Cafeteria plan, PPO, CHIP: open enrollment jargon buster

It’s open enrollment season, and time to break down some of those terms that are so often misunderstood by employees.

Open enrollment is the annual period when employees can update their health insurance and benefits enrollments that are restricted at other times of the year. But with all that choice comes pages of explanations, disclaimers and agreements, plus streams of unfamiliar acronyms that would be enough to make the average worker’s head spin.

Here’s a cheat sheet featuring some handy open enrollment definitions, to help cut through it and make speedier decisions:

Cafeteria plan

Allows employees to pick and choose from a range of benefits that are pre-tax. 

CHIP

Stands for Children’s Health Insurance Program; provides affordable coverage for low-income families.

Coinsurance

The percentage of healthcare costs employees pay after meeting their deductibles. 

Copay

A fixed dollar amount employees pay for a medical service, such as a visit to the doctor or the emergency room.

Cost sharing

The share of the costs for health coverage the employee receives (e.g., copays, coinsurance, deductibles).

Deductible

The amount employees must pay out of pocket before their health insurance begins covering costs. 

Dependent

A person such as a spouse or a child who is covered under an employee’s health plan.

Evidence of insurability

Documentation required to prove an employee’s health status when enrolling in a new health plan.

FSA

A flexible spending account, or FSA, refers to pre-tax dollars employees set aside to cover eligible expenses related to medical or dependent care. 

HMO

An HMO, or health maintenance organization, is a health plan that limits coverage to a network of providers.

HSA

A health savings account, or HSA, enables employees to set aside funds pre-tax to cover qualified medical expenses such as vision and dental care, or prescriptions.

In-network/out-of-network

A doctor is typically either in or out of an insurer’s network of preferred caregivers, with in-network providers resulting in lower costs to employees versus out-of-network.

PPO

Stands for preferred provider organization, a more comprehensive, more expensive health plan than an HMO that provides access to a wider range of caregivers and services.

Premium

The monthly amount paid to maintain health coverage; also, the base rate for a health plan, adjusted to calculate the premium owed by the employee. Factors that affect the rate include age, medical history and lifestyle factors.

Qualifying life event

A change in life status (e.g., getting married, having a baby) that allows employees to make changes to their health coverage outside the open enrollment period.