The words on your renewal, in plain English.
Benefits language is unusually good at hiding the mechanism. These are the terms that decide what you actually pay — defined the way we would explain them across a table, each with what it does to your number.
Start typing to find one.
1094-C
The transmittal an applicable large employer files with the IRS alongside its Forms 1095-C, reporting employee counts, the monthly 95% offer answer and any aggregated group.
Why it matters. A single wrong answer in the monthly offer column can put the whole full-time workforce in the penalty calculation. Form 1094-C, line by line →
1095-C
The individual statement an applicable large employer provides about the coverage it offered.
Why it matters. There are now two routes: furnish by 31 January with an automatic 30-day extension, or use the on-request model — post a conspicuous notice by the due date, retain through 15 October, and furnish within 30 days of a request. Several states run their own mandates the federal relief does not override. Form 1095-C, line by line →
Allowed AmountAlso: Eligible Expense
The most a plan will recognize for a covered service. What the plan pays and what the employee owes are both worked out from this number, not from the provider’s billed charge. It appears on every EOB.
Why it matters. A provider’s list price and the allowed amount can be far apart. Network contracts set the allowed amount, which is why the same procedure can cost an employee very different amounts in and out of network.
Applicable Large Employer (ALE)
An employer that averaged 50 or more full-time and full-time-equivalent employees in the prior calendar year, counted across a controlled group rather than per entity.
Why it matters. Crossing this line is what starts 1094-C and 1095-C reporting. It is measured on the prior year, so the obligation arrives the year after the growth.
ASO (Administrative Services Only)
A self-funded arrangement in which a carrier or TPA administers the plan for a fee while the employer pays the claims.
Why it matters. The fee is fixed and the claims are not, so the contract terms and what sits outside the per-employee fee decide the real cost. ASO explained →
Attachment PointAlso: Pooling Point
The dollar level above which a single claim stops counting against the group’s own experience — either pooled away by the carrier on an insured plan, or picked up by stop-loss on a self-funded one.
Why it matters. Where it sits decides whether one large claim is your problem or the carrier’s. When attachment points rise, more of each large claim stays in your experience, which can move a renewal with nothing else having changed.
Authorization Letter
A one-page letter that permits a carrier to release a defined set of information about your own plan to a named consultant.
Why it matters. It is not a broker of record letter. It does not change who represents you, it does not move commission, and it returns a limited information set rather than a full file. It applies to a group of any size.
Balance Billing
When an out-of-network provider bills the patient for the difference between its charge and what the plan allows. Federal law now bars it for emergency care and for certain care at in-network facilities, and the protections have limits.
Why it matters. Employees call HR when a bill arrives that the plan never mentioned. Knowing where the protection applies, and where it does not, keeps those calls short.
Benefits Administration Platform
The system that holds eligibility, runs enrollment, and passes elections to carriers and payroll.
Why it matters. The platform decision usually makes a bigger decision by accident: what it can and cannot pass across an integration ends up shaping what you can offer.
Book RateAlso: Manual Rate
The rate a carrier builds from age, location, industry classification and plan design rather than from your own claims.
Why it matters. Below full credibility, most of your renewal is this number. It is why a small employer’s increase is not a verdict on its own people.
Bracket
The size band an ancillary carrier rates you in — commonly 2–9, 10–49, 50–99 and 100+ enrolled.
Why it matters. Ancillary lines are not usually negotiated, they are bracketed: what arrives is the card rate for your bracket. Crossing a boundary produces a rate change that has nothing to do with your experience and reads exactly like a renewal action.
Broker of Record LetterAlso: BOR Letter
A letter appointing a new broker or consultant to represent you on a policy, replacing the incumbent.
Why it matters. Distinct from an authorization letter in every respect. A BOR changes representation; an authorization only releases information. BOR letter template →
COBRA
Federal continuation coverage, generally applying to employers with 20 or more employees.
Why it matters. Runs on clocks, not on goodwill: 30 days employer to administrator, 14 days administrator to qualified beneficiary, a 60-day election window, 45 days to the first premium, and a 30-day grace period after that. What COBRA costs →
Coinsurance
The share of an allowed charge the employee pays after the deductible, with the plan paying the rest. At 20% coinsurance the employee pays 20% and the plan pays 80%. See coinsurance explained.
Why it matters. A percentage grows with the price. On a large claim, coinsurance is the part of the plan employees feel most, until the out-of-pocket maximum caps it.
Community Rating
Pricing in the small-group market set from index, age and area rather than from the group’s own claims, filed with and approved by the state before the year begins.
Why it matters. It means the price is settled before anyone negotiates. At that size the lever is which book you are in, not what anyone says at renewal.
CopaymentAlso: Copay
A fixed dollar amount an employee pays at a visit or a prescription fill. See copays explained.
