| Affordable Care Act (ACA) | The Affordable Care Act (ACA) is a comprehensive healthcare reform law enacted in March of 2010 and is often referred to as PPACA or “Obamacare.” Generally, if you have 50 or more full-time employees, including full-time equivalent employees, you are an applicable full-time employer and need to offer health insurance to your employees. There are three primary goals of ACA:
Make affordable health insurance available to more people.
Expand the Medicaid program.
Support innovative medical care delivery methods to lower costs of healthcare in general.
For more information, visit the IRS website. |
Benefits administration | Benefits administration is the process of determining and managing benefits offered to the employees at a company. It is usually one of the essential functions of an HR department or a benefits administrator within an HR department. This process typically consists of the following steps:
Evaluating the value of current benefits programs
Communicating with benefits brokers and carriers
Selecting competitive benefits
Educating employees on what benefits are offered
Helping employees enroll in benefits programs
Reviewing and updating both employee and benefits information
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| Broker | A benefits broker is a specially state-licensed professional that sells insurance and works with employers to create and manage benefits packages for their employees. |
Carrier | A carrier or provider is a vendor that sells employee benefits products like medical, dental, and vision insurance to an employer either directly or via a broker. Common carriers include UnitedHealthcare, Blue Cross Blue Shield, Cigna, UMR, etc. |
| Coinsurance | Coinsurance is the percentage of healthcare costs the employee pays after they have met their deductible for the year, but before they meet their “out-of-pocket” maximum. |
| Copayment or copay | This is a fixed amount (i.e., $25 for example) that the insured employee will pay for covered medical services (i.e., doctor office visits, prescriptions, etc.), and then the insurance provider covers any remaining amount (after they have met their deductible, if applicable). |
Coverage effective date | Coverage effective date is the date the benefit coverage starts and employees can begin using their insurance. |
| Coverage level | The coverage level defines who will be covered by the benefit plan. Some plans allow more than the employee to receive coverage and can include dependents. Coverage levels you will see in BambooHR include the following:
Employee
Employee + Family
Employee + Children
Employee + Spouse
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| Deductible | The deductible is the amount of money the insured employee will have to spend out of pocket on their healthcare (not including premiums) before the insurance kicks in and starts covering healthcare costs. |
| Dependent | A dependent is usually a spouse, child, or children who also receives coverage benefits under the employee's insurance plans. |
| Disability leave | The Americans with Disabilities Act (ADA) refers to disability leave as giving workers who are substantially limited in one or more major life activities, due to a physical or mental impairment, the right to take a work leave of absence or have reasonable accommodation(s). A reasonable accommodation includes a change in workplace policies, facilities, or how work is done. The ADA law applies to employers with 15 or more workers. |
| Electronic data interchange (EDI) | Electronic data interchange (EDI) is an electronic transfer of data that communicates benefit enrollment data to the carriers. These feeds are typically set up behind the scenes by benefits administration systems. |
| Eligibility date | The eligibility date is the date an employee is able to enroll in a benefit plan if they choose to do so. |
Employee contribution | This is the amount the employee will be responsible for paying either each month or each paycheck when electing a benefit plan. This amount is automatically withheld from the employee's paycheck. This is also known as "Employee Pays" in BambooHR. |
Employer contribution | This is the amount the employer is responsible for paying on an employee benefit plan, such as their health or dental insurance. This is also known as "Company Pays" in BambooHR. |
Enrollment window | An enrollment window is the amount of time the employee has the opportunity to choose and enroll in the benefit plans offered by their employer. The enrollment window can also be known as the enrollment period. |
Enrollment types | Enrollment types help define the few events that allow the employee to enroll in new benefits or make changes to their benefit elections: Open enrollment: Occurs once a year for all employees to review their participation in benefit elections Qualifying life event: Occurs whenever there is a major life change like marriage, divorce, childbirth, etc. New hire: Occurs once in the employee life cycle at the time the employee first starts with the company Work status event: Occurs whenever a job status changes and impacts an employee's eligibility for benefits, such as a promotion or loss of employment
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Exclusive provider organization (EPO) | An exclusive provider organization (EPO) is similar to a PPO in structure, administration, and operation. However, EPO members receive no reimbursement or benefit if they visit a medical care provider outside of the preferred network, except in emergency cases. |
