The glossary. Every term, A to Z.

53 terms from employer health plans, each with the short answer. Select a term for the full guide, with the detail and the sources.

A

ACA affordability safe harbor: An ACA affordability safe harbor lets an employer prove its coverage is affordable without knowing household income. The employee's cost for the cheapest self-only plan with minimum value must stay at or below the IRS percentage, 9.96% for 2026 plan years and 10.22% for 2027, of W-2 wages, rate of pay or the federal poverty line.Full guideACA reporting
ACA reporting: ACA reporting is the yearly filing that tells the IRS what health coverage an employer offered or provided. Employers with 50 or more full-time employees, including equivalents, file Forms 1094-C and 1095-C. Insurers and small self-insured employers file Forms 1094-B and 1095-B. Returns are due February 28 on paper or March 31 electronically.Full guideACA reporting
ACA reporting software: ACA reporting software helps an applicable large employer track full-time status, code Forms 1095-C, check affordability and e-file Forms 1094-C and 1095-C with the IRS. You can buy it as a payroll or HRIS module, a standalone ACA tool, or a full-service filing. Whichever you pick, the employer stays legally responsible for what is filed.Full guideACA reporting
Aggregate stop-loss insurance: Aggregate stop-loss insurance reimburses a self-funded employer when the plan's total claims for the year pass a group-wide cap called the aggregate attachment point. That cap is usually expected claims times a corridor, such as 125 percent. The employer pays claims up to the cap, and the carrier reimburses the excess.Full guideStop-loss insurance

B

Broker and consultant compensation disclosure (ERISA section 408(b)(2)(B)): Broker compensation disclosure is a written statement that brokers and consultants to ERISA group health plans must give the employer when they expect $1,000 or more in pay. Required by section 202 of the Consolidated Appropriations Act, 2021, it lists their services and all direct and indirect compensation before the contract is signed, extended or renewed.Full guideFiduciary duty and advisor pay
Broker of record (BOR) letter: An employer uses a broker of record letter to tell an insurance carrier which broker now represents its plan. Signed by an authorized officer, it moves the account to a new broker without replacing the policy itself, and it stays in effect until the employer rescinds it in writing.Full guideFiduciary duty and advisor pay

E

Employee benefit plan audit (IQPA audit): An employee benefit plan audit is an independent accountant's audit of an ERISA plan's financial statements, attached to the Form 5500. Plans with 100 or more participants generally need one, but fully insured and unfunded health plans are exempt at any size. Health plans that hold assets in a trust, such as a VEBA, must be audited.Full guideERISA and plan documents
Employee benefits administration: Employee benefits administration is the work of keeping an employer's benefits running correctly all year. It covers enrollment and eligibility, sending enrollment data to carriers, matching payroll deductions and invoices to that data, processing life events, and handing off to COBRA and ACA reporting. Most problems start with eligibility data that doesn't match.Full guideBenefits strategy and administration
Employee benefits management: Employee benefits management is the ongoing oversight an employer gives its benefits program after the plan is designed. It covers vendor monitoring against contracts and service levels, the renewal cycle, a compliance calendar, employee communication and advocacy, claims and utilization review, and regular benefits committee meetings, so problems surface early instead of at renewal.Full guideBenefits strategy and administration
Employee benefits strategy: An employee benefits strategy is a written plan, usually covering three to five years, for what your benefits must do for your employees and your budget, and how you will get there. It is built from claims data, workforce needs, budget, market benchmarks and compliance duties, owned by a committee, and measured against targets every quarter.Full guideBenefits strategy and administration
Employee benefits survey: A good employee benefits survey asks employees whether they know their benefits, how satisfied they are, whether the cost feels worth it, how easy the plan is to use and what they would change. Use 25 to 35 questions, mostly rating scales, run it anonymously four to six months before renewal, and never ask about health conditions.Full guideBenefits strategy and administration
Employee Retirement Income Security Act (ERISA): ERISA applies to almost every health and welfare plan sponsored by a private-sector employer or union, whatever the company's size and whether the plan is insured or self-funded. Government plans, most church plans, plans kept only to comply with workers' compensation, unemployment or disability laws, plans abroad for nonresident aliens, and unfunded excess benefit plans are exempt.Full guideERISA and plan documents
Employee wellness program: An employee wellness program is an employer program that encourages healthier habits, often with rewards or premium discounts. Programs tied to a group health plan must follow federal wellness rules: participatory programs have no reward cap, while health-contingent rewards are capped at 30% of coverage cost, or 50% for tobacco programs.Full guideBenefits strategy and administration
ERISA fidelity bond: ERISA bond cost is the premium a Treasury-listed surety charges for the bond, and no law sets that price. It depends mostly on the bond amount, which ERISA fixes at 10% of the plan funds each person handles, at least $1,000 and at most $500,000, or $1,000,000 for plans holding employer securities.Full guideERISA and plan documents
ERISA fidelity bond (ERISA section 412 bond): An ERISA bond is a fidelity bond that ERISA section 412 requires for every fiduciary and other person who handles a benefit plan's funds or property. It protects the plan against theft, fraud and other dishonest acts, and must cover at least 10% of the funds handled, with a $1,000 minimum and a $500,000 cap per plan.Full guideERISA and plan documents
ERISA plan: ERISA plans are health and welfare plans that private employers sponsor, and they must follow federal rules on plan documents, disclosure, fiduciary duties and claims. Non-ERISA plans, mainly government plans, church plans and qualifying voluntary employee-paid insurance, are exempt from ERISA and are governed mostly by state law, with disputes heard in state court.Full guideERISA and plan documents
ERISA wrap document (wrap plan document): An ERISA wrap document is a written plan document that wraps around your insurance carriers' policies and certificates and adds the provisions ERISA requires that carrier documents leave out, such as the named fiduciary, funding, amendment procedures and claims rules. It can combine several benefits into one plan and often doubles as the summary plan description.Full guideERISA and plan documents

