Benefits Glossary

A termination of employment before a participant is eligible for Normal Retirement, but after he is eligible for an accrued benefit. Early Retirement eligibility is usually based on an age or a combination of age and service. An Early Retirement benefit often reflects a reduction factor for the number of years by which the Early Retirement age precedes the Normal Retirement age.

Amounts contributed to a plan by the employer at the employee's election and which, except to the extent they are designated Roth or after-tax contributions, are excludable from the employee's gross income. Elective deferrals include deferrals under 401(k) and 403(b) Plans.

An Actuary who has satisfied the qualifications set forth in the regulations of the Joint Board for the Enrollment of Actuaries and who has been approved by the Joint Board to perform actuarial services under ERISA.

Employee Plans Compliance Resolution System acronym. The IRS offers the following three programs to identify and correct plan mistakes and avoid the consequences of plan disqualification:

• Self-Correction Program (SCP) - permits a Plan Sponsor to correct certain plan failures without contacting the IRS or paying any fee.
• Voluntary Correction Program (VCP) - permits a Plan Sponsor to, any time before audit, pay a fee and receive IRS approval for correction of plan failures.
• Audit Closing Agreement Program (Audit CAP) - permits a Plan Sponsor to pay a sanction and correct a plan failure while the plan is under audit.

Exclusive Provider Organization acronym. An EPO is a plan that obligates employees to use their providers exclusively to receive coverage, in contrast to a PPO which merely offers a financial incentive for enrollees to use preferred providers. An EPO is a specific type of PPO plan that can be either self-insured or insured through an insurance company.

Employee Retirement Income Security Act acronym. ERISA, passed in 1974, is federal legislation which is designed to protect the interests of employees participating in employer-sponsored benefit plans.

For pension plans, ERISA also sets minimum standards for plan design to increase the security of private sector employees’ benefits, including requirements for pension plan disclosures, participation standards, vesting rules, funding and administration.

Employee Stock Ownership Plan acronym. A plan in which the employer pays a designated amount into a fund which then is invested primarily in company stock. Stock is distributed to employees according to a formula.

Employer Shared Responsibility Payment acronym. ACA requires certain employers with at least 50 FTEs to offer health insurance coverage to its FTEs (and their Dependents) that meets certain minimum standards set by the ACA or to make a shared responsibility tax payment called the ESRP.

ACA requires all health plans offered in the individual and small group markets, both inside and outside the Marketplace, offer a comprehensive package of items and services. Essential Benefits include services within core categories, including hospitalization, outpatient services, maternity and newborn care, prescription drugs, emergency care and preventive and wellness services.

ACA created “American Health Benefit Exchanges” in each state to assist individuals and small businesses in comparing and purchasing a Qualified Heath Plan. Exchanges determine who qualifies for subsidies and make subsidy payments to insurers on behalf of individual receiving them. They also accept applications for other health coverage programs, such as Medicaid and the CHIP.

The review of a health plan’s determination that a health care service or treatment is not or was no medically necessary. The review is done by a person or entity with no affiliation or connection to the health plan. ACA requires all health plans to provide an external review process that meets minimum standards.