Why it matters. Copays are easy for employees to understand, so a change to them is noticed the day it takes effect. They often move at renewal as a way to hold the premium.
Cost Sharing
The umbrella term for what employees pay when they use care: the deductible, copayments, coinsurance and the out-of-pocket maximum. Model a change with the renewal cost-sharing calculator.
Why it matters. Employers often hold the premium and move cost sharing to control a renewal. Employees feel it at the point of care, so test what each change does to a typical employee and not just to the total.
CredibilityAlso: The Credibility Factor
The weight a carrier gives your own claims experience against its book rate. It scales with enrolled contracts, commonly reaching full weight around 1,000 contracts.
Why it matters. It decides which explanations for your renewal are even available. At 100 contracts roughly a tenth of the number is yours, so a good result came from the market and the carrier chosen. At full credibility the renewal is your own year, priced.
Credibility Charge
The cost of being blended toward the book rate when your own experience is better than the book.
Why it matters. Low credibility is not neutral. A group with genuinely good experience can be charged a substantial sum simply for being too small to be believed.
Creditable Coverage (Part D)
A determination of whether your prescription drug coverage is at least as good as Medicare Part D, disclosed to Medicare-eligible individuals before 15 October each year and to CMS within 60 days of the plan year start.
Why it matters. There is no size exemption. Small employers miss this one most often.
Deductible
The amount an employee pays for covered care before the plan begins paying its share. Some services, such as in-network preventive care, are covered before the deductible is met. See how it fits with the out-of-pocket maximum.
Why it matters. The deductible resets each plan year, so a January claim and a December claim can cost an employee very different amounts. A higher deductible lowers the premium and moves risk to employees.
Drug Tier
The level a drug sits on in the plan’s formulary, which sets what the employee pays. Lower tiers cost less, and specialty drugs usually sit on the highest.
Why it matters. Moving a drug between tiers changes what employees pay without changing the premium. It is worth asking which tier the drugs your employees fill most often sit on.
EBSA
The Employee Benefits Security Administration, the Department of Labor agency that enforces ERISA for employer benefit plans.
Why it matters. Most investigations begin with an employee complaint or a Form 5500 problem, and the documents a plan can produce decide how they end. What EBSA does →
Enrolled Contracts
The number of subscribers actually enrolled — not eligible employees, and not covered members.
Why it matters. This is the unit that drives credibility and ancillary brackets. It is why headcount is how you found your size band, not what sets your rate.
EOB (Explanation of Benefits)
The statement a carrier sends after a claim, showing what the provider billed, what the plan allowed, what it paid and what the employee owes. It is not a bill. See how to read an EOB.
Why it matters. It is the first place to look when an employee thinks a claim was processed wrongly, and the clearest view of how the plan’s cost sharing actually works.
Experience Rating
Pricing built from the group’s own claims history, blended with the book rate according to credibility.
Why it matters. Available only once a carrier will release claims data, which generally starts around 50 enrolled contracts.
Fiduciary
Under ERISA, status attaches to whoever exercises discretion over the plan or its assets, regardless of job title.
Why it matters. You do not become a fiduciary by being appointed one. You become one by making the decisions.
Form 5500
The annual return for an ERISA plan, due the last day of the seventh month after the plan year ends, extendable by two and a half months on Form 5558.
Why it matters. The extension is not retroactive — it has to be filed before the original deadline.
FormularyAlso: Drug List
The list of drugs a plan covers, organized into tiers that set what the employee pays. Plans can add rules to individual drugs, such as prior authorization or step therapy. See formulary strategy.
Why it matters. Formulary changes can move a renewal without a change to the premium rate. Read the list as closely as the rate sheet.
FSA, Limited-Purpose
A flexible spending account restricted to dental and vision expenses.
Why it matters. A general-purpose FSA paired with an HSA-eligible plan disqualifies HSA contributions entirely. The limited-purpose version is the fix, and it has to be in place before the plan year, not after.
Fully Insured
The carrier takes the risk and you pay a premium.
Why it matters. Your renewal is the carrier’s price for next year, built from some mix of your experience and its book, in a proportion set by credibility.
Funded
In everyday use, how a plan pays claims. Under ERISA, whether plan assets are held in a trust.
Why it matters. The two meanings collide constantly. Both a fully insured plan and a plan self-funded from general assets are “unfunded” for the Form 5500 small-plan exemption. Never read the word without checking which sense is meant.
HMO (Health Maintenance Organization)
A plan type in which employees use a defined network and usually choose a primary care provider who coordinates referrals. Out-of-network care is generally not covered except in an emergency. See what an HMO is.