F

Form 1095-A: Form 1095-A comes from the Health Insurance Marketplace and reports Marketplace coverage and any advance premium tax credit, and the person who enrolled needs it to file Form 8962 with their tax return. Form 1095-C comes from an applicable large employer, reports the coverage offered to a full-time employee, and is not needed to file.Full guideACA reporting
Form 1095-B, Health Coverage: Form 1095-B is an IRS information return showing which months a person and their covered family members had minimum essential health coverage. Insurers, government programs such as Medicaid and Medicare, and small employers with self-insured plans issue it. People don't attach it to a federal return, but it can prove coverage for a state mandate.Full guideACA reporting
Form 1095-C: Form 1095-B shows that a person had minimum essential health coverage, and it comes from insurers, government programs and small self-insured employers. Form 1095-C comes from applicable large employers, those with 50 or more full-time employees including equivalents, and shows the coverage offered to each full-time employee, what it cost and, for self-insured plans, who enrolled.Full guideACA reporting
Form 1095-C: Form 1095-C is the IRS form an applicable large employer, one with 50 or more full-time employees including equivalents, gives each full-time employee to report the health coverage it offered that employee each month and the cost of the cheapest employee-only option. Employees do not need it to file their taxes, but should keep it.Full guideACA reporting
Form 5500 annual return/report: Form 5500 is due the last day of the 7th month after the plan year ends, which is July 31 for calendar-year plans. The 5500 extension deadline is 2½ months later, October 15 for calendar-year plans, if you file Form 5558 by the original due date. An extended corporate tax return can also extend it automatically.Full guideERISA and plan documents

G

Gag clause prohibition compliance attestation (GCPCA): A gag clause attestation is a yearly statement most group health plans must file with CMS by December 31, confirming their contracts with insurers, TPAs, networks and other service providers do not block the plan from getting or sharing its own cost, quality and claims data. Your TPA can file it, but the duty stays with your plan.Full guideCompliance rules and deadlines

H

Health and welfare benefit trust: A healthcare trust is a separate legal account that holds a self-funded health plan's money apart from the employer's general assets, for use only on plan benefits and expenses. Most self-funded plans don't need one. A trust, such as a VEBA, adds ERISA bonding, a Form 5500 at any size and, at 100 or more participants, an audit.Full guidePlan financing
Health plan fiduciary committee: A health plan fiduciary committee is a group an employer formally appoints to make and record decisions about its group health plan, such as choosing vendors, reviewing fees and deciding appeals. ERISA does not require one, but it judges fiduciaries by their process, and a committee with a charter and minutes is how an employer shows that process.Full guideFiduciary duty and advisor pay

L

Level-funded health plan: Level-funded health insurance is a self-funded health plan with a fixed monthly payment. The payment covers a claims fund, stop-loss insurance and administration. If claims come in under the fund, the employer may get part of the surplus back, but it takes on self-insured compliance duties and contract risk at renewal and termination.Full guidePlan financing
Level-funded health plan: In a fully insured plan, the employer pays a fixed premium and the insurer carries all claims risk. A level-funded plan is a self-funded plan with fixed monthly payments for administration, a claims fund and stop-loss insurance. The employer may get back part of any unused claims fund, but takes on more compliance duties and contract risk.Full guidePlan financing
Level-funded health plan: A level-funded plan is a self-funded plan sold as a bundle: one carrier sets a fixed monthly payment that covers administration, a claims fund and stop-loss. In a traditional self-funded plan, the employer pays claims as they occur and picks its own TPA, PBM and stop-loss carrier, gaining control and data but taking on more cash flow risk.Full guidePlan financing

