Glossary Benefits and Compensation Terms Here are explanations of some terms you may encounter when searching for a job.
Plan Year - This is the contract period for your benefit plans. A plan year may not coincide with the calendar year. Copayment - This is a payment you make at the time services are provided by a doctor or healthcare provider. Deductible - This is the amount you pay before your insurance company will begin to pay expenses for covered services rendered by a doctor or healthcare provider. Some insurance plans let you choose from one of several deductible amounts; in general, the higher your deductible, the lower your premiums. Coinsurance - This is a percentage of expenses you pay for covered services after the plan begins paying for covered services. Maximum Out-of-Pocket Expense - This is the maximum amount of money you will have to pay out of your pocket for covered services. The maximum out-of-pocket expense includes your deductible and coinsurance amounts. Drug Formulary - This is a list of some (but not all) brand name drugs and most generic drugs your insurance company may insist you substitute for brand-name drugs prescribed by a doctor or medical provider. Flexible ("Flex") Spending Account - This option allows you to use pre-tax deductions to pay for many unreimbursed medical expenses such as deductibles, coinsurance, dental care, vision care and more. You can use this account to pay for any qualifying medical expenses you may incur within the upcoming year and that are not covered under your group policy. It also can be used to pay for dependent care for your children or anyone else in your immediate family who is in need of care. Pre-Tax Deductions - Pre-tax deductions are taken from the gross amount of your paycheck – before your state or federal taxes are calculated – to pay for insurance premiums, unreimbursed medical expenses and child/dependent care expenses. With the pre-tax option, you are actually receiving a tax deduction every pay day for the amount you have deducted from your paycheck to pay these premiums and/or expenses. 401(k) Plan - A 401(k) plan is a retirement savings plan with income tax advantages. With a 401(k) plan, you choose the amount you save and how it is invested. Contributions are automatically deducted from your paycheck, so you don’t have to worry about remembering to contribute. The 401(k) plan has been approved by the IRS for preferential tax treatment. Taxes on your contributions have been deferred, which means the money you put into your 401(k) isn’t included as income for federal tax purpoeses. Your contributions – plus earnings – accumulate on a tax-deferred basis, and you pay taxes when you withdraw money from the plan. In a matching 401(k), your employer matches your contribution on a percentage basis (e.g., 50 cents on the dollar), up to a limit that equals a percentage of your gross income. Vesting refers to the percentage of the match that you own. In some situations you are not fully vested until you have achieved a certain number of years with your employer. If you leave your employer before you are fully vested, you will receive a percentage of the matching total in proportion to your accumulated years of service. Hourly - If you are an hourly employee, you would complete a weekly timesheet and are paid an hourly rate for all hours you work. If you work more than 40 hours in a week, you are eligible for overtime pay at 1 1/2 times the hourly rate for all hours worked over 40. Salaried, Exempt - If you are a salaried, exempt employee, you do not punch a time clock and you are paid a fixed salary per pay period. If you work more than 40 hours in a week you are not eligible for overtime pay. Your salary may not be subjected to partial day docking of time lost due to hours not worked; however, your employer may substitute accrued, paid leave for hours not worked.
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