TOOLS & RESOURCES

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Glossary

Coinsurance:
How you and your medical plan share costs after you meet the plan’s annual deductible (if applicable). For example, your plan may cover 80% of charges for a covered hospitalization, leaving you responsible for the other 20%. This 20% is known as the coinsurance.
Copay:
A fixed amount (for example, $20) you pay for a covered health care service, usually when you receive the service. The amount can vary by the type of service you receive.
Deductible:
The amount you owe for health care services before your plan begins to pay. For example, if your annual deductible is $3000, your plan won’t pay anything until you’ve reached that amount first. The exception is preventive care, which is fully covered so you pay nothing.
Dependent Care Flexible Spending Account (FSA):
An optional arrangement you may set up through [Client] to pay for eligible dependent care expenses — including child and elder care — with tax-free dollars. You contribute to your FSA through automatic, before-tax payroll deductions. [if no carryover: FSAs have a “use it or lose it” rule, meaning that any money left in your FSA at year-end is forfeited.] [if carryover: You can roll over up to $500 of unused funds at the end of the plan year to use the following year; amounts above $500 will be forfeited.] For a full list of eligible expenses, refer to IRS Publication 503, available at www.irs.gov.
Health Care Flexible Spending Account (FSA):
An optional arrangement you may set up through [Client] to pay for eligible health care expenses — including deductibles, coinsurance, and copays for medical, dental, and vision care — with tax-free dollars. You contribute to your FSA through automatic, before-tax payroll deductions. [if no carryover: FSAs have a “use it or lose it” rule, meaning that any money left in your FSA at year-end is forfeited.] [if carryover: You can roll over up to $500 of unused funds at the end of the plan year to use the following year; amounts above $500 will be forfeited.] By law, you cannot participate in a Health Care FSA and a Health Savings Account (HSA) at the same time. For a full list of eligible expenses, refer to IRS Publication 502, available at www.irs.gov.
Health Savings Account (HSA):
A medical savings account that, by law, is only available to participants in a qualified high-deductible health plan, such as the [Client CDHP]. An HSA allows you to pay for eligible medical expenses — including deductibles, coinsurance, and copays for medical, dental, and vision care — with tax-free dollars. Unlike a Flexible Spending Account (FSA), all of the money in your HSA rolls over from year to year and is always yours to keep. For example, you may use the money in your HSA to pay for eligible health expenses in retirement. For a full list of eligible expenses, refer to IRS Publication 502, available at www.irs.gov.
Limited Purpose Flexible Spending Account (LPFSA):
Available to [Client CDHP] participants only, the LPFSA is designed to work together with an HSA to provide additional tax-saving opportunities. This account can be used to reimburse deductibles, coinsurance, and copayments for dental and vision care only (your HSA covers your out-of-pocket medical expenses). Eyeglasses and contact lenses, prescription sunglasses, Lasik surgery, and adult orthodontia are included.
Out-of-pocket maximum:
The most you’ll ever pay in a plan year for covered expenses. Once you meet your out-of-pocket maximum, your plan pays 100% of covered services for the rest of the year.
Premiums:
A fixed amount that you automatically contribute from each paycheck for coverage under a medical plan. Premiums can vary widely by the type of plan you choose.
Preventive care:
In-network preventive care is fully covered under all of [Client’s] medical plans, so you pay nothing. Preventive care includes routine care designed to prevent illness or disease, including annual physicals, immunizations, and cancer screenings. If the same tests are done to diagnose an illness or treat a known condition, they are not considered preventive care and your plan’s normal charges will apply.