Benefits Glossary

A method of health insurance payments in which doctors and other health care providers are paid for each particular service performed. Examples of services include tests and office visits.

For Defined Benefit (DB) plans, any person who exercises power and control, management or disposition with regard to a pension plan’s assets, or who has authority to do so or who has authority or responsibility for plan administration.

For Defined Contribution (DC) plans, any person with discretionary authority over plan administration or investments. Plan fiduciaries ordinarily include the employer, trustees, and investment advisers. Fiduciaries must discharge their duties solely in the interest of the plan participants and are accountable for any actions which may be construed by the courts as breaching that trust.

Also known as a Section 125 Cafeteria Plan. An employer-sponsored benefits plan that offers employees a choice between permissible taxable benefits, including cash, and nontaxable benefits such as life and health insurance, vacations, retirement plans and child care. The plan may be funded solely by the employer or through joint employer-employee contributions.

Family and Medical Leave Act acronym.  A federal law that guarantees up to 12 weeks of job protected leave for certain employees when they need to take time off due to serious illness or disability, to have or adopt a child, or to care for another family member. When on leave under FMLA, an employee continues coverage under the employer’s health plan.

The part of an employee’s account balance (employer contributions) that is lost because it is not vested when the employee terminates employment. 

A cover sheet used by insurance providers when they send the Internal Revenue Service (IRS) information about who has health coverage that meets the standards of the Affordable Care Act.

IRS transmittal form that must be filed with the Form 1095-C (Employer-Provided Health Insurance Offer and Coverage) as required under the Affordable Care Act.

Health insurance tax form sent by insurance providers that is used for verification of qualifying health coverage (referred to as “minimum essential coverage”) for some or all months during the year.

Employer-Provided Health Insurance Offer and Coverage is an IRS tax form that each Applicable Large must send at year’s end reporting health coverage offered to employees.

A list of prescription drugs covered by the health plan, often structured in tiers that subsidize low-cost generics at a higher percentage than more expensive brand-name or specialty drugs.

Federal Poverty Level acronym. A measure of income issued each year and used to determine eligibility for Medicaid and CHIP coverage, as well as eligibility for Premium and cost-sharing subsidies in the Exchange and other federal programs.

A Closed Pension Plan that limits future benefit accruals for some or all active plan participants. Some frozen plans may not allow participants to accrue any additional benefits, while others may change the prospective benefit formula in such a way as to limit future benefit accruals.

Flexible Spending Account or Arrangement acronym. FSAs are accounts offered and administered by employers that provide a way for employees to set aside, out of their paycheck, pretax dollars to pay for medical expenses not covered by the employer’s health plan. FSAs can also be provided to cover childcare expenses, but those accounts must be established separately from medical FSAs.

Funding Target Attainment Percentage acronym. It is calculated as the Actuarial Value of Assets divided by the Funding Target and is expressed as a percentage. The FTAP is one measure of how well a pension plan is funded on a current basis.

Full-Time Employee acronym. A FTE is generally one who is employed an average of 30 or more hours per week for more than 120 days in a year.

In an insured plan, the employer contracts with another organization to assume financial responsibility for the costs of enrollees’ medical claims and for all incurred administrative costs.

A statement clarifying the goals and objectives for funding a pension plan, and how the plan sponsor will achieve them. The policy may include the amounts and timing of future contributions.

The present value (determined as of the date of the Actuarial Valuation) of all benefits under the pension plan that have accrued as of the first day of the Plan Year based on prescribed actuarial assumptions and cost methods.