Glossary of Terms

To understand your coverage and choose the best plans, it’s helpful to be familiar with healthcare vocabulary. Here are some common terms.

Allowed Amount – Maximum amount on which payment is based for covered medical services. If an out-of-network provider charges more than the allowed amount, you may have to pay the difference.

Balance Billing – When a healthcare provider bills a patient for the difference between the insurance carrier’s allowed amount and the provider’s charge. If the provider’s charge is $250 and the allowed amount is $170, the provider may bill the patient for the remaining $80. An in-network provider cannot balance bill you for the covered services.

Coinsurance – Your share of the cost of a covered medical service, calculated as a percent of the allowed amount for the service. The medical plan pays the rest of the allowed amount. You are responsible for the coinsurance until you reach your plan’s out-of-pocket maximum.

Copay – A fixed amount which you pay at the time of service. For medical services, you may have a specific charge required by your insurance company for certain medical, dental or vision visits. While copays do not usually count toward the deductible, they do count toward your out-of-pocket maximum. Copays are most common for prescription drugs, office visits, urgent care and emergency room visits.

Deductible – The amount you must pay out of pocket before the health plan begins to pay benefits. The deductible may not apply to all services, such as services that are covered by a copay.

Explanation of Benefits (EOB) – Explains how much you owe, the total cost of care, how much your plan paid and the amount an in-network doctor or other healthcare professional is allowed to charge a member.

Formulary – A list of approved drugs that your insurance company agrees to help cover.

Flexible Spending Account (FSA) – An arrangement that allows participants to pay for certain medical and/or dependent care expenses on a pre-tax basis.

High Deductible Health Plan (HDHP) – Provides coverage for doctor visits, hospital care, emergency care and prescription drugs. You must meet the deductible before the plan begins to pay. To help you cover out-of-pocket costs such as your deductible, you can open a Health Savings Account (HSA) and contribute pre-tax dollars to pay for eligible medical expenses tax-free.

Health Savings Account (HSA) – A tax-advantaged savings account available to those enrolled in a High Deductible Health Plan (HDHP). Funds can be used to pay for qualified healthcare expenses per IRS guidelines. The funds contributed to an account are not subject to federal income tax at the time of deposit.

In-Network Provider – A healthcare provider that has a service contract with your health plan to provide services at a discount. This enables participants to receive care at a reduced rate compared to out-of-network providers.

Out-of-Network Provider – An out-of-network provider does not have a service contract with your health plan. Your out-of-pocket costs may increase, and services may be subject to balance billing.

Out-of-Pocket Maximum – The most you pay during the plan year before your plan begins to pay 100% of the allowed amount. This limit does not include your premium or balance-billed charges.

Participant – A team member, spouse or dependent that is covered under the plans.

Preferred Provider Organization (PPO) – A plan that gives you flexibility to choose an in-network or out-of-network provider. PPO plans may have lower deductibles and copays but higher team member premiums.

Preauthorization – A determination by the health plan that a medical service, prescription drug or durable medical equipment is medically necessary.

Preferred Provider – A preferred provider is a provider who has a service contract with your health insurance company or health plan and has a cost and quality designation.

Preventive Services – The set of services, such as routine screenings and shots, that support maintaining your health. These services are covered in full by your health plan and are based on federal guidelines. They must be administered by an in-network physician.

Primary Care Physician – A physician, including an MD, DO, Internist, Family Practitioner, GP, OB/GYN or Pediatrician who provides a range of medical services.

Specialist – A physician who focuses on a specific area of medicine or group of patients to diagnose, manage, prevent or treat certain types of symptoms and conditions.

Usual, Customary & Reasonable Charges (UCR) – The calculation by a healthcare provider of what they determine is the appropriate fee to pay for a specific healthcare service.

Common Health Plan Acronyms 

ADA – Americans with Disabilities Act.

AD&D – Accidental Death and Dismemberment.

CDHP – Consumer-Driven High Deductible Plan.

COBRA – Consolidated Omnibus Budget Reconciliation Act.

DCAP – Dependent Care Assistance Program.

EAP – Employee Assistance Program. Provides counseling and other services to team members.

EOB – Explanation of Benefits. Issued by insurance companies to participants to explain what amount of their medical expenses was covered.

EOI – Evidence of Insurability. Sometimes called evidence of good health, often required by insurers before issuing an LTD or GTL policy.

FFS – Fee for Service.

FICA – Federal Insurance Contribution Act. Refers to Social Security and Medicare taxes.

FSA – Flexible Spending Account.

GTL Insurance – Group Term Life Insurance.

HDHP – High Deductible Health Plan.

Health FSA – A Flexible Spending Account (FSA) under which participants may obtain reimbursement for medical expenses.

HIPAA – Health Insurance Portability and Accountability Act.

HMO – Health Maintenance Organization.

HRA – Health Reimbursement Arrangement.

HSA – Health Savings Account.

LTD Plan – Long-Term Disability Plan. A plan that provides a partial income-replacement benefit to a team member unable to work because of a disability.

MSA – Medical Savings Account. Also known as an Archer MSA.

MSP Rules – Medicare Secondary Payer Rules. Laws that require Medicare to be the secondary payer in most situations where a group health plan or private insurance carrier also provides coverage.

OOPM – Out-of-Pocket Maximum.

PCE – Preexisting Condition Exclusion.

PHI – Protected Health Information.

PPO – Preferred Provider Organization.

SMM – Summary of Material Modifications. An ERISA-required summary of plan changes that a plan sponsor must distribute to participants and beneficiaries.

SPD – Summary Plan Description. An ERISA-required plan summary that must be furnished to participants and beneficiaries.

STD – Short-Term Disability.

TPA – Third-Party Administrator.