Benefits glossary
Common benefits words in plain English. Each definition comes from one of the guides on this site, which lists the official sources, with a link so you can read more.
Last checked: Nov 2026
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- 401(k)
- A retirement savings plan through your job. You choose to have part of your paycheck put into your own account in the plan (per the IRS). Read: 401(k) basics and employer match
A
- Annual maximum (dental)
- The most a dental plan will pay in a year, even if your costs are higher, according to the American Dental Association. After that, you pay the rest. Read: Dental and vision coverage
- Applicable large employer (ALE)
- Under IRS rules, an employer that averaged at least 50 full-time employees, including full-time equivalents, in the prior year. Full-time means 30 or more hours a week, or 130 hours a month. Read: Benefits compliance basics
C
- Cafeteria plan
- A written plan that lets employees choose between cash and certain qualified benefits that aren't taxed (IRS Publication 15-B). Read: Starting an HSA or FSA program
- Carryover (FSA)
- A plan feature that lets you carry a limited amount of unused health FSA money into the next plan year. For a 2026 plan year, the IRS maximum carryover is $680. Anything above the carryover amount is lost. Read: What is an FSA?
- COBRA
- A federal law that generally lets people keep their employer group health coverage for a limited time after events like job loss, usually by paying up to 102% of the plan's cost. It generally applies to employers with 20 or more employees (per the U.S. Department of Labor). Coverage usually lasts up to 18 months. Read: COBRA explained
- COBRA election period
- The time you have to choose COBRA: 60 days, starting when your job-based coverage ends or when you get your COBRA election notice, whichever is later (U.S. Department of Labor). Read: COBRA explained
- Coinsurance
- Your percentage share of the cost of a covered service after you meet your deductible. HealthCare.gov uses 20% as an example. Read: Health insurance words explained
- Commuter benefits (qualified transportation benefits)
- Transit passes, vanpool rides, and qualified parking that an employer can provide or let you pay for pre-tax. For 2026, the limits are $340 a month for transit and vanpool combined and $340 a month for parking (IRS Publication 15-B). Read: Dependent care FSA and commuter benefits
- Coordination of benefits (who pays first)
- Rules that decide which insurance pays first when you have more than one. If you're 65 or older and covered through a current job at an employer with 20 or more employees, the job's plan generally pays first and Medicare pays second (Medicare.gov). Read: Medicare at 65 if you're still working
- Copay (copayment)
- A fixed dollar amount you pay for a covered service. HealthCare.gov uses $20 as an example. Read: Health insurance words explained
- Coverage examples
- The last part of an SBC. It shows what a person might pay in made-up situations, such as having a baby or managing type 2 diabetes, so you can compare plans. The government's template says it is not a cost estimator. Read: How to read your SBC
- Creditable drug coverage
- Prescription drug coverage similar in value to Medicare Part D. If you have it, you can wait to join a Medicare drug plan. Going 63 days or more without it can lead to a Part D late penalty (Medicare.gov). Read: Medicare at 65 if you're still working
D
- Deductible
- The amount you pay for covered care before your plan starts to pay. With a $2,000 deductible, you pay the first $2,000 of covered services yourself (HealthCare.gov example). Read: Health insurance words explained
- Dependent care FSA
- A separate account for child or dependent care, not medical bills. The IRS calls it a dependent care assistance program. It has its own limit: $7,500 for 2026 ($3,750 if married filing separately), per IRS Publication 15-B. Read: Dependent care FSA and commuter benefits
E
- Elective deferrals
- The part of your paycheck you choose to put into your 401(k). In plain words: money you choose to save from your pay. Read: 401(k) basics and employer match
- Employer match
- Money your employer adds to your 401(k) when you contribute, if the plan allows it. For example, a plan might add 50 cents for each dollar you save. Read: 401(k) basics and employer match
- EPO (Exclusive Provider Organization)
- A plan where services are covered only if you use doctors, specialists, or hospitals in the plan's network, except in an emergency (HealthCare.gov). Read: HMO vs PPO vs HDHP
F
- Fiduciary
- A person who runs a retirement plan or controls its money. Fiduciaries must act only in the interest of participants, act prudently, diversify investments, follow the plan document, and pay only reasonable plan expenses (DOL/IRS). Read: 401(k) basics for employers
- FSA (health flexible spending arrangement)
- An arrangement through your employer that lets you pay for many out-of-pocket medical expenses with tax-free dollars (HealthCare.gov). You choose how much to put in at the start of the plan year. Read: What is an FSA?
G
- Grace period (FSA)
- A plan feature that gives you up to 2 and a half extra months after the plan year ends to use last year's leftover health FSA money. A plan can offer a grace period or a carryover, but not both. Read: What is an FSA?