M

Medical benefit and pharmacy benefit: The medical benefit and the pharmacy benefit are two ways your health plan pays for care. The medical benefit, run by your carrier or TPA, pays for drugs a provider gives in a clinic or hospital and bills after the visit. The pharmacy benefit, run by a PBM, pays for prescriptions filled at a pharmacy, in real time.Full guidePharmacy and PBMs
Medical loss ratio (MLR) rebate: An employer that receives an MLR rebate must give employees the share that came from their premium contributions. Under DOL Technical Release 2011-04, that share is a plan asset and should be used within three months, as a premium holiday, reduced contributions, cash or benefit enhancements. The employer may keep only the share its own contributions paid for.Full guideCompliance rules and deadlines
Medicare Part D creditable coverage: Medicare Part D creditable coverage is employer drug coverage expected to pay at least as much as standard Medicare Part D. Employers must tell Medicare-eligible members each year, before October 15, whether their plan is creditable, and report it to CMS. For 2027, the simplified test requires a plan designed to pay at least 73 percent of drug costs.Full guideCompliance rules and deadlines

N

Nonquantitative treatment limitation (NQTL): An NQTL, or nonquantitative treatment limitation, is a non-numeric limit on benefits, such as prior authorization, step therapy or network admission standards. Since February 10, 2021, group health plans covering mental health or substance use disorder benefits must keep a written comparative analysis of each NQTL and produce it when regulators or participants ask.Full guideCompliance rules and deadlines

P

Patient-Centered Outcomes Research Institute (PCORI) fee: The PCORI fee is a yearly federal fee on health insurers and on employers that sponsor self-insured health plans, including level-funded plans and HRAs. It is the average number of covered lives times the IRS rate, $3.84 for plan years ending October 2025 through September 2026, and is reported and paid on Form 720 by July 31.Full guideCompliance rules and deadlines
Pharmacy benefit manager (PBM): To choose a good PBM, an employer should compare contracts, not just price quotes. Check how brand, generic and specialty drugs are defined, what share of rebates reaches your plan, whether spread pricing is allowed, and your audit, data and termination rights. A standardized, scored RFP makes the bids comparable.Full guidePharmacy and PBMs
Pharmacy benefits administrator (PBA): A pharmacy benefits administrator (PBA) processes prescription claims and runs a drug plan for an employer, usually for an administrative fee, while the plan keeps more of the decisions. A PBM often bundles those services with its own rebate deals, network and pharmacies. The label matters less than the contract: verify pay, rebates and data access in writing.Full guidePharmacy and PBMs
Prescription Drug Data Collection (RxDC): RxDC reporting is the yearly prescription drug and health care spending report that group health plans and insurers must send CMS under section 204 of the Consolidated Appropriations Act, 2021. Each report covers the prior calendar year and is due June 1. Carriers, TPAs and PBMs usually file most of it, but employers often supply the premium data.Full guideCompliance rules and deadlines

R

Reference-based pricing (RBP): Reference-based pricing (RBP) lets a self-funded health plan pay providers a set percentage of a benchmark, usually what Medicare pays for the same service, instead of a network discount off billed charges. It can lower claim costs, but providers who reject the payment may balance bill members, so the plan must resolve those bills.Full guidePlan financing

