Compliance & Jargon Glossary
A – C
ACA (Affordable Care Act)
Plain English: The federal law that requires employers to offer qualifying health coverage, submit reports and avoid penalties.
Formal Definition: Federal legislation defining employer-sponsored health benefits requirements, including coverage mandates, compliance obligations and tax reporting responsibilities.
Coinsurance
Plain English: A percentage of cost an employee pays after the deductible is met (e.g., 20%).
Formal Definition: A fixed percentage of allowable medical costs the enrollee must pay after satisfying the deductible.
Copay
Plain English: A fixed-dollar fee for a service (e.g., $25 per doctor visit).
Formal Definition: A specified per-service charge paid at the time of service under the plan.
D – F
Deductible
Plain English: What the insured pays out-of-pocket before the plan starts paying.
Formal Definition: The predetermined amount the enrollee must reach in covered expenses before the insurance company begins paying benefits.
EAP (Employee Assistance Program)
Plain English: Confidential, no-cost help for employees covering mental health, legal and financial issues.
Formal Definition: A support service provided through the employer that offers third-party counseling for personal and work-related issues.
EOB (Explanation of Benefits)
Plain English: A statement showing what was charged, what the plan covered and what the employee owes.
Formal Definition: Carrier-issued summary detailing billed services, the plan’s payment and the enrollee’s financial responsibility.
ERISA (Employee Retirement Income Security Act)
Plain English: The rulebook calling for plan documentation, disclosures and responsible administration.
Formal Definition: Federal statute requiring fiduciary accountability, benefit plan documentation, participant disclosures and regulatory compliance.
Fringe Benefits
Plain English: Extras like tuition, wellness, or commuter perks, some of which may be taxable.
Formal Definition: Non-wage compensation provided by employers, which may or may not be exempt from taxable income.
FSA (Flexible Spending Account)
Plain English: Pre-tax account for medical or dependent care expenses; use it or lose it if unused at year-end.
Formal Definition: Tax-advantaged account allowing employees to set aside pre-tax dollars for qualified expenses under IRS rules.
G – I
HMO (Health Maintenance Organization)
Plain English: Lower-cost plan that limits you to in-network care and usually needs referrals for specialists.
Formal Definition: Network-based managed-care plan requiring primary care coordination and restricting out-of-network access.
HDHP (High-Deductible Health Plan)
Plain English: Lower monthly premiums but higher out-of-pocket costs before coverage kicks in.
Formal Definition: ACA-compliant plan with higher annual deductibles, eligible for pairing with Health Savings Accounts.
HIPAA (Health Insurance Portability and Accountability Act)
Plain English: Laws around privacy, portability and electronic standards for benefits administration.
Formal Definition: Federal statutes and regulations governing portability of coverage, privacy of PHI and administrative standardization in health benefits.
HSA (Health Savings Account)
Plain English: Tax-advantaged savings account used to pay for medical expenses; must have an HDHP.
Formal Definition: Employee-owned account to pay for qualified medical costs, available only with HDHP eligibility.
HRA (Health Reimbursement Arrangement)
Plain English: Employer-funded account reimbursing medical or insurance costs tax-free.
Formal Definition: Employer-funded arrangement allowing tax-free employee reimbursements for qualified medical expenses.
J – L
Level‑Funded Plan
Plain English: A mix of predictable monthly cost and potential year-end refunds if claims are low.
Formal Definition: Hybrid funding model combining features of self-insurance and fully insured plans, including stop-loss protection and possible refunds.
Metal Tiers (Bronze–Platinum)
Plain English: Labels showing how much of medical costs the plan covers: Bronze (~60%), Silver (~70%), etc.
Formal Definition: ACA-standardized health plan categories indicating actuarial value for expected cost-sharing.
Minimum Essential Coverage (MEC)
Plain English: The lowest level of health insurance that satisfies ACA basic coverage requirements.
Formal Definition: Health coverage that meets the ACA standard for mandatory coverage to avoid penalties.
