Definitions

MEPS-20(D)

U.S. DEPARTMENT OF COMMERCE

(03-05-2014)

Medical Expenditure Panel Survey
Insurance Component

HEALTH INSURANCE COST STUDY
DEFINITIONS

ACTIVE EMPLOYEE – A person who was employed fullor part-time in 2014 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, or left
employment prior to 2014.
ACTUARIAL VALUE – The percentage of medical
expenses paid by the plan, rather than out-of-pocket by a
typical group of enrollees. As plans increase in actuarial
value, they would cover a greater share of enrollees’ medical
expenses overall.
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.
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 $20
copay for each doctor’s office visit, $150 for each day in the
hospital, and $20 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 $1000 deductible, the
insured person would be responsible for the first $1000 of
covered medical services. Plans may have both individual
and family deductibles.
DOMESTIC PARTNERS – Unmarried couples of the same
or opposite sex who live together and share a common
domestic life.
EMPLOYEE-PLUS-ONE COVERAGE – Health insurance
coverage for an employee-plus-spouse or an
employee-plus-child AT A LOWER PREMIUM LEVEL than
family coverage.

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

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 pays 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 enrollees must use
providers from the specified network of physicians and
hospitals to receive coverage except in an emergency
situation.
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.
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.
FLEXIBLE SPENDING ACCOUNT (FSA) – An
account offered and administered by employers that
provides a way for employees to set aside, out of their
paycheck, pre-tax dollars to pay for the employee’s share
of medical expenses not covered by the employer’s health
plan. In 2014, the maximum amount allowed in an
individual’s FSA is $2,500. Typically, benefits or cash
must be used within the given benefit year or the
employee loses the money.
FULL-TIME EQUIVALENT (FTE) – An FTE is the
number of working hours that represents one full-time
employee during a specific time period, such as a week. A
FTE is 30 hours per week for purposes of determining
whether an employer is eligible to obtain health insurance
through a SHOP exchange and 40 hours per week for
purposes of determining whether an employer is eligible for
the Small Business Healthcare Tax Credit. See
healthcare.gov for details.
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.

Continued on reverse

GRANDFATHERED HEALTH PLANS – Plans that
existed before the Patient Protection and Affordable Care
Act (PPACA) was enacted. Plans certified to be
grandfathered plans are not subject to all of the PPACA
requirements.
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 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.
LONG-TERM CARE INSURANCE – Covers all forms
of health care (both institutional and non-institutional)
required by the chronically ill or disabled. Normally
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. Often, these
plans are 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
open-ended HMO or HMO/PPO hybrid) – Plan
participants’ access to "in-network" providers is controlled
by primary-care doctors or gatekeepers. Participants are
covered when they seek care from out-of-network
providers, but at reduced coverage levels.
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 – A plan that provides coverage to participants
through a network of selected health care providers (such
as hospitals and physicians). The enrollees may go outside
of 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 a 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 (see definition).
SINGLE COVERAGE – A health plan that covers the
employee only.
SMALL BUSINESS HEALTHCARE TAX CREDIT –
A small employer may be eligible for this credit on its
federal income taxes if 1.) it has fewer than 25 full-time
equivalent employees, 2.) pays an average wage of less
than $50,000 per year, AND 3.) pays at least half of the
health insurance premiums for its employees. Effective in
2014, only small businesses obtaining coverage for their
employees through a Small Business Health Options
Program (SHOP) exchange are eligible for the tax credit.
SMALL BUSINESS HEALTH OPTIONS PROGRAM
(SHOP) – SHOP exchanges are health insurance
marketplaces that provide a variety of health insurance
plans which small businesses can purchase for their
employees. Each State has its own SHOP exchange that
is administered by either the State or federal government,
and coverage through an exchange is provided by
private-sector insurance companies who choose to offer
plans in the exchange. SHOP exchanges were created
under the federal Patient Protection and Affordable Care
Act of 2010. For 2014, SHOP exchanges are available to
employers with 50 or fewer full-time-equivalent (FTEs)
employees. See healthcare.gov for details.
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.
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
healthcare (the specific (individual) stop-loss coverage
amount) or for the total health expenses of the firm (the
aggregate stop-loss coverage amount).
THIRD PARTY ADMINISTRATOR (TPA) /
ADMINISTRATIVE SERVICES ONLY (ASO) – An
individual or firm hired by an employer to handle claims
processing, pay providers, and manage other functions
related to the operation of a self-insured health plan.
TYPICAL PAY PERIOD – Any pay period during
calendar year 2014 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.

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 .
MEPS-20(D)