Why it matters. HMOs are often the lowest-premium option, and the trade is a narrower choice of providers. The question for your group is whether the network includes the doctors your employees already use.
HRA
A health reimbursement arrangement: an employer-funded account that reimburses defined medical expenses.
Why it matters. Most HRAs owe the PCORI fee, which surprises employers who think of the fee as a self-funding problem.
ICHRA
An individual coverage HRA: the employer funds an allowance and employees buy individual coverage with it.
Why it matters. It moves the plan decision to the employee. It does not remove it — and it carries a real 90-day notice deadline before the plan year.
Level Funded
Self-funded up to an attachment point, with a fixed monthly payment and a reconciliation afterward.
Why it matters. It is self-funding, whatever the payment schedule feels like. The employer owes the PCORI fee and Section 105(h) testing applies.
Leveraged Trend
The effect of a fixed deductible against claims that keep growing: the threshold stays put while the claims above it rise.
Why it matters. It is why a stop-loss renewal can land in the thirties when underlying claims moved ten percent and nothing unusual happened.
Mini-COBRA
A state continuation law extending COBRA-style rights to employees of employers below the federal 20-employee threshold.
Why it matters. Michigan does not have one. A Michigan employer under 20 has no continuation obligation, federal or state — which is the opposite of what most people assume.
Out-of-Network
Care from a provider that has no contract with the plan. The plan may pay less, or nothing, and the provider may bill the difference. See the plan types guide.
Why it matters. Network breadth is part of what a plan costs. A plan that looks cheaper on paper can cost employees more if their providers sit outside it.
Out-of-Pocket Maximum
The most an employee pays in a plan year for covered, in-network care. After it is reached, the plan pays the rest. Premiums and services the plan does not cover do not count toward it. See out-of-pocket maximum explained and what counts toward it.
Why it matters. It is the ceiling on an employee’s exposure in a year, and it is a plan-design lever worth testing against the deductible and coinsurance together.
ParticipationAlso: Take-Up
The share of eligible employees who actually enroll.
Why it matters. A rate lever twice over: it drives credibility, and thin participation is separately penalized, because the people who enroll out of a thinly-participating class skew toward those who needed the coverage.
PBM (Pharmacy Benefit Manager)
The company that runs a plan’s prescription benefit: formulary, pharmacy network, claims and manufacturer rebates.
Why it matters. How a PBM is paid, through spreads, retained rebates or a disclosed fee, often matters more than the discount it quotes. How PBMs work →
PCORI Fee
A per-covered-life fee filed on Form 720 by 31 July of the year after the plan year ends.
Why it matters. Owed by the sponsor of a self-funded plan, including level-funded plans and most HRAs. Employers who think of themselves as insured are the ones who miss it.
PEO
A professional employer organization, entering a co-employment relationship with your workforce.
Why it matters. The benefits consequence is usually evaluated only as a payroll decision: in a PEO arrangement the PEO becomes the plan sponsor.
POS (Point-of-Service) Plan
A hybrid of an HMO and a PPO. Employees usually pick a primary care provider and get referrals for in-network care, with the option to go out of network at a higher cost. See the plan types guide.
Why it matters. It gives employees an out-of-network option without the full cost of a PPO, but the referral rules are the part employees most often get wrong.
PPO (Preferred Provider Organization)
A plan type with a network of preferred providers. Employees can go out of network at a higher cost and generally do not need referrals. See the plan types guide.
Why it matters. PPOs offer the most choice and usually carry a higher premium. Compare them against narrower networks on total cost, not on premium alone.
PreauthorizationAlso: Prior Authorization
Approval a carrier requires before it will cover certain services or drugs. See referrals and prior authorizations explained and the Michigan prior authorization law.
Why it matters. A missed approval becomes a denied claim, and denials land on HR’s desk. Employees need to know which services require approval before they schedule them.
Preventive Care
Services such as screenings and immunizations that most non-grandfathered group health plans must cover with no cost sharing when delivered in network. See preventive services with no cost sharing.
Why it matters. Preventive care is the one place cost sharing is removed by law, so it is worth making sure employees know it is free, and that a diagnostic visit is not the same thing.
Rate ExhibitAlso: Rate Development Summary
The carrier’s own working showing how it built your renewal — community rate, pooling point, credibility factor and projection.
Why it matters. The credibility factor actually applied to you is printed on it. If you have never been shown one, that is the first thing to ask for.
Reference-Based Pricing
Paying providers a set multiple of the Medicare rate instead of a negotiated network discount.
Why it matters. For scale: one national transparency study put private plans at 254 percent of Medicare for hospital care. Programs of this kind report averages nearer 140 percent, with the usual caveats that the findings are descriptive rather than causal.
Section 105(H) Testing
Non-discrimination testing that applies to self-funded medical plans, including level-funded ones.
