GOOD TERMS TO KNOW
Brand-Name Drug — These are drugs that are under patent protection or that used to be under patent protection. Generally, brand-name drugs are more expensive than generic drugs. (See Generic Drugs.)
Brand-Name Formulary Drugs — Preferred brand-name drugs are FDA-approved brand-name prescription drugs selected by the prescription drug plan for price and effectiveness. They are typically available at a lower copay to plan members.
Brand-Name Non-Formulary Drugs — Non-preferred brand-name drugs are FDA-approved brand-name prescription drugs that have a preferred alternative listed in the plan’s formulary. You will pay a higher copay for a non-formulary drug than for a formulary drug or generic drug.
Coinsurance — Once you pay the annual deductible, you and the plan share the cost of covered expenses, up to the out-of-pocket maximum. Coinsurance is usually expressed as a percentage; for example, your insurance plan pays for 80% of your eligible medical expenses, and you’re responsible for the remaining 20%.
Contribution — Your contribution is the amount of money deducted from your paycheck to pay for your XPO benefit coverage.
Copay — A copay is the fixed dollar amount that you pay for specific health care expenses covered by XPO’s medical, dental or vision plan. For example, when you visit a doctor, you pay $35 or $55. Copays do not count toward the deductible but do count toward the out-of-pocket maximum.
Deductible — The deductible is the amount you pay out of your own pocket for medical services covered by the plan before the plan begins to pay benefits. For certain services like preventive care, you do not have to pay the deductible amount before the plan begins to pay benefits.
Eligible Health Care Expense — The IRS allows you to use pre-tax dollars to pay for eligible medical and dental expenses through certain types of accounts, including the Health Savings Account and the Health Care FSA. For more information, please refer to IRS Publication 502.
Evidence of Insurability (EOI) — Evidence of Insurability, also known as proof of good health, is an insurance term that means you must confirm your or your dependent’s physical fitness in writing, through a questionnaire or a medical examination before your coverage becomes effective.
Explanation of Benefits (EOB) — An EOB is a statement you receive from the health provider after you receive medical or dental care. It shows the provider’s actual charges, the in-network negotiated charges if you received care from a network provider, how much the plan pays and how much is your responsibility.
Flexible Spending Account (FSA) — An FSA, such as XPO’s Health Care FSA or Dependent Day Care FSA, allows you to set aside pre-tax money from each paycheck to reimburse yourself for eligible expenses (health care and dependent care). You lose any money in a reimbursement account that is not used for eligible expenses incurred during the calendar year, generally. Typically, there is a grace period during which you can file claims for expenses incurred during the previous year.
Generic Drugs — These are drugs that are as safe and effective as brand-name drugs but are not under patent and are less costly.
Health Savings Account (HSA) — An HSA is a triple-tax advantaged savings account that you can use to pay eligible out-of-pocket health care expenses now or in the future. You can open an HSA only if you enroll in an HDHP, e.g., the Basic HSA or HSA Plus plan. XPO will contribute to the account if you enroll in the HSA Plus medical plan. HSA balances roll over from year to year, and it can be invested in a variety of options. You keep this money if you retire or leave XPO.
High Deductible Health Plan (HDHP) — An HDHP is a medical plan intended to give you more control of your health care dollars. With an HDHP, you pay lower premiums but have a higher annual deductible than you would with a traditional plan. You also have the option to open a tax-advantaged Health Savings Account (HSA), which you can use to pay for health care expenses now or in future years. This type of plan is also referred to as a Consumer Driven Health Plan (CDHP).
Imputed Income — Imputed income occurs when your employer provides you a benefit that has a cash value and the Internal Revenue Code does not designate it as a non-taxable benefit. In that case, XPO must treat it as taxable income to you, even though no money has been received. The amount of imputed income is reported on your pay stub and W-2 as taxable income. Employment taxes and income tax withholding applies on the imputed income value of the benefit, in the same manner as though you had received cash instead of the benefit coverage. Basic Life insurance in excess of $50,000 is taxable and reported as imputed income.
Mail-Order Drugs — These are drugs that can be ordered through the mail. The plan uses a mail-order pharmacy that provides a 90-day supply of maintenance drugs.
Maximum Allowed Amount (MAA) — The MAA is the amount Anthem will pay for a given service provided by an in-network or out-of-network provider. The MAA is based on the 90th percentile of the customary allowance from a fee schedule selected by Anthem. You are responsible for paying any amount over the eligible maximum allowed amount charges in addition to your deductible and coinsurance.
Negotiated Charge — The negotiated charge is the discounted amount a network provider has agreed to charge for services. If you use a network provider, the plan will pay benefits based on the negotiated charge. This applies to all XPO medical plan options.
Network — Most of our medical plans use a network of physicians and facilities contracted by Anthem to provide services within negotiated price boundaries.
Out-of-Pocket Maximum — The annual out-of-pocket maximum is the most that you have to pay for covered health care services (out of your pocket) in a calendar year before the plan starts to pay 100% of covered expenses. Deductibles, copays and coinsurance count toward the out-of-pocket maximum.
Preferred Provider Organization (PPO) — With a PPO plan, most medical services are covered in full after you pay a copay — as long as you use the plan’s network of physicians, hospitals and other providers. When you receive care from an in-network provider, you get higher benefits and pay less out of your own pocket. There are no deductibles to meet. In addition, the plan does not require you to select a primary care physician to manage your care, nor do you need a referral to see a specialist. However, you can receive care from out-of-network providers and still receive benefits from the plan. You must pay an annual deductible before the plan begins to pay out-of-network benefits, and then pay a percentage of the amount allowed under the plan.
Qualifying Event — You can only make changes outside of the Open Enrollment period if you experience a qualifying life event. Under IRS rules, your benefit change must be on account of and consistent with your life event. Examples include:
- You get married, divorced, legally separated or have your marriage annulled by a civil court.
- You have a child, adopt a child or a child is placed with you for adoption.
- Your spouse or eligible dependent dies.
- Your child loses eligibility for dependent coverage or no longer qualifies as a dependent under the Dependent Care FSA.
- Your spouse or other dependent gains or loses coverage under another benefit plan or that coverage is significantly changed (as the result of starting or ending employment; a change in work site, residence or employment status that affects eligibility; a strike or lockout; or the beginning or end of an unpaid leave).
- You or your dependent loses coverage under a State Children’s Health Insurance Program (SCHIP) or Medicaid.
- You or your dependent becomes eligible for premium assistance from the state toward coverage under the medical plan.
Triple-Tax Advantaged — This term refers to the money in your Health Savings Account. XPO’s contributions and your contributions are tax-free, the interest or investment growth accumulates in the account tax-free, and withdrawals are tax-free if spent on eligible health care expenses. (The money can be withdrawn for other purposes, but will be taxable and, if withdrawn before age 65, will be subject to a 20% penalty.) Please keep in mind that some state tax regulations vary from the federal regulations described here.