{"id":4678,"date":"2016-04-04T10:47:40","date_gmt":"2016-04-04T15:47:40","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/employment-law-and-human-resources\/dictionary-employee-health-insurance.html"},"modified":"2024-06-06T05:06:52","modified_gmt":"2024-06-06T10:06:52","slug":"dictionary-employee-health-insurance","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/employment-law-and-human-resources\/dictionary-employee-health-insurance.html","title":{"rendered":"Glossary: Employee Health Insurance"},"content":{"rendered":"\n
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Glossary: Employee Health Insurance<\/h1>\n
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\n By Susan Buckner, J.D.<\/a> | Legally reviewed by Susan Mills Richmond, Esq.<\/a>\n | Last updated\n
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Editorial Note: We earn a commission from affiliate partner links on FindLaw. Commissions do not affect the editorial integrity of our legal content.<\/p>\n\n <\/div>\n \n

\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n

Glossary: Employee Health Insurance<\/h2>\r\n

When your employer offers group health insurance, it often comes with a long list of limitations, options, and restrictions. Some of these terms can be confusing, especially those defining who has coverage. This glossary helps explain some common terms found in typical health insurance plans.<\/p>\r\n\r\n

Affiliation Period<\/p>\r\n<\/th>\r\n

The time before health insurance coverage provided by an HMO becomes effective. The affiliation period runs concurrently with any waiting period for coverage under the plan. The affiliation period can’t be longer than two months from your enrollment date.<\/p>\r\n<\/td>\r\n<\/tr>

Affordable Care Act<\/a> (ACA)<\/p>\r\n<\/th>\r\n

Also called Obamacare, the Patient Protection and Affordable Care Act (ACA) requires insurers to offer multiple levels of insurance for all applicants. It also requires insurance companies to cover pre-existing conditions.<\/p>\r\n<\/td>\r\n<\/tr>

COBRA<\/a><\/p>\r\n<\/th>\r\n

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) is a federal law allowing qualified employees to continue their group health insurance when they leave work. COBRA continuation coverage generally lasts for a limited period of time, 18 to 36 months, depending on the type of coverage.<\/p>\r\n<\/td>\r\n<\/tr>

Covered Employee<\/p>\r\n<\/th>\r\n

An individual with a group health plan subject to COBRA is a covered employee. Covered employees must have lost their jobs due to a qualifying event.<\/p>\r\n<\/td>\r\n<\/tr>

Creditable Coverage<\/p>\r\n<\/th>\r\n

Health coverage you had in the past. Any other health insurance not interrupted by a significant break in coverage applies to your new coverage. Your prior insurer must issue a certificate of creditable coverage upon request as proof of your insurance.<\/p>\r\n<\/td>\r\n<\/tr>

Deductible<\/p>\r\n<\/th>\r\n

The amount you must pay out-of-pocket for your medical treatment. A high annual deductible often means lower monthly or annual premiums, but the patient pays more for routine medical care.<\/p>\r\n<\/td>\r\n<\/tr>

Disability Insurance<\/a><\/p>\r\n<\/th>\r\n

Workplace insurance provided by employers to provide partial wage replacement for workers who can’t work due to a non-work-related illness or injury. Five states (California, Hawaii, New Jersey, New York, and Rhode Island) require employers to provide short-term disability insurance.<\/p>\r\n<\/td>\r\n<\/tr>

Drug Formulary<\/p>\r\n<\/th>\r\n

A list of all the medications your group health insurance provides. Most formularies cover generics and common brand names.<\/p>\r\n<\/td>\r\n<\/tr>

Employee Assistance Programs (EAP)<\/p>\r\n<\/th>\r\n

Employee assistance programs help workers with work-life balance issues. These can include housing, mental health, childcare, and other matters. EAPs can help reduce healthcare costs and improve employee retention.<\/p>\r\n<\/td>\r\n<\/tr>

Employee Benefits Package<\/p>\r\n<\/th>\r\n

An employee benefits package is one way that small business owners attract top talent. Benefits packages include health insurance, pensions, and other perks like paid time off.<\/p>\r\n<\/td>\r\n<\/tr>

Employee Organization<\/p>\r\n<\/th>\r\n

Any organization in which employees participate. Employee organizations exist for collective bargaining agreements and to improve employee benefit plans and group health care plans.<\/p>\r\n<\/td>\r\n<\/tr>

Employer Contributions<\/p>\r\n<\/th>\r\n

The amount that the employer pays towards your healthcare coverage. The employer usually pays a portion of the premium and takes the rest out of the employee’s paycheck.<\/p>\r\n<\/td>\r\n<\/tr>

Enrollment Date<\/p>\r\n<\/th>\r\n

The date on which the employee entered or submitted the policy. This differs from the effective date when the coverage becomes active.<\/p>\r\n<\/td>\r\n<\/tr>

