Healthcare Terms You Need to Know to Understand Your Options and
Navigate Your Benefits
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Annual Enrollment and Navigating Your Benefits
Annual Enrollment gives you an opportunity to review your healthcare alternatives and enroll in a health plan or make changes if you desire. To help you navigate your options, and navigate your benefits year-round, here are the healthcare terms you need to know.
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Plan Administrators
TPA (Third-party Administrator) - an organization that processes insurance claims, and provides underwriting and customer service for edHEALTH member colleges, universities, and charter schools and their faculty, staff, and family members. All member schools use OptumRx for prescription drug benefits. Harvard Pilgrim Health Care, Trustmark Health Benefits, and Tufts Health Plan administer edHEALTH’s healthcare benefits with each school determining which TPA it offers.
PBM (Pharmacy Benefit Manager) - a third-party administrator of prescription drug programs. PBMs develop and maintain the formulary (the covered list of medicines), contract with pharmacies, negotiate discounts and rebates with drug manufacturers, and process and pay prescription drug claims.
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Plan Types
HDHP (high-deductible health plan) - has a lower monthly premium but a higher deductible than traditional options. You can opt for a HMO or PPO and still choose a HDHP. Having a higher deductible means that you will spend more out-of-pocket for your healthcare expenses until you reach the deductible amount. The Internal Revenue Service defines a HDHP as one with a deductible of at least $1,400 for an individual or $2,800 for a family (for 2021). After you meet the deductible, the plan pays its share.
HMO (Health Maintenance Organization) – a health plan that providers coverage for treatment by a network of doctors, hospitals, and other health care providers within a certain geographic area. HMOs do not offer out-of-network benefits, with the exception of emergency care. You must select a PCP for regular check-ups. If you wish to see a specialist, you must get a referral from your PCP.
PPO (Preferred Provider Organization) – a health plan that provides coverage by network doctors, hospitals, and other healthcare providers at a higher premium cost than a HMO. You are not required to select a PCP, nor required to get a referral to see specialists or out-of-network providers. You will pay less if you stay in-network. If you have established providers outside the network, a PPO gives you flexibility to continue to see them.
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Pre-tax Programs
Flexible Spending Account (FSA) - a medical FSA lets you set aside pre-tax money to pay for out-of-pocket expenses including deductibles, copays, and coinsurance for medical, dental, and vision care. You can spend the funds any time during the year without waiting for the total to be deducted from your paycheck. At the end of the year, any unused funds are forfeited unless the plan allows for carry-overs or a grace period, so estimate your annual election carefully. The IRS hasn’t released the 2021 FSA maximum as of the date of this publication.
HSA (Health Savings Account) - allows people enrolled in a high-deductible health plan to save money to pay for eligible medical expenses on a tax-free basis. You own the funds. Funds automatically carry over each year and earn interest or can be invested and remain tax-free. You cannot be eligible for Medicare or be claimed as a dependent on another person’s tax return to enroll in a HSA. For 2021, you can contribute up to $3,600 (individual coverage) and $7,200 (family coverage).
Limited FSA – lets you set aside pre-tax money to pay for vision and dental expenses that are not covered by insurance. You cannot have a Limited FSA and a Medical FSA at the same time. They are mutually exclusive. However, you can have both a Health Savings Account and a Limited FSA. At the end of the year, any unused funds are forfeited unless the plan allows for carry-overs or a grace period, so estimate your annual election carefully. The IRS hasn’t released the 2021 Limited FSA maximum as of the date of this publication.
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Plan Components
Allowed amount - the maximum amount the plan will pay for covered benefits minus any applicable member cost share.
Network – groups of doctors, hospitals, and other healthcare providers that contract with a plan administrator. If you enroll in a plan that offers both network and out-of-network coverage, you will receive a higher level of benefits when you are treated by network providers.
Limited or Focused Network Plan – a less expensive plan that offers essentially the same benefits as a wide network plan, but with fewer physicians, hospitals, and other providers.
Preventive services - Routine health care that includes screenings, check-ups, and patient counseling to prevent illnesses, disease, or other health problems.
Provider - A doctor, hospital, healthcare professional, pharmacy, or healthcare facility.
PCP (Primary Care Provider) – physicians with specialties in internal medicine, family practice, geriatric medicine, and pediatrics as well as nurse practitioners and physician assistants who coordinate their patients’’ health care.
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Member Costs
Premium - The amount you pay for your health insurance every month.
Cost sharing - In addition to your premium, you usually have to pay other costs for your health care:
Deductible - a specific dollar amount that you are responsible for paying to your provider(s) for certain services before the plan will pay for these services. Deductibles reset each plan year. If you have family coverage and not individual coverage, the deductible can be designed as either an embedded or non-embedded deductible:
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Embedded - no single person on a family plan will have to pay a deductible higher than the individual deductible amount.
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Aggregate or non-embedded deductible – there is no individual deductible. One or more covered family members must meet the full family deductible before the administrator pays any after-deductible benefits.
Copay - a fixed dollar amount you must pay for certain covered benefits including network doctors’ office visits; prescription drugs; high-tech imaging, such as MRIs and CT scans; and emergency room care. The copay is due at the time of service or when billed by the provider.
Coinsurance - a percentage of the allowed amount for certain covered benefits that you must pay the provider. Coinsurance amounts are in addition to any deductible and applicable copay.
Out of Pocket Maximum (OOPM) – the maximum amount of medical, prescription drug, and behavioral health copays, coinsurance, and deductibles a member will pay for covered expenses within a plan year. For family coverage, an out-of-pocket maximum can be embedded or aggregated:
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Embedded OOPM - no single person on a family plan will have to pay more than the individual OOPM amount.
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Aggregate or non-embedded OOPM - there is no individual OOPM. One or more covered family members must meet the full family OOPM before the family ceases having to pay out-of-pocket costs.
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edHEALTH is the healthcare purchasing collaborative for 25 colleges, universities, and secondary schools. Our guiding principles include:
- Ownership
- Innovation
- Transparency
- Savings
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