H
- HDHP (high-deductible health plan)
- A plan with a higher deductible than a traditional plan. The monthly premium is usually lower, but you pay more of your costs yourself before the plan pays its share. An HDHP that meets IRS rules lets you open an HSA. Read: HMO vs PPO vs HDHP
- HMO (Health Maintenance Organization)
- A plan that usually limits coverage to doctors who work for or contract with the HMO. It generally won't cover out-of-network care except in an emergency (HealthCare.gov). Read: HMO vs PPO vs HDHP
- HRA (health reimbursement arrangement)
- An account funded only by your employer. You can't put your own money in (IRS Publication 969). Read: HSA vs FSA
- HSA (health savings account)
- A tax-exempt account you set up with a qualified trustee, like a bank or insurance company, to pay or reimburse certain medical expenses. You need to be covered by a qualifying high-deductible health plan (IRS). Read: What is an HSA?
I
- In-network
- Doctors and hospitals that have a deal with your plan. They usually cost you less. Read: Health insurance words explained
- Initial Enrollment Period (Medicare)
- Your first chance to sign up for Medicare. It lasts 7 months: it starts 3 months before the month you turn 65 and ends 3 months after it (Medicare.gov). Read: Medicare at 65 if you're still working
L
- Late enrollment penalty (Medicare Part B)
- An extra 10% added to your Part B premium for each full 12-month period you could have had Part B but didn't, usually for as long as you have Part B (Medicare.gov). Read: Medicare at 65 if you're still working
- Limited-purpose FSA
- An FSA for things like dental and vision. Unlike a general-purpose health FSA, it can be paired with an HSA. Read: What is an HSA?
M
- Medicare Part A and Part B
- Part A is hospital insurance. Part B is medical insurance. The standard Part B premium is $202.90 a month in 2026 (Medicare.gov). Read: Medicare at 65 if you're still working
N
- Network
- The group of doctors, hospitals, and pharmacies that have a deal with your plan. Going in network almost always costs you less. Read: HMO vs PPO vs HDHP
O
- Open enrollment
- The time each year when you can sign up for, change, or drop benefits like health, dental, and vision insurance. Your employer sets its own dates. Read: Open Enrollment 101
- Out-of-pocket maximum (or limit)
- The most you have to pay for covered services in a plan year. After you spend this amount on in-network care, your plan pays 100% of covered benefits for the rest of the plan year (HealthCare.gov). Read: Health insurance words explained
P
- POS (Point of Service)
- A plan where you pay less if you use the plan's network, and you need a referral from your primary care doctor to see a specialist (HealthCare.gov). Read: HMO vs PPO vs HDHP
- PPO (Preferred Provider Organization)
- A plan where you pay less if you use providers in the plan's network. You can also see doctors outside the network without a referral, for an extra cost (HealthCare.gov). Read: HMO vs PPO vs HDHP
- The amount you pay to have insurance. HealthCare.gov describes it as the amount you pay for your health insurance every month. Read: Health insurance words explained
- Preventive care
- Checkups and screenings. Most plans must cover a set of preventive services at no cost to you when you use an in-network provider, even before you meet your deductible (HealthCare.gov). Read: Health insurance words explained
Q
- Qualifying event (COBRA)
- An event that can make you eligible for COBRA, such as leaving a job or a cut in hours, the death of the covered worker, a divorce or legal separation, or a child aging out of the plan (U.S. Department of Labor). Read: COBRA explained
- Qualifying life event
- A big life change, like getting married or divorced, having or adopting a baby, or losing other coverage, that can make you eligible for a Special Enrollment Period, so you can enroll outside open enrollment (HealthCare.gov). Read: Life changes and special enrollment
- Qualifying person (dependent care)
- For dependent care benefits, your dependent child under 13, or a spouse or certain other dependents who can't care for themselves and lived with you more than half the year (IRS Publication 503). Read: Dependent care FSA and commuter benefits
R
- Roth 401(k) contributions
- Contributions that are included in your taxable income the year you make them, if your plan allows them. They generally follow the tax rules for Roth IRAs (IRS). Read: 401(k) basics and employer match
S
- Safe harbor 401(k)
- A 401(k) design where the employer makes a set contribution that is fully vested right away, and in return the plan skips some yearly nondiscrimination testing (DOL/IRS). Read: 401(k) basics for employers
- Special Enrollment Period (SEP)
- A time outside open enrollment when you can sign up for health insurance because of certain life events. Marketplace plans usually give 60 days, and job-based plans must give at least 30 days (HealthCare.gov). Read: Life changes and special enrollment
- State Health Insurance Assistance Program (SHIP)
- A local program that offers free, one-on-one help choosing a Medicare plan, reviewing coverage, and understanding costs (Medicare.gov). Read: Medicare at 65 if you're still working
- Summary of Benefits and Coverage (SBC)
- An easy-to-read summary that lets you compare costs and coverage between plans. You get one when you shop for coverage, when you renew or change coverage, or when you ask for one (HealthCare.gov). The premium is listed separately. Read: How to read your SBC
- Summary Plan Description (SPD)
- The main document that explains an ERISA plan to participants. Federal rules say it must be written so the average participant can understand it. Read: Open enrollment communication
U
- Uniform Glossary
- A standard list of common health coverage terms that health plans must make available along with the SBC (HealthCare.gov). Read: How to read your SBC
V
- Vesting
- Ownership of the money in your retirement account. Your own contributions are always 100% yours. Your employer's contributions may follow a vesting schedule (IRS). Read: 401(k) basics and employer match