Open Enrollment Toolkit

This is the maximum payment the plan will pay for a covered health care service. May also be called “eligible expense”, “payment allowance”, or “negotiated rate.”

A request for a benefit (including reimbursement of a health care expense) made by you or your health care provider to your health insurer or plan for items or services you think are covered.

Your share of the costs of a covered health care service, calculated as a percentage (for example, 20%) of the allowed amount for the service. You generally pay coinsurance plus any deductibles you owe.

A fixed amount (for example, $15) you pay for a covered health care service, usually when you receive the service. The amount can vary by the type of covered health care service.

An amount you could owe during a coverage period (usually one year) for covered health care services before your plan begins to pay. An overall deductible applies to all or almost all covered items and services. A plan with an overall deductible may also have separate deductibles that apply to specific services or groups of services.

A Dependent Care plan (DCA account) is a type of flexible spending account that allows employees to use pre-tax dollars to pay for out-of-pocket child and adult dependent care expenses. Any employer can decide to offer it to their employees.  At the beginning of the year, the employee estimates his annual out-of-pocket expenses for his dependents. The money elected is automatically deducted from his gross pay before federal, Social Security, state, and local taxes are withheld.  In 2023, employees can elect up to $5,000 annually per household.

A Flexible Spending Account (FSA) is a designated account where you can deposit funds to cover specific out-of-pocket healthcare expenses. The money you contribute to an FSA is not subject to taxes, resulting in savings equivalent to the amount you would have paid in taxes. While employers can contribute to an FSA, it is not mandatory for them to do so. FSAs can be used to pay for eligible medical and dental expenses for yourself, your spouse (if married), and your dependents. However, it’s crucial to be aware of the “use it or lose it” rule, which generally requires you to utilize the funds in your FSA within the plan year. Nevertheless, employers may offer two options: a “grace period” of up to 2 ½ additional months to utilize the funds or the ability to carry over up to $610 into the following year. The plan limits for 2023 are set at $3,050, with $610 available for carryover into 2024.

The list of prescription drugs covered under a health plan. A formulary is usually structured in tiers that ensure you can access affordable options while balancing coverage for brand-name and specialty drugs.

A health plan typically with lower premiums compared to PPO plans. However, HMOs come with certain limitations. They offer a narrower selection of doctors and facilities, restricting your choice of healthcare providers. Additionally, HMO plans generally do not provide coverage for out-of-network services, except in emergency situations. If you are enrolled in an HMO plan, you will need a referral from your primary care doctor before seeing a specialist. While this referral process ensures coordinated care, it can be frustrating if you require prompt access to a specialist. This requirement may cause delays in receiving specialized medical attention.

A Health Reimbursement Arrangement is an employer-paid health reimbursement plan. Any employer can decide to offer it to their employees.  It helps employees save money by paying for different types of out-of-pocket expenses (deductibles, copays, etc.). Employers save money by shifting to consumer-driven healthcare. They pay directly for various expenses instead of through increased premiums from an insurance company. HRA Plan funds used by employees are tax-deductible to the employer and employee.

Health Savings Accounts (HSAs) are available to employees who enroll in a high-deductible health plan (HDHP). HSAs allow individuals to contribute money, up to government-set annual limits using pre-tax dollars. The contribution limits for 2024 are $4,150 for self-only coverage and $8,300 for family coverage. Employers can also make contributions within the prescribed limit. These funds can be utilized to pay for medical expenses, regardless of whether the deductible has been met, and withdrawals for medical purposes are tax-free. Notably, HSAs are individually owned, meaning they remain with the employee even after leaving the current employment. This arrangement provides individuals with a valuable means of setting aside funds, enjoying tax advantages, and maintaining ownership and control over their healthcare savings.

A health plan characterized by low premiums and a higher deductible. This type of plan can be advantageous for individuals without chronic illnesses or those planning for surgeries, as it can lead to overall cost savings. Additionally, selecting an HDHP often makes individuals eligible for a health savings account (HSA), which offers tax advantages and allows them to set aside funds for future medical expenses. By choosing an HDHP and utilizing an HSA, individuals can potentially reduce their healthcare expenses while enjoying the benefits of long-term savings and financial flexibility.

Physicians, clinics, medical facilities, and other healthcare practitioners who have established a contractual agreement with the health plan to provide services to its members. In-network healthcare providers are favored by health plans, as they offer more extensive coverage at a reduced cost compared to out-of-network providers.

The facilities, providers and suppliers your health insurer or plan has contracted with to provide health care services.

Doctors, clinics, hospitals, and other healthcare professionals who do not have an agreement with the health plan to offer services to its members. While a health plan may still provide coverage for treatment obtained from out-of-network providers, it typically requires covered individuals to bear a greater portion of the expenses. This means that utilizing out-of-network providers often results in higher out-of-pocket costs for individuals compared to using in-network providers, who have negotiated agreements with the health plan for more favorable coverage terms. Therefore, it is generally more cost-effective for individuals to seek care from in-network providers to minimize their financial responsibility.

A financial threshold that determines the maximum amount an employee is responsible for paying during a specific coverage period, typically spanning one year. It encompasses various costs associated with covered services, such as co-payments and co-insurance. Once an employee reaches this limit, the health plan assumes responsibility for covering the remaining costs of covered services for the remainder of the coverage period. In other words, the out-of-pocket limit sets a cap on the total amount an individual is obligated to pay directly, providing a safeguard against excessive financial burdens and ensuring that healthcare expenses remain manageable within a defined timeframe.

A decision by your health insurer or plan that a health care service, treatment plan, prescription drug or durable medical equipment (DME) is medically necessary. Sometimes called prior authorization, prior approval or precertification. Your health insurance or plan may require preauthorization for certain services before you receive them, except in an emergency.

A type of health plan that allows you to visit specialists without referrals. PPO plans typically have higher premiums than HMOs but have the added advantage of offering out-of-network coverage to ensure you can always get the care you need.

The amount that must be paid for your health insurance or plan. You and/or your employer usually pay it monthly, quarterly, or yearly.

An individual or facility that provides health care services. Some examples of a provider include a doctor, nurse, chiropractor, physician assistant, hospital, surgical center, skilled nursing facility, and rehabilitation center.

A concise document detailing simple and consistent information about a health plan’s costs, covered services, and benefits.