Why it matters. Failing it is a taxable event for highly compensated participants, not a filing problem.
Self-Funded
The employer pays claims from its own assets, usually with stop-loss above an attachment point.
Why it matters. The premium equivalent stops being one number and becomes three that move on different clocks: claims, administration and stop-loss. How ASO plans work →
Specialty Drug
A high-cost drug, often injectable, used for a complex or chronic condition and often requiring special handling or prior authorization. See specialty drug management.
Why it matters. A small number of claimants can drive a large share of drug spend, so specialty drugs often decide stop-loss and renewal outcomes.
Step TherapyAlso: Fail First
A rule requiring an employee to try a lower-cost drug first before the plan covers a more expensive one. See formulary strategy.
Why it matters. It controls spend, and it can delay care when the first drug does not work. Know which exceptions your carrier allows and how an employee asks for one.
Stop-Loss
Insurance that caps a self-funded employer’s exposure, either per claimant or in aggregate.
Why it matters. Premiums rose in the mid-teens for 2026 depending on deductible — several points faster than the year before — largely through leveraged trend.
Summary Annual Report (SAR)
The plain-language summary of the Form 5500, due nine months after the plan year closes, or two months after an extension ends.
Why it matters. It is a distribution obligation, not a filing one. Missing it is quiet until someone asks.
Tier Relativity
The price relationships between coverage tiers — single, two-person, family and so on.
Why it matters. Restructuring these is a pricing decision that arrives dressed as trend. Three tiers up twenty-two percent and family up fifteen is not a claims outcome.
Trend
The expected year-over-year rise in medical cost, quoted either before or after plan-design changes.
Why it matters. The before-and-after distinction is the most misquoted thing in this subject. National figures for 2026 run around nine to ten percent before plan changes and roughly six and a half to seven and a half after.
UCR (Usual, Customary and Reasonable)
A benchmark some plans use to decide what to pay an out-of-network provider, based on typical charges for the same service in the area. See balance billing.
Why it matters. When a plan pays out-of-network care at a percentage of UCR, the gap between that figure and the provider’s charge is what the employee may be billed.
Nothing matches that. Try a shorter word, or ask us directly.
If a term on your renewal is not here, send it to us.
We will tell you what it means and, more usefully, whether it is doing anything to your price.
Related guides.
Employer Benefits Guides
Plain-language guides on eligibility, plan design, life events and rules.
Where the Rules Come From.
The laws and rules named on this page link to the statute or regulation they come from. This is general information, not legal or tax advice, and rules change, so check the current text.
ERISA (29 U.S.C. Chapter 18)
The federal law that sets reporting, disclosure and fiduciary rules for employer-sponsored benefit plans.
COBRA Continuation Coverage (29 U.S.C. 1161)
Requires many group health plans to offer temporary continuation coverage after a qualifying event.
ACA Reporting (26 U.S.C. 6056)
The statute behind employer reporting of offers of coverage on Forms 1094-C and 1095-C.
Health Savings Accounts (26 U.S.C. 223)
Tax rules for health savings accounts paired with qualifying high-deductible health plans.
Plan Reporting (29 CFR Part 2520)
The Department of Labor rules for annual plan reports, including Form 5500.
Creditable Prescription Coverage (42 CFR 423.56)
Defines creditable coverage for Medicare Part D disclosure and notice rules.
No Surprises Act (42 U.S.C. 300gg-111)
Limits balance billing for emergency services and certain care by out-of-network providers at in-network facilities.
ACA Preventive Services (42 U.S.C. 300gg-13)
Requires non-grandfathered group health plans to cover recommended preventive services with no cost sharing.
Related: Rate tiers explained: EE only, EE + spouse, family →
What people ask about the terms on a renewal.
Five plain answers to go with the glossary.
What is the difference between a deductible and an out of pocket maximum?
The deductible is what an employee pays before the plan starts sharing costs. The out of pocket maximum is the most an employee pays in a plan year for covered in network care, including the deductible, copays and coinsurance.
What does fully insured mean, and how is it different from self funded?
In a fully insured plan the carrier takes the claims risk and charges a set premium. In a self funded plan the employer pays claims as they occur, usually with stop loss insurance as protection against very large claims.
What is stop loss insurance?
Stop loss is insurance an employer with a self funded plan buys to limit its exposure to very large claims, either on a single person or across the whole group.
What does trend mean on a renewal?
Trend is the expected increase in the cost of care from one year to the next, such as higher prices and greater use of services. It is one part of the renewal increase, alongside the group own claims experience.
What if a term on my renewal is not in the glossary?
Send it to us. We will explain it in plain English and tell you how it affects your renewal.
Ready? Send us your renewal, or talk it through with someone first.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
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