Glossary
Employee Benefits Glossary for Brokers
58 terms brokers meet in quotes, renewals, and compliance work, defined the way you would explain them to a client. Where Planlined has a deeper guide or calculator, the term links to it.
Funding arrangements
- Fully insured
- The employer pays a fixed premium and the carrier takes on all claims risk. Rates are set for the plan year; surplus claims experience stays with the carrier. Self-funded vs fully insured calculator →
- Self-funded (Self-insured)
- The employer pays claims from its own assets, usually through a third-party administrator, and buys stop-loss to cap the exposure. Common above 100 lives; possible smaller with the right stop-loss. Self-funded calculator →
- Level-funded
- A self-funded plan packaged to feel fully insured: a fixed monthly payment that pre-funds expected claims, administration and stop-loss, with a possible refund if claims run under the funded amount. Level-funded plans explained →
- ASO (Administrative services only)
- A contract where a carrier or TPA administers a self-funded plan (claims, network access, ID cards) for a fee without insuring the claims.
- Stop-loss insurance
- Reinsurance for a self-funded or level-funded plan. Specific stop-loss caps the plan's cost for any one member; aggregate stop-loss caps total claims for the year, usually at 120 to 125 percent of expected. Stop-loss calculator →
- Attachment point
- The dollar level at which stop-loss begins paying: the specific deductible per member, or the aggregate corridor for the whole plan.
- Lasered member (Laser)
- A member the stop-loss carrier assigns a higher specific deductible because of known claims history. A common renewal surprise on level-funded and self-funded quotes.
- PEO (Professional employer organization)
- A co-employment arrangement in which the PEO becomes the employer of record for benefits, payroll and HR, and the client buys into the PEO's master health plan. PEO benefits comparison guide →
- Captive (Group captive)
- A stop-loss arrangement in which several employers jointly own the insurer that reinsures their self-funded plans, sharing risk and any underwriting surplus.
Rates and pricing
- Community rating
- The ACA small-group pricing rule: rates vary only by age, geography, tobacco use and family size, never by the group's health or claims history. Small group vs large group →
- Experience rating
- Large-group and self-funded pricing based on the group's own claims history, demographics and industry.
- Age-banded rates (Member-level rates)
- A premium for each covered person based on their age, summed per employee. Standard for ACA small group; the total bill moves as the census changes.
- Composite rates
- One rate per coverage tier regardless of member ages, derived from the group's census. Common in large group; some small-group carriers convert age-banded rates to composite for billing.
- Coverage tiers (Four-tier structure)
- The rate categories on a quote, usually Employee Only, Employee + Spouse, Employee + Child(ren) and Family. Two- and three-tier variants exist.
- Rate guarantee
- How long the quoted rates are locked, typically 12 months. Multi-year guarantees are a negotiating lever on dental, vision, life and disability lines. Rate negotiation →
- Renewal
- The carrier's proposed rates and plan changes for the next plan year, usually delivered 60 to 90 days before the anniversary date. Renewal analysis →
- Trend (Medical trend)
- The annual increase in claims cost from price and utilization changes, used by underwriters to project next year's rates. Distinct from the renewal increase actually offered.
- Participation requirement
- The share of eligible employees who must enroll for the carrier to issue or keep the group, commonly 70 to 75 percent after valid waivers.
- Contribution requirement
- The minimum share of the employee-only premium the employer must pay, often 50 percent, for the carrier to write the group.
Plan design
- Deductible
- What a member pays before the plan starts sharing costs. Embedded family deductibles cap any one member at the individual amount; aggregate (non-embedded) family deductibles must be met by the family as a whole.
- Coinsurance
- The percentage split of covered costs after the deductible, expressed as the plan's share (80/20 means the plan pays 80 percent).
- Copay
- A flat fee per service, such as an office visit or prescription, that usually does not count toward the deductible but does count toward the out-of-pocket maximum.
- Out-of-pocket maximum (OOP max)
- The most a member pays for covered in-network care in a plan year. ACA caps it annually; after it is met the plan pays 100 percent.
- Metal tiers (Actuarial value)
- ACA plan categories by the share of average costs the plan pays: Bronze about 60 percent, Silver 70, Gold 80, Platinum 90.
- HMO, PPO, EPO, POS
- Network types. HMO: in-network only, primary-care gatekeeper. PPO: in- and out-of-network, no referrals. EPO: in-network only, no referrals. POS: HMO-style with some out-of-network coverage. Plan comparison →
- HDHP (High-deductible health plan)
- A plan meeting IRS minimum-deductible and maximum out-of-pocket rules that lets enrolled members contribute to an HSA.
- HSA (Health savings account)
- A member-owned, tax-advantaged account paired with an HDHP. Balances roll over and follow the employee.
- HRA (Health reimbursement arrangement)
- An employer-funded account that reimburses medical expenses. Integrated HRAs sit under a group plan; ICHRAs and QSEHRAs reimburse individual-market premiums instead of offering a group plan.
