Benefits Glossary

A fixed dollar amount that an insured person pays out of pocket each year before the plan will begin reimbursing for covered medical expenses. Plans may have both individual and family deductibles. Some plans have separate deductibles for specific services.

An employee group retirement plan established and maintained by an employer that uses a predetermined formula to calculate the amount of an employee’s retirement benefit. The benefit formula may take into consideration an employee’s years of service and/or pay during employment. No individual accounts are maintained. Often referred to as pension plans.

A retirement plan where employers, employees, or both make regular contributions, and future benefits are based on how much money goes into the plan and how the plan's investments perform. DC Plans provide an individual retirement account for each participant, with employees bearing the risk of investment losses. The 401(k) is a well-known example of a DC Plan.

A dependent, usually a spouse or child, of an insured person who is eligible for insurance coverage.  Under the ACA, individuals may be able to claim a Premium Tax Credit to help cover the cost of coverage for themselves and their dependents.

An audit which typically involves hiring an outside vendor to verify the eligibility of all enrolled dependents in an employer’s health plan. This is sometimes also referred to as a Dependent Audit, Verification Audit, or Dependent Verification Audit.

A termination of employment as a result of a totally disabling injury or illness occurring before a participant is eligible for Early Retirement or Normal Retirement. Pension plans may provide additional benefits due to a Disability Retirement, and such benefits may be payable immediately or deferred.

All tax qualified retirement plans must be administered in compliance with numerous regulations to comply with IRS guidelines. IRS guidelines for DB and DC plans require a number of compliance tests to ensure that plan coverage and benefits do not favor HCEs. DC Plan compliance tests include ACP and ADP tests. The common term for these compliance tests is called Discrimination Testing.

A broad approach to coordinating the entire disease treatment process for a patient. The process is intended to reduce health care costs and improve the quality of life for individuals by preventing or minimizing the effects of a disease, usually a chronic condition.

A coverage gap which exists in most plans with Medicare prescription drug coverage (Medicare Part D). After the insured and the plan have spent a certain amount of money for covered drugs, the insured has to pay all costs out-of-pocket up to an annual limit. After costs reach this limit, the coverage gap ends and the plan helps pay for covered drugs again.