Glossary of Benefit Terms
Glossary of Terms Related to Employee Benefits Insurance
A glossary of the most important terms you’ll encounter with your plans sponsored by Bishop's. These terms cover the core cost-sharing, plan design, account-based, and administrative concepts most employees encounter with group health benefits. Definitions can vary slightly by plan and carrier, so always check your specific plan documents or Summary of Benefits and Coverage for exact details.
1. Premium
The total cost to have health insurance coverage. The Bishop's School pays a portion of this cost, and your share is deducted from your paycheck.
2. Deductible
The amount you must pay out-of-pocket for covered services before the insurance plan begins to pay.
3. Copayment (Copay)
A fixed dollar amount you pay for a specific service (e.g., $30 for a primary care visit or $15 for a generic prescription) at the time of service.
4. Coinsurance
Percentage of payment shared between the member and the plan for certain services after the deductible has been met. (e.g., after you met the deductible, the plan pays 80% and you pay 20%).
5. Out-of-Pocket Maximum (OOP Max)
The most you will pay for covered services in a calendar year. Once reached, the plan pays 100% of covered expenses for the rest of the calendar year.
6. In-Network / Out-of-Network
Providers and facilities that have contracted rates with the insurer (in-network) vs. those that do not (out-of-network). Using in-network providers usually results in much lower costs.
7. HMO (Health Maintenance Organization)
A health plan type that typically requires you to choose a primary care physician (PCP) and get referrals for specialists. Coverage is limited to the plan’s network (except emergencies), usually referred to as in-network providers.
8. PPO (Preferred Provider Organization)
A health plan type that provides you flexibility to see providers in- or out-of-network without referrals. Seeing providers in-network incurs lower costs than going out-of-network.
9. HDHP (High-Deductible Health Plan)
A health plan type with a higher deductible that provides you flexibility to see providers in- or out-of-network without referrals. Enrolling in an HDHP qualifies the employee to contribute to a Health Savings Account (HSA) with some exceptions.
10. HSA (Health Savings Account)
A tax-advantaged savings account available to employees covered by the HDHP. Contributions are pre-tax (federal only, subject to CA state income tax), grow tax-free, and can be used tax-free for qualified healthcare expenses. The account is owned by the employee and is portable.
11. FSA (Flexible Spending Account)
A pre-tax employer-sponsored account used to pay for eligible out-of-pocket healthcare or dependent care expenses. The account is not portable if you leave Bishop's.
12. Open Enrollment
The annual period when employees can elect, change, or drop benefit coverage for the upcoming plan year without a qualifying life event. This usually takes place in early February at Bishop's.
13. Qualifying Life Event (QLE)
A major life change that allows you to make changes to your benefit elections outside of your annual open enrollment period.
14. COBRA
Consolidated Omnibus Budget Reconciliation Act (COBRA). A federal law that lets employees and their dependents temporarily continue group health coverage after certain events (job loss, reduction in hours, etc.), usually at full cost plus an administrative fee.
15. Summary of Benefits and Coverage (SBC)
A standardized, easy-to-read document that summarizes what your health plan covers, what you'll pay out-of-pocket, and includes sample cost scenarios.
16. Explanation of Benefits (EOB)
A statement from the insurer after a claim is processed that shows what was billed, what the plan paid, and what you may still owe. It is not a bill.
17. Formulary
The plan’s list of covered prescription drugs, usually organized into tiers with different copay or coinsurance levels (generic, preferred brand, non-preferred, specialty, etc.).
18. Prior Authorization (Prior Auth)
A requirement that the insurer approve certain services, procedures, or medications in advance before they will be covered.