- FSA (Flexible spending account)
- A pre-tax account funded by payroll deductions for medical or dependent-care expenses, with a use-it-or-lose-it rule subject to a limited carryover or grace period.
- Formulary
- The list of covered prescription drugs and their tiers. Formulary differences are a frequent hidden variable when two plans look alike on deductible and copay.
- Ancillary benefits
- Lines sold alongside medical: dental, vision, life, short- and long-term disability, and voluntary products. Often the easiest place to improve a renewal. Ancillary benefits strategy →
- Voluntary benefits (Worksite benefits)
- Employee-paid coverage offered through payroll deduction at group rates: accident, critical illness, hospital indemnity, supplemental life and similar.
Contributions and employee cost
- Contribution strategy
- How the employer splits premium with employees: a percentage of each tier, a flat dollar amount, a percentage of the base plan, or a defined contribution the employee applies to any plan. Contribution modeling →
- Defined contribution
- The employer commits a fixed dollar amount per employee; the employee chooses a plan and pays the difference. Makes employer cost predictable and shifts plan choice to the employee.
- Payroll deduction
- The employee's share of premium withheld each pay period, usually pre-tax under a Section 125 plan. Shown per pay period, not per month, in employee materials. Payroll deduction calculator →
- Section 125 plan (Cafeteria plan)
- The IRS arrangement that lets employees pay their premium share and FSA contributions pre-tax. Required paperwork for pre-tax deductions.
- Employee cost difference
- The change in an employee's per-pay-period cost between the current plan and a proposed one. The number that decides whether a renewal recommendation lands. Employee cost difference analysis →
- What-if scenario
- A copy of the case with a different plan mix, contribution strategy or enrollment assumption, used to test a recommendation before it reaches the client. Scenario modeling →
Compliance
- ACA affordability
- The employer-mandate test: the employee-only premium for the lowest-cost plan offering minimum value must not exceed a set percentage of household income, checked through one of three safe harbors. ACA affordability calculator →
- Affordability safe harbors
- The three IRS methods for the affordability test when household income is unknown: W-2 wages, rate of pay, or the federal poverty line. ACA compliance →
- ALE (Applicable large employer)
- An employer with 50 or more full-time-equivalent employees, subject to the ACA employer mandate and 1094-C/1095-C reporting.
- Minimum value
- A plan that pays at least 60 percent of covered costs and provides substantial inpatient and physician coverage. Required, with affordability, to avoid employer-mandate penalties.
- ERISA
- The federal law governing private-sector employee benefit plans: fiduciary duties, plan documents, SPDs, claims procedures and Form 5500 reporting. ERISA compliance checklist →
- SPD (Summary plan description)
- The ERISA-required plain-language description of a plan's benefits, rules and claims process, given to participants within 90 days of enrollment.
- Form 5500
- The annual ERISA return for welfare plans with 100 or more participants at the start of the plan year, filed with the Department of Labor.
- SBC (Summary of Benefits and Coverage)
- The standardized ACA-mandated summary every plan must provide, which makes it the most reliable document for a side-by-side comparison. SBC comparison tool →
- COBRA
- Continuation coverage employees and dependents can elect after a qualifying event, for employers with 20 or more employees; many states have mini-COBRA rules for smaller groups. COBRA administration guide →
- MLR rebate (Medical loss ratio rebate)
- The refund a carrier owes when it spends less than 80 percent (small group) or 85 percent (large group) of premium on claims and quality improvement. Employers must share the employee-paid portion. MLR rebate calculator →
- Waiting period
- The time a new hire waits before coverage begins. The ACA caps it at 90 days; first-of-the-month-following-30-or-60-days is the usual design.
- Open enrollment
- The annual window when employees can enroll, change plans or add dependents without a qualifying event, timed to the plan anniversary. Open enrollment checklist →
Quoting and proposal process
- Census
- The employee roster carriers rate from: date of birth, zip, coverage tier, sometimes salary and dependents. Errors here are the top cause of a quote being re-rated at issue.
- RFP (Request for proposal)
- The package sent to carriers to obtain quotes: census, current plan designs, claims experience for larger groups, and requirements. Benefits RFP template →
- Broker of record (BOR)
- The broker a carrier recognizes as the group's representative. A BOR letter transfers the account, and its commissions, between brokers.
- Side-by-side comparison
- The table that lines up plan designs and rates across carriers using normalized fields, so a $2,000 embedded deductible reads the same in every column. Multi-carrier comparisons →
- Proposal book (Benefits proposal)
- The client-facing deliverable: executive summary, comparison tables, contribution scenarios, employee cost impact and the recommendation. Proposal builder →
- Employee benefit guide (Benefits booklet)
- The document employees receive at enrollment: plan options, per-pay-period costs, how to enroll, contacts and FAQs. Employee benefit guide template →
- Invoice reconciliation
- Matching each carrier bill line to the enrollment roster to catch terminated employees still billed, missing new hires and wrong tiers. Invoice reconciliation guide →
- Plan library
- A reusable store of carrier plan designs and rates so the same plan is entered once and reused across cases and renewals. Plan library →