Attachment N – Definitions

MEPS-20(D)

U.S. DEPARTMENT OF COMMERCE

(03-29-2017)

Medical Expenditure Panel Survey
Insurance Component

HEALTH INSURANCE COST STUDY
DEFINITIONS

ACTIVE EMPLOYEE – A person who was employed
full- or part-time in 2017 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 2017.
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. People in a common-law marriage
should not be considered domestic partners.
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 2017, the maximum amount allowed in an
individual’s FSA is $2,600. 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.

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.
HEALTH REIMBURSEMENT ARRANGEMENT
(HRA) – An agreement where an employer funds a
predetermined amount of expenses to pay an employee
per benefit year for out-of-pocket medical costs, including
health insurance premiums. The HRA funds may be
carried over to the next benefit year. The HRA does not
have to be used in conjunction with any health plan.
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.

MEPS-20(D)

PRIVATE EXCHANGE – An employer may choose to
contract with a private exchange to provide a set of health
insurance plans to be offered to its employees. Private
exchanges are Affordable Care Act (ACA) compliant but
are not the same as the Federal exchange or marketplace
(at healthcare.gov) or those run by individual states.
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 (FTE) 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, small businesses obtaining coverage
for their employees through a Small Business Health
Options Program (SHOP) exchange are eligible for a
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.
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. Effective in 2016, SHOP exchanges are
available to employers with 100 or fewer full-timeequivalent (FTEs) employees. See healthcare.gov for
details.
SPECIALTY DRUGS – Prescription medications that
require special handling, administration or monitoring.
These drugs are used to treat complex, chronic and often
costly conditions, such as multiple sclerosis, rheumatoid
arthritis, hepatitis C, and hemophilia. Additionally, specialty
drugs include specifically identified types of drugs, such as
lifestyle drugs and biologics.
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 2017 in which employment was neither
unusually high nor unusually low.

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 .