When the time for open enrollment comes around again, the process can seem overwhelming—even if you’ve done it for years. There are numerous terms and acronyms that can cause confusion for many employees and employers throughout the process. Read on for a breakdown of each acronym, what it stands for, and what exactly it entails.
The Affordable Care Act is legislation enacted for the purpose of overall health care reform. The act was created with 3 primary goals in mind:
To make healthcare more affordable to more people.
Expand upon the Medicaid programs.
Support the delivery methods of medical care and in turn lower overall costs.
The Consolidated Omnibus Budget Reconciliation Act is a set of laws put into place by the Department of Labor (DOL) to protect employees from the possibility of losing health insurance coverage. COBRA provides a temporary means of insurance should your employment end. This can apply if you lose coverage as a dependent of a different covered individual, or another qualifying event.
The explanation of benefits is a record that is sent to you following the use of your health insurance benefits. It will break down the costs that you owe and what was covered by the health plan.
Evidence of Insurability, also known as EOI, is an application process where you provide information on the current and past condition of your health, your spouse’s health, and your dependent’s health in order to enroll in certain types of insurance coverage. Evidence of insurability will only apply to some benefits, such as disability and life plans.
The Employee Retirement Income Security Act of 1974 is a federal law that establishes the minimum standards for most retirement and healthcare plans in the private sector. Enforced by the Department of Labor, the law is designed to protect employees who enroll in these employer-sponsored benefits. ERISA noncompliance can be costly to organizations offering qualified plans.
Flexible spending accounts are funds which allow employees to store money tax-free for the purposes of medical or healthcare expenses. Unlike an HSA, you do not need to be enrolled in an HDHP to open an FSA. However, you will not have the same rollover options that you would have with an HSA.
This type of plan offers a solution to individuals who are looking to lower their health care costs. Plan members will pay a lower monthly premium and maintain a higher yearly deductible cost. It is beneficial for employees who have relatively low medical costs.
A health reimbursement arrangement, sometimes called a health reimbursement account, is an employer-funded and owned group health plan. Through HRAs, employees receive tax-free reimbursement for qualified medical expenses up to a certain dollar amount per year.
A health savings account is a personal bank account with significant tax advantages that can be used by an individual to pay for medical expenses that aren’t covered by their insurance, typically on high-deductible health insurance plans (HDHP). It is important to note that, unlike FSA plans, you are able to rollover funds with an HSA.
A health maintenance organization is a type of health insurance plan that provides people with all in-network care. This means that employees or individuals covered by an HMO have one primary care physician (PCP) for appointments and are not incentivized to receive covered care out-of-network.
Open enrollment is the time of year when employers and carriers allow employees to enroll in, or change, their insurance elections.
An out-of-network provider is not included in the standard network maintained by your health plan. Utilizing a provider out of network can lead to overall higher costs.
Out-of-Pocket refers to the amount of money you will pay either before or alongside your health plan provider. The out-of-pocket maximum represents the maximum amount of money an individual will be required to pay over the course of the plan year.
A pharmacy benefit manager manages and administers the drug benefits program within an employer health plan. Essentially, a PBM is a middle man whose job is to help employers get the most out of their drug plan.
Primary Care Provider is any form of health services that provides healthcare support such as preventative services or any necessary treatments. This can include doctors, nurses, or physician assistants.
This is a form of coverage that is intended to help you pay for medication or other prescription drugs.
A preferred provider organization offers users the freedom to choose where they receive care and from whom, both in and out of their network. Additionally, these plans do not require a primary care physician (PCP) to be chosen prior to enrollment.
A qualified health plan is a type of insurance plan that offers crucial benefits and is officially certified by the Health Insurance Marketplace. It must also follow specific pre-established limits on cost-sharing, such as deductibles, copayments, and any out-of-pocket maximum amounts. Lastly, it must meet any other requirements as described in the Affordable Care Act.
Special enrollment periods take place when an individual or their family experiences a qualifying life event. These changes to the person’s circumstances allow them to make adjustments to their benefits no matter the time of year. There are 4 types of qualifying events:
Loss of health coverage
Changes in household such as marriage, divorce or birth of a child
Changes in residence
And other events such as change in income that would impact coverage options.
The summary plan description describes to a participant, all of the benefits and rights that they are entitled to under the plan. It includes information such as the name of the plan as well as the type of plan it is. It will also often include a description of benefits that are included in the plan, along with any and all procedures regarding the benefit claims and means of dissolving claims if needed. All employees are entitled to a copy of the latest summary plan description, upon being hired.
A TPA is either a person or firm that is contracted by the employer to help manage any needs relating to health insurance, such as claims processing, paying providers, and other administrative needs.
You can also stay informed, educated, and up-to-date with open enrollment and other important topics by using BerniePortal’s comprehensive resources:
BerniePortal Blog—a one-stop-shop for HR industry news
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