Here are some commonly used health industry acronyms and their meaning:
- Department of labor Uniform Glossary of Terms
- PPO – Proferred Provider Organizaton. A health care organization composed of physicians, hospitals, or other providers, under carrier contract which provides for health care services at a reduced fee. A PPO is similar to an HMO, but care is paid for as it is received instead of in advance in the form of a scheduled fee. PPOs may also offer more flexibility by allowing for visits to out-of-network professionals. However, out-of-network expenses are higher and charges over and above the contracted rate can be assessed the patient. A policyholder has the option of using a primary physician or going directly to a specialist within the network. After any visit, the policyholder must submit a claim, and will be reimbursed for the visit minus his/her co-payment.
- HMO – Health Maintenance Organization. An organization that provides health coverage with providers under contract with an Insurance company. A Health Maintenance Organization (HMO) differs from traditional health insurance by the contracts it has with its providers. These contracts allow for premiums to be lower, because the health provider has the advantage of having patients directed to them; but these contracts also add additional restrictions to the HMO’s members. A policyholder will have a primary care physician (gatekeeper) within the network who will handle referrals to specialists and all providers must be linked to the same Medical Group.
- HRA – Health Reimbursement Arrangement. Employer-funded plans that reimburse employees for incurred medical expenses that are not covered by the company’s standard insurance plan. Because the employer funds the plan, and reimburses the employee for medical expenses not covered by the plan, any distributions are considered tax deductible to the employer, and reimbursement dollars received by the employee are generally tax-free.
- HSA – Health Savings Account. An account created for individuals who are covered under high-deductible health plans (HDHPs) to save for medical expenses that HDHPs do not cover. Contributions are made into the account by the individual or the individual’s employer and are limited to a maximum amount each year. The contributions can be both tax-deductible and grow tax-deferred and when used to pay for medical expense can be tax-free. Contributions accumulate year after year, and can be used to pay for qualified medical expenses – which includes expenses for medical care, dental, vision and prescription drugs.
- FSA – Flexible Spending Account. A type of savings account that provides the account holder with specific tax advantages. Set up by an employer for an employee, the account allows employees to contribute, on a pre-tax basis, a portion of their regular earnings to pay for qualified expenses, such as medical expenses or dependent care expenses.
- Section 125 Pre-Tax Only Plans – Section 125 Plans are one of the most underused employee benefits for small businesses today. These plans allow employees to withhold a portion of their salary on a pre-tax basis to cover the cost they contribution to their qualifying group insurance premiums for themselves or their dependents.