Benefits 101 / Employee guide
A plain-language benefits glossary.
Look up a term, then use the linked guide for an example. Your plan documents provide the details for your coverage.
Quick answer
Insurance terms describe different parts of the same process: keeping coverage, getting care, sharing costs, and understanding the claim.
Costs
| Term | Meaning |
|---|---|
| Premium | The amount paid to keep coverage in force, whether or not you use care. |
| Allowed amount | The amount recognized by the plan for a covered service; often a negotiated rate in network. |
| Deductible | Your required payment for services subject to the deductible before the plan begins sharing those costs. |
| Copay | A fixed amount for a covered service. Other services during the same visit may be billed separately. |
| Coinsurance | Your percentage share of the allowed amount under plan rules. |
| Out-of-pocket limit | A limit on specified covered cost sharing; it does not include every expense, such as premiums or noncovered care. |
Access and coverage
| Term | Meaning |
|---|---|
| Network | Providers participating in the plan’s contracted network. |
| PPO, HMO, EPO | Plan/network designs with differing access and referral rules. Check the actual plan rather than relying only on its initials. |
| Referral | A direction or authorization to obtain care from another provider, when required. |
| Prior authorization | A plan review required before certain services. Approval is not an unconditional payment guarantee. |
| Formulary | The plan’s prescription-drug list, with tiers and coverage rules. |
| Step therapy | A requirement to try specified treatment before another is covered, subject to applicable exceptions. |
Documents and accounts
| Term | Meaning |
|---|---|
| EOB | Explanation of Benefits: how a claim was processed; not a bill. |
| SBC | Summary of Benefits and Coverage: a standardized plan summary useful for comparison. |
| SPD | Summary Plan Description: describes an ERISA plan’s operation and participant rights; consult governing documents and applicable law when a dispute arises. |
| HSA | An individually owned Health Savings Account. Keeping the account and being eligible to contribute are different questions. |
| Health FSA | An employer-sponsored health spending arrangement with contribution and expense deadlines. |
| HRA | An employer-funded Health Reimbursement Arrangement governed by its plan terms. |
Enrollment and other benefits
| Term | Meaning |
|---|---|
| Open enrollment | A scheduled period for benefit elections under the plan’s rules. |
| Special enrollment | A right to enroll outside that period after certain qualifying events and within applicable deadlines. |
| Waiting period | Time an otherwise eligible person waits for coverage; applicable group health waiting periods generally cannot exceed 90 days. |
| COBRA | Temporary continuation of certain employer coverage for qualified beneficiaries after qualifying events, subject to eligibility and deadlines. |
| Disability coverage | Benefits replacing part of covered income when policy conditions are met. |
| Voluntary benefits | Optional coverage often paid by employees; check premiums and what the product supplements. |
| EAP | Employee Assistance Program: services and limits vary by the employer’s arrangement. |
Sources checked September 19, 2026. General information; your plan and circumstances matter.
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