Benefits Glossary

An eligible employee who is covered by a retirement plan.

The money that an employee contributes to their DC Plan account.

Pension Benefit Guaranty Corporation acronym. This federal corporation was established by ERISA to provide a safety net for participants in private-sector pension plans. The PBGC guarantees basic benefits under the plan in the event that the employer-sponsored pension plan becomes insolvent. Plan Sponsors are required to pay premiums to the PBGC each Plan Year for this benefit guarantee.

A regular payment made during a person's retirement from a pension plan fund to which that person and/or the person’s employer has contributed to during their working life.

For Defined Benefit (DB) plans, the person(s) or entity ultimately responsible for the oversight, management and administration of the pension plan, and the administration and investment of the pension fund. The Plan Administrator may delegate some or all of its responsibilities for administering the pension plan and administering and investing the pension fund to various service providers.

For Defined Contribution (DC) plans, the person(s) or entity identified in the Plan Document as having responsibility for the oversight, management and administration of the DC Plan. It could be the employer, a committee of employees, a company executive or someone hired for that purpose. The Plan Administrator may delegate some or all of its responsibilities to various service providers.

A comprehensive legal document that sets forth the rights of the plan’s participants and beneficiaries and guides the Plan Sponsor and Plan Administrator in making decisions and executing their responsibilities.

The company or employer that establishes a plan for the benefit of the organization’s employees.

The process, prescribed by the IRS, that a Plan Sponsor must go through to end a pension plan. PBGC coverage ends once a plan is terminated. There are two ways an employer can terminate its pension plan:

• Standard termination – occurs when a pension plan has enough money to pay all benefits owed to participants. The plan must either purchase an annuity from an insurance company to provide the participants’ benefits or offer participants a single lump-sum payment of the entire benefit.

• Distress termination – occurs when a pension plan is not fully funded and the employer is in financial distress. The employer must prove to a bankruptcy court or the PBGC that it cannot remain in business unless the plan is terminated. PBGC will take over the plan as trustee and pay guaranteed plan benefits using plan assets and PBGC guarantee funds.

The one-year period for which plan records are maintained. The Plan Year may be a calendar year, the employer’s fiscal year or another one-year period specified in the Plan Document.

Point-of-Service acronym. A POS plan combines features of PPOs and traditional HMOs. POS enrollees receive more generous benefits for services within the network and for specialist care authorized by their primary care physicians. Benefits are less generous for care received outside the network and for self-referrals.

Pension Protection Act of 2006 acronym. The PPA made significant reforms to U.S. pension laws and regulations, sought to hold Plan Sponsors more accountable for underfunded pension plans, and attempted to strengthen the overall pension system and reduce reliance on the PBGC.

Patient Protection and Affordable Care Act acronym.  Comprehensive health care reform legislation signed into law by President Obama on March 23, 2010. Also known as the Affordable Care Act (ACA) or Obamacare.

Preferred Provider Organization acronym. A PPO is a type of managed care health insurance plan that provides maximum benefits if an employee visits an in-network physician or provider, but still provides some coverage for out-of-network providers. Additional costs for out-of-network providers may be in the form of higher deductibles, higher coinsurance rates, or both, or undiscounted charges.

An illness or medical condition for which an individual received medical advice, diagnosis, care or treatment prior to the date of enrollment in a health benefit plan.

The amount that must be paid for a health insurance plan by covered employees, by their employer, or shared by both. A covered employee's share of the annual Premium is generally paid periodically, such as monthly, and deducted from his or her paycheck.

A tax credit that eligible individuals who enroll for a Qualified Health Plan through the Marketplace can use to lower health plan Premiums. Individuals who quality can take the Premium Tax Credit in the form of advance payments to lower their monthly Premiums. The amount of the credit depends on how much income the eligible individual or family expects to earn.

Covered services that are intended to prevent disease or to identify a disease while it is more easily treatable. ACA requires insurance plans to provide coverage for Preventive Benefits without Deductibles, Co-payments or Coinsurance.

A DC Plan in which a company credits shares of profits to participants’ accounts; employee contributions are not required. Plans may have a fixed formula for sharing profits, but it is not required. Profit sharing contributions to employees’ accounts may be discretionary. Contributions may be allocated proportional to employees’ salaries or in an equal allocation to all employees.