ATTACHMENT O Definitions

MEPS-20(D)

U.S. DEPARTMENT OF COMMERCE

(4-26-2007)

Medical Expenditure Panel Survey
Insurance Component

HEALTH INSURANCE COST STUDY
DEFINITIONS
ACTIVE EMPLOYEE – A person who was employed full- or
part-time in 2006 regardless of whether the employee was
considered permanent, temporary, or seasonal. Include owners
and officers of the organization. Exclude individuals who were
contract laborers, retirees, laid off, left employment prior to 2006,
or who were hired after 2006.

Economics and Statistics Administration
U.S. CENSUS BUREAU
ACTING AS COLLECTING AGENT FOR

U.S. DEPARTMENT OF
HEALTH AND HUMAN SERVICES
AGENCY FOR HEALTHCARE
RESEARCH AND QUALITY

FAMILY COVERAGE – A health plan that covers the enrollee
and members of his/her immediate family (spouse and/or
children). For purposes of this survey, "family coverage" is any
coverage other than single and employee-plus-one (see
definitions). Some plans offer more than one rate for family
coverage, depending on family size and composition. If more than
one rate is offered, report costs for a family of four.

CAFETERIA PLAN – See Flexible Benefits Plan.
COBRA – Consolidated Omnibus Budget Reconciliation Act of
1985 (COBRA). Part of this law requires employers to continue
offering health coverage for enrollees and their dependents for a
period of time after an enrollee leaves the firm. Typically, the
enrollee pays the entire monthly premium when covered by
COBRA. COBRA coverage for State and local governments was
transmitted through the Public Health Service Act and may also be
referred to as PHSA coverage or PHSA (COBRA) coverage.
COINSURANCE – A fixed percentage that an enrollee pays for
medical expenses after the deductible amount, if any, was paid.
Coinsurance rates may differ for different types of services. For
example, an enrollee may pay a 10% rate for doctor fees, a 20%
rate for hospital fees, and a 5% rate for prescription fees.
CONVENTIONAL INDEMNITY/TRADITIONAL HEALTH
PLAN – A type of medical plan that allows the participant to
choose any provider without effect on reimbursement. These plans
reimburse the patient and/or provider as expenses are incurred.
COPAYMENT – A fixed dollar amount that an enrollee pays
when medical service is received, regardless of the total charge for
service. The insurer is responsible for the rest of the total charge.
For example, an enrollee may pay a $10 copay for each doctor’s
office visit, $75 for each day in the hospital, and $5 for each
prescription.
DEDUCTIBLE – A fixed dollar amount during the benefit period
(usually a year) that an insured person pays before the insurer
starts to make payments for covered medical services. For
example, if the plan has a $100 deductible, the insured person
would be responsible for the first $100 of covered medical services.
Plans may have both per individual and family deductibles. Plans
may have separate deductibles for specific services. Deductibles
are often associated with conventional indemnity plans.
EMPLOYEE-PLUS-ONE COVERAGE – Health insurance
coverage for an employee-plus-spouse or an employee-pluschild(ren) AT A LOWER PREMIUM LEVEL than family coverage.
EMPLOYEE PRE-TAX CONTRIBUTIONS TO HEALTH
INSURANCE – Also known as a Premium Only Plan (POP), this
is the most basic type of Section 125 Plan. An employee can pay
his/her share of the premium for employer-sponsored health
insurance through a payroll deduction, prior to taxes being
withheld. This lowers the amount of income on which the employee
must pay taxes.
EXCLUSIVE PROVIDER ORGANIZATION (EPO) PLAN –
A restrictive type of preferred provider organization plan under
which employees must use providers from the specified network of
physicians and hospitals to receive coverage. There is no
coverage for care received from a non-network provider except in
an emergency situation.

FLEXIBLE BENEFITS PLAN (Full Cafeteria Plan) – A
benefit program under Section 125 of the Internal Revenue Code
that offers employees a choice between permissible taxable
benefits which may include cash, and nontaxable benefits such as
life and health insurance, vacations, retirement plans, and child
care. Although a common core of benefits may be required, the
employee can determine how his or her remaining benefit dollars
are to be allocated for each type of benefit from the total amount
promised by the employer. Sometimes employee contributions
may be made for additional coverage.
FLEXIBLE SPENDING ACCOUNT (FSA) – An account
offered and administered by employers that provides a way for
employees to set aside, out of their paycheck, pretax dollars to
pay for the employee’s share of insurance premiums or medical
expenses not covered by the employer’s health plan. The
employer may also make contributions to a FSA. Typically,
benefits or cash must be used within the given benefit year or the
employee loses the money.
FORMULARY – A formulary is a list of prescription drugs that
are preferred by the health plan for use. A formulary may include
brand-name and generic drugs.
GATEKEEPER – A gatekeeper is responsible for coordinating
(managing) all services, approving referrals and directing patients
to specialists or health care facilities. Gatekeepers are associated
with prepaid health plans. A gatekeeper may or may not be a
physician.
HEALTH INSURANCE PORTABILITY AND
ACCOUNTABILITY ACT (HIPAA) – This federal law, enacted
in 1996, protects health insurance coverage for workers and their
families when they change jobs by limiting exclusions for
pre-existing conditions, prohibiting discrimination against
employees and dependents based on their health status, and
guaranteeing renewability and availability of health coverage to
certain employers and individuals.
HEALTH MAINTENANCE ORGANIZATION (HMO) – A
health care system in which plan participants obtain
comprehensive health care services from a specified list of
"in-network" providers who receive a fixed periodic prepayment
from the insurer. Plan participants’ access to "in-network"
providers is controlled by a primary-care physician or gatekeeper.
HMOs typically do not have a deductible.
HEALTH REIMBURSEMENT ARRANGEMENT (HRA) – An
arrangement where the employer agrees to reimburse health
expenses up to a set amount per year for an employee. While
often associated with a high deductible health plan, this is not a
requirement. Only the employer can fund an HRA. Unused funds
can be carried over to the following year.
Continued on reverse