ERISA<\/a><\/p>\r\n<\/th>\r\n

The Employee Retirement Income Security Act of 1974 (ERISA) regulates employee benefit plans. Group health plans, pensions, and other plans fall under ERISA.<\/p>\r\n<\/td>\r\n<\/tr>

Flexible Spending Account (FSA)<\/p>\r\n<\/th>\r\n

An employee benefit offered as an insurance option. The employer withholds money from the employee’s pay up to a preset limit. Employees can use these funds for out-of-pocket medical expenses, such as copayments and deductibles.<\/p>\r\n<\/td>\r\n<\/tr>

Genetic Information<\/p>\r\n<\/th>\r\n

Data collected from your genetic material. Genetic information can be taken from genetic testing, or from medical exams and family histories.<\/p>\r\n<\/td>\r\n<\/tr>

Genetic Information Nondiscrimination Act<\/a> (GINA)<\/p>\r\n<\/th>\r\n

Federal legislation prohibiting discriminating against individuals in the workplace based on known or perceived genetic characteristics.<\/p>\r\n<\/td>\r\n<\/tr>

Group Health Insurance Plan<\/p>\r\n<\/th>\r\n

An employee benefit plan offered by an employer or a union. The plan provides medical care to employees and their dependents directly or through insurance, such as an HMO or PPO, reimbursement, or otherwise.<\/p>\r\n<\/td>\r\n<\/tr>

Health Insurance Premiums<\/p>\r\n<\/th>\r\n

The monthly or annual payments paid to the insurance carrier to maintain the insurance policy. Premiums vary depending on how much the insured must pay out-of-pocket for medical care. A high-deductible policy has lower premiums than a low-deductible policy.<\/p>\r\n<\/td>\r\n<\/tr>

Health Savings Account (HSA)<\/p>\r\n<\/th>\r\n

Health savings accounts let employees with high-deductible policies set aside money on a pre-tax basis to cover medical expenses. Unused funds roll over to the following year. Employees can transfer HSA funds if they transfer to a new job.<\/p>\r\n<\/td>\r\n<\/tr>

Health Reimbursement Arrangement (HRA)<\/p>\r\n<\/th>\r\n

Some employers that offer health insurance may opt to reimburse their employees for out-of-pocket expenses each year. This allows the employer to select a plan with lower premiums and higher deductibles.<\/p>\r\n<\/td>\r\n<\/tr>

HIPAA<\/a><\/p>\r\n<\/th>\r\n

The Health Insurance Portability and Accountability Act (HIPAA) ensures employees’ health coverage follows them when they change jobs. It also prevents new insurance companies from denying coverage based on pre-existing conditions. HIPAA also safeguards medical record privacy.<\/p>\r\n<\/td>\r\n<\/tr>

HMO<\/p>\r\n<\/th>\r\n

A Health Maintenance Organization (HMO) is a legal entity consisting of participating medical providers. HMOs provide medical care to a given population group for a fixed fee per person. HMOs are alternatives to traditional indemnity plans.<\/p>\r\n<\/td>\r\n<\/tr>

Late Enrollee<\/p>\r\n<\/th>\r\n

An employee who enrolls in a group health plan on a date outside the open enrollment period. Late enrollees may be subject to pre-existing exclusion conditions.<\/p>\r\n<\/td>\r\n<\/tr>

Life Insurance<\/p>\r\n<\/th>\r\n

An employee benefit that provides the employee’s beneficiaries with a lump-sum payout upon the employee’s death.<\/p>\r\n<\/td>\r\n<\/tr>

Mental Health Parity Act (MHPA)<\/p>\r\n<\/th>\r\n

The Mental Health Parity Act (MHPA) provides that large-group healthcare plans can’t place lifetime or annual limits on mental health benefits that are more restrictive than limits imposed on other medical benefits.<\/p>\r\n<\/td>\r\n<\/tr>

Newborns’ and Mothers’ Health Protection Act<\/p>\r\n<\/th>\r\n

The Newborns Act protects the time mothers and newborn infants have in the hospital following childbirth. In general, insurers may not limit benefits to less than 48 hours after a vaginal delivery or 96 hours after cesarean delivery. The time runs from the delivery, not admission.<\/p>\r\n<\/td>\r\n<\/tr>

Open Enrollment<\/p>\r\n<\/th>\r\n

The designated period when eligible employees may add, change, or drop their employer-provided health insurance. Open enrollment typically lasts one month and often coincides with federal Medicare\/Medicaid enrollment.<\/p>\r\n<\/td>\r\n<\/tr>

Professional Employer Organization (PEO)<\/p>\r\n<\/th>\r\n

A PEO is like a management company for small business owners. These agencies provide human resource management for businesses needing health insurance, payroll, workers’ compensation, and other assistance, but that are not big enough for their own full-time HR department.<\/p>\r\n<\/td>\r\n<\/tr>

