Glossary of Benefits Terms
Glossary of Top 20 Terms Related to Employee Benefits Insurance
A glossary of 20 of the most important terms you’ll encounter with your plans sponsored by The Bishop's School:
1. Premium
The amount paid (usually monthly) to keep the insurance coverage active. Employers often pay a large portion; employees pay the rest through payroll deduction.
2. Deductible
The amount you must pay out of pocket for covered services before the insurance plan begins to pay. Higher deductibles usually mean lower premiums.
3. Copayment (Copay)
A fixed dollar amount you pay for a specific service (e.g., $30 for a primary care visit or $15 for a generic prescription) at the time of service.
4. Coinsurance
The percentage of costs you pay after meeting your deductible (e.g., plan pays 80%, you pay 20%). Different from a fixed copay.
5. Out-of-Pocket Maximum (OOP Max)
The most you will pay in a plan year for covered services (deductibles + copays + coinsurance). Once reached, the plan generally pays 100% of covered expenses for the rest of the year.
6. In-Network / Out-of-Network
Providers and facilities that have contracted rates with the insurer (in-network) vs. those that do not (out-of-network). Using in-network providers usually results in much lower costs.
7. HMO (Health Maintenance Organization)
A plan type that typically requires you to choose a primary care physician (PCP) and get referrals for specialists. Coverage is generally limited to the plan’s network (except emergencies).
8. PPO (Preferred Provider Organization)
A more flexible plan type that allows you to see providers in or out of network without referrals, though in-network care costs less.
9. EPO (Exclusive Provider Organization)
A plan similar to a PPO but with little or no coverage for out-of-network care (except emergencies). No referrals usually required.
10. HDHP (High-Deductible Health Plan)
A plan with a higher deductible (and often lower premium) that qualifies the employee to contribute to a Health Savings Account (HSA).
11. HSA (Health Savings Account)
A tax-advantaged savings account available only with an HDHP. Contributions are pre-tax, grow tax-free, and can be used tax-free for qualified medical expenses. The account is owned by the employee and is portable.
12. FSA (Flexible Spending Account)
A pre-tax account used for eligible medical, dental, vision, or dependent care expenses. Funds are “use-it-or-lose-it” (with limited carryover or grace period options) and are generally not portable if you leave the employer.
13. HRA (Health Reimbursement Arrangement)
An employer-funded account that reimburses employees for qualified medical expenses. Unlike an HSA, the employer owns the account and sets the rules.
14. Open Enrollment
The annual period (usually in the fall) when employees can elect, change, or drop benefit coverage for the upcoming plan year without a qualifying life event.
15. Qualifying Life Event (QLE)
A change in personal circumstances (marriage, birth/adoption, loss of other coverage, divorce, etc.) that allows mid-year enrollment or changes outside of open enrollment.
16. COBRA
A federal law that lets employees and their dependents temporarily continue group health coverage after certain events (job loss, reduction in hours, etc.), usually at full cost plus an administrative fee.
17. Summary of Benefits and Coverage (SBC)
A standardized, easy-to-read document that summarizes key plan features, costs, and coverage examples so employees can compare plans.
18. Explanation of Benefits (EOB)
A statement from the insurer after a claim is processed that shows what was billed, what the plan paid, and what you may still owe. It is not a bill.
19. Formulary
The plan’s list of covered prescription drugs, usually organized into tiers with different copay or coinsurance levels (generic, preferred brand, non-preferred, specialty, etc.).
20. Prior Authorization (Prior Auth)
A requirement that the insurer approve certain services, procedures, or medications in advance before they will be covered.
These terms cover the core cost-sharing, plan design, account-based, and administrative concepts most employees encounter with group health benefits. Definitions can vary slightly by plan and carrier, so always check your specific plan documents or Summary of Benefits and Coverage for exact details.
