Benefits Glossary

For plan years before 2019, most people had to pay a fee if they didn’t have health coverage that qualified as MEC. One exception was for people who faced certain "hardships" that prevented them from becoming insured.

Employees usually are not penalized when money is withdrawn from a DC Plan as a result of a hardship, often defined as a death or illness of a family member, educational expenses, sudden uninsured losses, or a need to prevent eviction from one’s primary residence.

Highly Compensated Employee acronym. An employee who received more than the published IRS limit in compensation during the preceding Plan Year and, if the employer so chooses, was in the top 20% of employees when ranked by compensation OR is a greater than 5% owner in the company.

View current IRS limits for retirement plans.

View current IRS limits for health plans.

High-Deductible Health Plan acronym. An HDHP features higher annual deductibles than traditional health plans, such as a PPO or HMO. With the exception of preventive care, covered employees must meet the annual deductible before the plan pays benefits. HDHPs, however, may have significantly lower Premiums than a PPO, HMO or other traditional plan.

The U.S. Department of Health and Human Services acronym. HHS is a federal agency that oversees CMS. The stated mission of HHS is to enhance and protect the health and well-being of all Americans.

Under the ACA starting in 2018, an excise tax on insurance companies that provide high-cost plans. This tax encourages streamlining of health plans to make Premiums more affordable. It is also called the Cadillac Tax.

Health Insurance Portability and Accountability Act of 1996 acronym. A federal law enacted in 1996 which made it easier for individuals to move from job to job without the risk of being unable to obtain health insurance or having to wait for coverage due to a Pre-Existing Medical Condition.

Status once an individual has had 18 months of continuous Creditable Coverage and met other certain requirements. Being a HIPAA Eligible Individual gives a person greater protections when buying individual health insurance than they would otherwise have under state law.

Health Maintenance Organization acronym. HMOs assume both the financial risks associated with providing comprehensive medical services and the responsibility for delivering health care in a particular geographic area, usually in return for a fixed, prepaid fee from members. HMOs emphasize preventive care and cover most types of care in full or subject to a copayment.

Health Reimbursement Arrangement acronym.Also known as Health Reimbursement Account. Unlike HSAs, only an employer may fund an HRA and the funds revert back to the employer when the employee leaves the organization. HRAs are not subject to the same contribution limits as HSAs, and they may be paired with either HDHPs or traditional health plans.

Health Savings Account acronym. HSAs may be opened by employees who enroll in a HDHP. Employees can put money in an HSA, up to an annual limit, using pre-tax dollars. Employers may also contribute funds to these accounts within the prescribed limit. HSA funds may be used to pay for medical expenses, and no tax is owed on funds withdrawn from an HSA to pay for medical expenses. HSAs are individually owned and the account remains with an employee after employment ends.

A pension plan that does not have a traditional defined benefit formula:

• Cash balance plan – For each year of work, employees are credited with contributions to a notional account, along with interest on the contributions, which will provide a set account balance at retirement. Benefits are generally paid as a lump sum.

• Pension equity plan – For each year of work, employees are credited with a percentage of their final average earnings. Benefits are generally paid as a lump sum.