Plan Administrator<\/p>\r\n<\/th>\r\n

The person who manages the health insurance plan. The employer can designate an administrator, or the sponsor can be the administrator.<\/p>\r\n<\/td>\r\n<\/tr>

Plan Sponsor<\/p>\r\n<\/th>\r\n

The employer or other organizer of the benefit plan is the "sponsor" of the plan, including group health plans.<\/p>\r\n<\/td>\r\n<\/tr>

Preferred Provider Organization (PPO)<\/p>\r\n<\/th>\r\n

A PPO is a health insurance network that contracts with participating doctors, labs, and hospitals to provide medical care.<\/p>\r\n<\/td>\r\n<\/tr>

Pre-existing Condition<\/p>\r\n<\/th>\r\n

An illness or condition that existed before an individual’s first day of coverage under a group health plan. Under the ACA and HIPAA, insurance companies can’t refuse coverage due to pre-existing conditions and may only limit coverage for up to 12 months.<\/p>\r\n<\/td>\r\n<\/tr>

Qualified Beneficiary<\/p>\r\n<\/th>\r\n

Qualified health insurance beneficiaries include covered employees, spouses, and dependent children. Some plans may include retired employees and their spouses and dependent children.<\/p>\r\n<\/td>\r\n<\/tr>

Qualifying Event<\/p>\r\n<\/th>\r\n

A "qualifying event" may mean an incident that causes an employee to be eligible for special enrollment, such as the birth of a child. A "qualifying event" may also be an incident that causes an employee to lose health coverage, such as termination.<\/p>\r\n<\/td>\r\n<\/tr>

Retirement Plans<\/p>\r\n<\/th>\r\n

Another benefit offered to full-time employees is retirement plans, which may include pensions, profit-sharing, stock options, and 401(k) plans.<\/p>\r\n<\/td>\r\n<\/tr>

Significant Break in Coverage<\/p>\r\n<\/th>\r\n

Any extended period during which you had no health insurance. The standard period for a "significant break" is 63 days, excluding any waiting periods between enrollment and the effective date.<\/p>\r\n<\/td>\r\n<\/tr>

Small Business Health Insurance<\/p>\r\n<\/th>\r\n

Health insurance intended for businesses with fewer than 50 employees. This coverage has variable pricing and offers pooling options or other ways to keep premiums low for small business employees and owners.<\/p>\r\n<\/td>\r\n<\/tr>

Summary Plan Description (SPD)<\/p>\r\n<\/th>\r\n

A document that the plan administrator provides to participants and beneficiaries. The SPD explains the plan coverage and the rights and responsibilities of participants and beneficiaries.<\/p>\r\n<\/td>\r\n<\/tr>

Special Enrollment<\/p>\r\n<\/th>\r\n

The opportunity to enroll in a group health plan when certain work or life events occur, regardless of the plan’s regular enrollment dates.<\/p>\r\n<\/td>\r\n<\/tr>

Tax Credit<\/p>\r\n<\/th>\r\n

An incentive given to employers by the IRS for offering employee benefits. When purchasing insurance, employers should discuss any tax credits and other benefits with their insurance agent.<\/p>\r\n<\/td>\r\n<\/tr>

Waiting Period<\/p>\r\n<\/th>\r\n

The time between the day the employee becomes eligible for coverage, and the day the health insurance becomes effective. The ACA requires coverage to begin within 90 calendar days after the employee becomes eligible. For instance, if you must work 30 days to become eligible, the waiting period begins on the 31st day after your hire date, and your coverage must be effective within the next three months. Employers may not delay for their own convenience. For example, if the next billing date after your effective date is five days later, they cannot withhold your coverage until that date.<\/p>\r\n<\/td>\r\n<\/tr>

Wellness Programs<\/p>\r\n<\/th>\r\n

An employee perk encouraged by insurance companies as a way to improve employee health and well-being and lower insurance costs. Wellness programs include in-house fitness programs, nutrition plans, stress management, mental health awareness, and related programs.<\/p>\r\n<\/td>\r\n<\/tr>

Workers’ Compensation<\/p>\r\n<\/th>\r\n

All states, except Texas, require employers with more than one employee to carry workers’ compensation insurance. Workers’ compensation is separate from health insurance. It protects workers and employers by covering medical care and lost wages for job-related injuries and illnesses.<\/p>\r\n<\/td>\r\n<\/tr><\/tbody><\/table>\r\n

Get Legal Advice<\/h2>\r\n

If you have any questions or concerns about your employee health insurance, be sure to consult an employment law attorney<\/a>. They can answer any questions you have about your insurance rights.<\/p>\r\n

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