Minimum Value
Plain English: Plans that cover at least 60% of expected health costs, required for compliance.
Formal Definition: ACA standard ensuring that employer-provided coverage pays at least 60% of expected care costs.
M – O
Medical Underwriting
Plain English: Insurer review of health history before issuing individual plans not used in standard group plans.
Formal Definition: Risk assessment process used by insurers for individual coverage decisions, excluding most employer plans.
MEWA (Multiple Employer Welfare Arrangement)
Plain English: Multiple small employers pool together to offer benefits collectively like a shared plan.
Formal Definition: Federally governed group benefit structure that allows employers to combine resources for benefits coverage.
Premium Tax Credit (PTC)
Plain English: Subsidies for private marketplace coverage, only for people without affordable employer plans.
Formal Definition: ACA tax-exempt credit for eligible individuals purchasing coverage via healthcare exchanges.
PPO (Preferred Provider Organization)
Plain English: More flexibility to see doctors in and out of network without referrals but often at higher cost.
Formal Definition: Managed-care plan with negotiated network discounts and out-of-network flexibility without referral requirements.
Qualified Small Employer HRA (QSEHRA)
Plain English: Small employers (under 50 employees) can reimburse employees for insurance and medical expenses tax-free.
Formal Definition: IRS-approved HRA format allowing employers under 50 to reimburse employee health costs, subject to annual contribution caps.
P – R
POS (Point-of-Service Plan)
Plain English: Uses a primary care doctor like an HMO but allows out-of-network care at higher cost.
Formal Definition: Hybrid managed-care model combining PCP referral structure with optional out-of-network coverage for higher cost-sharing.
Premium Tax Credit (PTC)
Plain English: Subsidies for private marketplace coverage, only for people without affordable employer plans.
Formal Definition: ACA tax-exempt credit for eligible individuals purchasing coverage via healthcare exchanges.
PPO (Preferred Provider Organization)
Plain English: More flexibility to see doctors in and out of network without referrals but often at higher cost.
Formal Definition: Managed-care plan with negotiated network discounts and out-of-network flexibility without referral requirements.
Qualified Small Employer HRA (QSEHRA)
Plain English: Small employers (under 50 employees) can reimburse employees for insurance and medical expenses tax-free.
Formal Definition: IRS-approved HRA format allowing employers under 50 to reimburse employee health costs, subject to annual contribution caps.
S – U
Self-Funded Plan
Plain English: You pay claims as they come instead of fixed premiums, giving more control but more risk.
Formal Definition: Employer-directed plan structure where the employer assumes claims risk, often managed by TPAs and combined with stop-loss insurance.
Stop‑Loss Insurance
Plain English: Insurance that protects you if an unusually large claim pushes costs past a threshold.
Formal Definition: Reinsurance policy limiting employer financial exposure in a self-funded plan.
Section 125 Plan (Cafeteria Plan)
Plain English: Lets employees pay for benefits with pre-tax dollars, saving money—but needs testing.
Formal Definition: IRS-regulated payroll plan structure enabling pre-tax deductions for benefits, with nondiscrimination rules.
TPA (Third-Party Administrator)
Plain English: A vendor that handles claims, billing and compliance for self-funded plans.
Formal Definition: External administrator managing operations and regulatory filing for self-funded benefit plans.
V – Z
ACA (Affordable Care Act)
Plain English: The federal law that requires employers to offer qualifying health coverage, submit reports and avoid penalties.
Formal Definition: Federal legislation defining employer-sponsored health benefits requirements, including coverage mandates, compliance obligations and tax reporting responsibilities.
Coinsurance
Plain English: A percentage of cost an employee pays after the deductible is met (e.g., 20%).
Formal Definition: A fixed percentage of allowable medical costs the enrollee must pay after satisfying the deductible.
Copay
Plain English: A fixed-dollar fee for a service (e.g., $25 per doctor visit).
Formal Definition: A specified per-service charge paid at the time of service under the plan.
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