of coverage in a group basis. A group of doctors and other medical professionals offer care through the HMO for a fixed monthly fee with no deductibles. Only visits to professionals within the HMO network are covered.
Health Reimbursement Accounts (HRA)
An employer-funded plan that reimburses employees for qualified medical expenses not covered by insurance.
Health Savings Accounts (HSAs)
A tax-deductible employee-funded savings account available to subscribers of a high-deductible health plan (HDHP).
High Deductible Health Insurance Plan (HDHP)
A plan with lower premiums and higher deductibles than a traditional health plan. Can be combined with a health savings account (HSA) so you can use pre-tax money to pay for the higher costs.
Services to comfort and support individuals in the last stages of a terminal illness.
The percent you pay for covered healthcare services to providers who contract with your health insurance. In-network co-insurance typically costs less than out-of-network coinsurance.
A set amount that you pay for covered services to providers who contract with your health insurance. In-network co-payments typically cost less than out-of-network co-payments.
Jury Duty Leave
Employees must be given time off when summoned to serve on a jury. Employee compensation regulations vary by state.
Long-Term Insurance (LTC)
Coverage providing intensive care for individuals over the age of 65 with chronic illnesses or disabilities. Examples include nursing-home care, home-health care, personal or adult care.
Health services or supplies needed to prevent or treat an injury, illness, or symptoms that meet accepted standards of medicine.
Paid employee leave for active or inactive military duty with the National Guard or Armed Forces. Up to 15 days a year may be used for active duty or training.
The providers, suppliers, and facilities contracted with your insurance plan to provide services.
A provider without a contract with your insurance plan. It’s generally more expensive to see a non-preferred provider.
Open Access Plan (OAP)
Combines Health Maintenance Organizations (HMO) and traditional health coverage. It offers Tier I and Tier II in-network providers, while Tier III benefits are out-of-network and come with higher out-of-pocket costs. OAPs give you lots of flexibility as can use a provider from any tier and still receive benefits.
The percent you pay for covered healthcare services to providers who don’t contract with your health insurance. Out-of-network coinsurance typically costs more than in-network.
The most you'll pay before your insurance begins to pay 100% of the allowed amount. Your premium or services that your plan doesn't cover are not included.
A leave of absence that doesn’t fit into another leave category (ie. vacation, family leave, maternity/parental leave, bereavement, etc.).
Medical services provided by a licensed medical physician (Medical Doctor (M.D.) or Doctor of Osteopathic Medicine (D.O.)).
A benefit your employer or union provides to alleviate your healthcare costs.
Point-of-Service Plan (POS)
POS plans are a combination of HMOs and PPOs. You pay no deductible, have a minimal co-pay, and have a primary care physician who can give you in-network referrals. If you decide to go out of network, the plan acts more like a PPO, with a deductible and a higher co-pay.
Preferred Provider Organization (PPO)
Plans that allow members to use any healthcare professional without a referral. Staying in-network means smaller copays and more coverage. If you go out-of-network, you'll have higher out-of-pocket costs, and not all services may be covered.
A decision by your insurer that a service or drug is medically necessary to treat your condition. Your plan may require preauthorization before you receive specific services.
The amount that you and your employer pay for your health insurance. Typically paid monthly.
Primary Care Physician
A physician (M.D or D.O.) who practices general medicine and provides a variety of medical services.
A physician (M.D. or D.O.), health care professional or facility that is licensed and certified as required by state law.
Surgery needed to correct or restore a part of the body aesthetically or functionally due to birth defects, accidents, or medical conditions.
Services that help a person maintain or reclaim skills and functioning for daily living lost after a debilitating illness or injury. Examples include occupational therapy, speech therapy, and select psychiatric services.
An insurance plan in which the employer does not use an insurance carrier and assumes the financial risk of providing employee health care benefits. Also known as administrative services only (ASO). See also: Fully-insured plan.
Employees can take time off when they are too sick to work. Company policies vary, but usually employees get a predetermined amount of sick days to use throughout the year.
A savings account set up by employers to help employees save for retirement. Employees can contribute pre-tax contributions to the account and employers may choose to match a certain percentage of contributions.
Skilled Nursing Care
Licensed nurses who provide long or short-term care to patients in a nursing home or their home.
A physician that focuses on a specific area medicine who can diagnose, prevent, or treat health conditions.
Summary of Benefits and Coverage (SBC)
A straightforward summary of an insurance plan’s costs and coverage.
Usual, Customary, and Reasonable (UCR)
The amount paid for a healthcare service in a geographic area based on what local providers charge. Insurers use it to determine what a reasonable charge is.
Care for a serious condition or injury needing care right away, but that is not life threatening enough to require emergency room care.
The time that must pass before a new employee and his or her dependents are eligible for insurance coverage. The period is often about three months, or 90 days.
A employer or insurance carrier-funded program incentivizing employee health and fitness through discounted gym memberships, gift certificates for preventive care, and more.
Now that you’re a healthcare benefits vocab pro, it’s time to put what you’ve learned to the test. Do you have a healthcare benefits package that your employees love? Download our Complete Guide to Employee Benefits to learn how to build a comprehensive plan that helps you attract and retain top talent.
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