HEALTH SAVINGS ACCOUNT (HSA) – A trust account
owned by the employee for the purpose of paying for medical
expenses not covered by the employer’s health plan. The
employee must be enrolled in a high deductible health plan that is
HSA eligible in order to qualify for an HSA. Both employers and
employees can contribute to an HSA. Unused funds are carried
over to the following year.
INSURANCE CARRIER – A corporation that engages in the
business of selling insurance protection to the public, either
directly or through employers, unions, etc.
LONG-TERM CARE INSURANCE – Covers all forms of
health care (both institutional and non-institutional) required by
the chronically ill or disabled. Often provided as optional
coverage.
OPTIONAL COVERAGE (Single service plans) – Separate
coverage for a limited area of medical care to supplement the
basic health insurance plan. These plans are often offered
through an insurance company/carrier separate from the one
providing basic health coverage. An additional premium is paid
by the enrollee and/or employer for this optional coverage.
(Example: Dental or Vision Plan)
POINT-OF-SERVICE PLAN (POS) (Also called openended HMO or HMO/PPO hybrid) – Plan participants’ access
to "in-network" providers is controlled by a primary-care doctor
or gatekeeper. Participants are covered when they seek care
from out-of-network providers, but at reduced coverage levels.
PRE-EXISTING CONDITION LIMITATION – Restricts
coverage for medical or health conditions which exist prior to
enrollment in a health plan. Pre-existing conditions may be
excluded from coverage, or enrollees may have to wait a
specified length of time before medical care related to the
pre-existing condition is covered by the health plan.
PREFERRED ("IN-NETWORK"/PARTICIPATING)
PROVIDER – A medical provider (doctor, hospital, pharmacy)
who is a member of a health plan’s network. Enrollees
generally pay lower or no copayment for services from a
preferred provider.
PREFERRED PROVIDER ORGANIZATION (PPO)
PLAN – An indemnity plan where coverage is provided to
participants through a network of selected health care
providers (such as hospitals and physicians). The enrollees
may go outside the network, but would incur larger costs in
the form of higher deductibles, higher coinsurance rates, or
non-discounted charges from the providers.
PREMIUM – Agreed upon fees paid for coverage of medical
benefits for a defined benefit period. Premiums can be paid by
employers, unions, employees, or shared by both the insured
person and the plan sponsor.

PREMIUM EQUIVALENT – For self-insured plans, this is
the cost per covered enrollee, or the amount the organization
would expect to pay in premiums if the plan were insured by
someone else. The premium equivalent is equal to the
per-capita amount of claims, administration, and stop-loss
premiums for a self-insured plan.
PURCHASED PLAN (Also called a fully-insured plan) – A
health plan is considered purchased when the financial risk for
the enrollee’s medical claims is assumed by the health
insurance company/carrier.
SELF-INSURED PLAN – A health plan is self insured when
the financial risk for the enrollee’s medical claims is assumed
partially or entirely by the organization offering the plan.
Organizations with self-insured plans commonly purchase
stop-loss coverage from an insurer who agrees to bear the risk
(or stop the loss) for those expenses exceeding a
predetermined dollar amount.
SINGLE COVERAGE – A health plan that covers the
employee only.
STATE CONTINUATION-OF-BENEFITS LAWS – Laws
which vary by state mandating that organizations provide
enrollees with the option of continuing to purchase insurance
through the organization for a limited amount of time after they
leave the organization’s employ.
STOP-LOSS COVERAGE – A form of reinsurance for
organizations with self-insured health plans which limits the
amount the firm will have to pay for each enrollee’s health care
or for the total health expenses of the firm.
THIRD PARTY ADMINISTRATOR (TPA) – An individual
or firm hired by an employer to handle claims processing, pay
providers, and manage other functions related to the operation
of health insurance. The TPA is not the policyholder or the
insurer.
TYPICAL PAY PERIOD – Any pay period during calendar
year 2006 in which employment was neither unusually high nor
unusually low.
UNDERWRITER – The company that issues an insurance
policy and assumes the financial risk for covered individuals.
VOUCHER (STIPEND) – A specific dollar amount that an
organization provides to an employee to be applied toward the
employee’s health insurance coverage. The employee is then
responsible for obtaining his or her own health insurance
policy.

If you would like more information on the Medical Expenditure Panel Survey – Insurance
Component (MEPS–IC) or the survey sponsor, the Agency for Healthcare Research and
Quality (AHRQ), please visit the AHRQ Website at http://www.meps.ahrq.gov

MEPS-20(D) (4-26-2007)