S

Section 105(h) nondiscrimination testing: Section 105(h) nondiscrimination testing checks that an employer's self-insured medical reimbursement plan, including a self-funded health plan, HRA or health FSA, does not favor highly compensated individuals in eligibility or benefits. If the plan fails, the plan stays in place, but some or all reimbursements to those individuals become taxable income to them.Full guideCompliance rules and deadlines
Self-funded health plan: Self-funded health insurance is a health plan where the employer pays employees' medical claims from its own money instead of buying a fully insured policy. A third-party administrator processes the claims, a pharmacy benefit manager runs the drug benefit, and stop-loss insurance reimburses the employer when claims pass set limits.Full guidePlan financing
Self-funded health plan: Self-insured health plans give employers control of plan design, full claims data, freedom from state premium taxes and mandates, and the chance to keep money when claims run low. The cons are claims volatility, uneven cash flow, exposure to large claims and lasering, fiduciary and compliance duties, and run-out liability when the plan ends.Full guidePlan financing
Self-funded health plan: In a fully insured plan, the employer pays a fixed premium and the insurance company carries the claims risk. In a self-funded plan, the employer pays employees' claims itself, usually with stop-loss insurance capping large losses, and in exchange gets its own claims data, freedom from most state mandates and any money not spent on claims.Full guidePlan financing
Spread pricing (pharmacy benefit management): Spread pricing is when a pharmacy benefit manager charges your health plan more for a prescription than it pays the pharmacy and keeps the difference. The spread rarely appears on an invoice. Your contract decides whether it is allowed, and federal law passed in 2026 requires PBMs to report it to employer plans starting in 2028 or 2029.Full guidePharmacy and PBMs
Stop-loss captive: A captive health insurance plan is a self-funded employer health plan whose stop-loss coverage runs through a captive, an insurer owned by the employers it covers. The employer pays routine claims, a shared captive layer pays mid-sized large claims, and a reinsurer pays the biggest ones. Good years can return surplus; bad years can cost more.Full guideStop-loss insurance
Stop-loss insurance: A self-funded employer with a $50,000 specific deductible pays the first $50,000 of one person's claims, and stop-loss reimburses the rest. If that person's claims reach $220,000, the carrier pays $170,000. Aggregate stop-loss works the same way for total plan claims above a group-wide attachment point.Full guideStop-loss insurance
Stop-loss insurance: Stop-loss insurance reimburses a self-funded employer when health claims pass a set limit. Specific stop-loss covers one person's claims above a per-person deductible, and aggregate stop-loss covers total plan claims above a group-wide cap. The employer pays claims up to those attachment points, and the carrier reimburses the excess.Full guideStop-loss insurance
Stop-loss premium: Stop-loss insurance cost depends on your group, so there is no standard price. Carriers quote specific stop-loss per employee per month by single and family tier, and aggregate coverage separately. The specific deductible, contract type, group size, claims history, lasers, industry, plan design, medical trend and commissions all move the premium.Full guideStop-loss insurance
Summary of benefits and coverage (SBC): Every employer with a group health plan must give employees a summary of benefits and coverage (SBC), a standardized summary of what each plan option covers and costs, no longer than four double-sided pages. It is due with enrollment materials, 30 days before an automatic renewal, within 90 days for special enrollees, and within seven business days of a request.Full guideCompliance rules and deadlines
Summary plan description (SPD): A summary plan description (SPD) is the plain-language document ERISA requires every employer plan to give participants, explaining what the plan covers, who is eligible, how to file claims and appeals, and their rights under ERISA. It is due within 90 days after someone joins the plan and must match the plan document.Full guideERISA and plan documents

T

The ERISA compliance checklist: An ERISA compliance checklist lists what an employer health and welfare plan must have, send and file. That means a written plan document and SPD, SMMs, SARs, SBCs, Form 5500, claims procedures, a documented fiduciary process, broker and consultant fee disclosures, COBRA and other required notices, and the CAA 2021 filings, each on its own deadline.Full guideERISA and plan documents
Third party administrator (TPA): A third party administrator (TPA) is a company an employer hires to run its self-funded or level-funded health plan. The TPA pays claims with the employer's money, provides network access, files stop-loss claims and reports plan data. The employer, not the TPA, carries the claims risk and stays responsible for the plan.Full guideBenefits strategy and administration

V

Voluntary benefits: Voluntary benefits are optional coverages employees choose and usually pay for themselves through payroll deduction, at group rates the employer makes available. Common examples are accident, critical illness, hospital indemnity, supplemental life, disability and pet insurance. The employer picks the menu and runs the deductions, and each employee decides whether to enroll.Full guideBenefits strategy and administration
Voluntary plan safe harbor: Employers can owe fiduciary duties on voluntary benefits even when employees pay the full premium. A voluntary program stays outside ERISA only if it meets all four conditions of the DOL safe harbor, including no employer endorsement. Miss one, and the employer must select and monitor carriers and broker pay like any other ERISA plan.Full guideFiduciary duty and advisor pay

Y

Year-end health plan compliance: A year-end health plan compliance checklist lists the filings, notices, tests and limit updates an employer group health plan has to finish before the plan year closes and early in the next. It covers the December 31 gag clause attestation, nondiscrimination testing, new plan limits, participant notices, ACA reporting and the CMS Part D disclosure.Full guideCompliance rules and deadlines

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