Family and Medical Leave Act (FMLA) | This is also known as FMLA. The Family and Medical Leave Act of 1993 is a law requiring businesses to give employees up to 12 weeks of unpaid leave every year for health and family reasons. There are a variety of reasons an employee is able to take unpaid leave under this act, including the birth of a child, care of a family member with a serious health condition, or care of a military service member in the family who has a serious health condition. Though this type of leave is not paid, health care benefits must continue, and the job is protected. |
| Flexible spending account (FSA) | A flexible spending account (FSA) is a tax-exempt account designated for certain out-of-pocket health care costs. Employees contribute to FSA accounts in each paycheck. They can then turn in receipts from qualified medical expenses and use the fund to get reimbursed. Generally, the funds in FSA accounts fall into the use-it-or-lose-it category—money not spent by December 31 does not roll over to next year’s balance. |
Health reimbursement account (HRA) | A health reimbursement account (HRA) is an employer-funded and employer-owned group benefit for employees to use, tax-free, for qualified medical expenses. An employer provides a fixed dollar amount per year available for use on qualified expenses, but employers may offer year-end rollover options. |
| Health savings account (HSA) | A health savings account is a savings vehicle that is tied to an HSA-qualified, high-deductible health plan (HDHP). As with 401k accounts and flexible spending accounts (FSA), health savings accounts offer pre-tax benefits for employees. The money that employees deposit into HSA accounts reduces their taxable income rather than acting as a direct deduction like FSA funds. Employees can then spend the money on qualified medical expenses without any tax penalty. |
| High deductible health plan (HDHP) | This type of health plan is tied to a higher deductible than traditional plans in exchange for typically lower monthly premiums. |
In-network provider | The list of doctors, other healthcare providers, and hospitals that your benefit plan covers. In-network providers are contracted with the benefit carrier to provide a more predictable cost of care for its members. |
Indemnity | This is a type of insurance that protects professionals and business owners by compensating the insured party for unexpected damages or losses up to a certain amount and with limitations. |
Maximum out-of-pocket | This is the maximum out-of-pocket dollar amount the insured employee is expected to pay for their healthcare in a single calendar year. After they meet this maximum amount, the insurance company will pay for 100% of your approved healthcare costs from that point and forward for the rest of the calendar year. There are exceptions for contract limitations and exclusions, which includes money you spent reaching your deductible, but it does not include your premiums. |
Out-of-network provider | Out-of-network providers are healthcare providers, hospitals, and services that are not contracted by the benefit carrier but are still available to the insured employee with the caveat of high deductibles, coinsurance, and out-of-pocket maximums. |
| Open enrollment | Open enrollment occurs once a year and allows employees to edit their participation in offered benefits from the employer for a period of time. |
Point-of-service (POS) plan | Typically requiring the use of a primary care doctor, this type of healthcare plan offers a smaller list of in-network healthcare providers at a lower cost. However, it allows participants to use out-of-network providers. |
Preferred provider organization (PPO) | A preferred provider organization (PPO) is a subscription-based, reduced-rate medical care arrangement between subscribing members and a contracted network of preferred medical providers. PPO plan members either pay a copayment at the time of service or pay full cost until they meet a deductible. However, the insurance company may waive the deductible for preventive care or for in-network care. Members who go outside the network will pay a greater copay or cost share and may pay a deductible, which can significantly increase the cost of going out of network. |
| Premium | A premium is an amount the insured employee pays for the plan's coverage. Most companies will cover the majority of the cost (usually 70%-80%), but the employee has to pay as well. This is typically a pre-tax payroll deduction taken from each paycheck. |
Qualifying life event (QLE) | A qualifying life event, as far as health insurance goes, is a change in situation (such as getting married or divorced, a change in residence, or a job loss) which makes a person eligible to enroll in health insurance outside of the yearly open enrollment period. |
Retirement plan | This type of plan prepares employees for life after work by allowing employees to make contributions towards a fund that they can access after a certain age. There are many types of retirement plans available, including the following: 401(k) 403(b) Traditional IRA Roth IRA 457
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Voluntary benefits | Voluntary benefits are services and/or goods that an employer offers at a discounted group rate but are paid for (either fully or partially) by an employee through a payroll deduction. Voluntary benefits are supplemental to other traditional benefits (health insurance, retirement, etc.) and do not have any direct costs to the employer. Examples of this type of coverage include accident or critical illness insurance. This is often referred to as supplemental coverage in BambooHR. |
