For foreign business leaders expanding into the U.S., navigating employee health insurance can be one of the most unfamiliar–and frustrating–parts of the process. In many countries, health care is publicly funded and centrally managed. But in the United States, responsibility often falls to the employer. That means your company isn’t just expected to offer benefits–it’s expected to understand and administer them.
To help, we’ve created a glossary of key U.S. health insurance terms. Whether you’re designing a benefits package or reviewing a plan with your HR partner, these definitions will help you better understand what you’re offering–and what your employees are receiving.
Core Health Insurance Terms
Premium. The amount paid (monthly or annually) to keep the health insurance plan active. Employers often pay a large portion of this, with employees covering the rest through payroll deductions.
Deductible. The amount an employee must pay out-of-pocket each year before insurance begins to cover most medical services. Some preventative care may be exempt from the deductible.
Copayment (Copay). A fixed dollar amount the employee pays for certain medical services—such as doctor visits or prescriptions—at the time of service.
Coinsurance. A percentage of costs that the employee must pay after the deductible has been met. For example, after meeting the deductible, an employee may still pay 20% of the cost of a covered service, while the insurer pays 80%.
Out-of-Pocket Maximum. The most an employee will have to pay in a given year—including deductibles, copays, and coinsurance. Once this limit is reached, the insurer covers 100% of covered expenses for the rest of the year. This is really important if something major occurs, like a serious injury or illness, causing the employee to stay in the hospital or receive surgery.
Coverage Limits. Some plans cap the amount of coverage provided, either by dollar amount, number of visits, or type of service. It’s important to review these to avoid unexpected costs.
Types of Insurance Accounts
Some plans also allow for types of insurance accounts to be added, or employees can add their own through other providers. The goal is to save pre-tax dollars for use on medicine, doctors, and health-related expenses during the year. These accounts include:
- Flexible Spending Account (FSA). An employer-sponsored account allowing employees to set aside pre-tax income for eligible medical expenses. Funds must typically be used within the plan year.
- Health Savings Account (HSA). An employee-owned, tax-advantaged account for those with high-deductible health plans. Funds roll over year to year and can be used for current or future medical expenses.
- Health Reimbursement Arrangement (HRA). A company-funded account that reimburses employees for out-of-pocket medical expenses. Unlike FSAs or HSAs, only the employer can contribute.
Plan Networks and Structures
In-Network vs. Out-of-Network. In-network providers have pre-negotiated rates with the insurance company, resulting in lower costs for employees. Out-of-network care typically costs more and may not be fully covered.
Preferred Provider Organization (PPO). A flexible plan that allows employees to see any provider, but offers better rates for in-network care. Referrals are not required to see specialists.
Exclusive Provider Organization (EPO). A stricter plan that only covers services from in-network providers, except in emergencies.
Health Maintenance Organization (HMO). A plan that requires members to select a primary care physician (PCP) and get referrals to see specialists. Care is generally restricted to in-network providers.
Primary Care Physician (PCP). The main doctor an employee sees for routine care and health concerns. In HMOs, PCPs coordinate referrals to specialists and manage overall care.
Employer-Provided and Self-Funded Plans
Self-Insured Plan. Rather than purchasing insurance from a provider, the employer directly covers medical expenses. Many use a third-party administrator (TPA) to manage the plan. Employers may also purchase stop-loss insurance to limit their financial risk.
Premium Equivalent. A term used for self-insured plans to estimate the total cost of coverage per employee, including expected claims, admin fees, and risk protection.
Coverage During Transitions & Life Events
Consolidated Omnibus Budget Reconciliation Act (COBRA) allows eligible employees and their dependents to temporarily continue employer-sponsored health coverage after a qualifying life event (like job loss or divorce). Coverage typically lasts 18–36 months and is paid entirely by the participant.
Qualifying Life Event (QLE). A change in personal circumstances—such as marriage, birth of a child, job loss, or relocation—that makes you eligible to enroll in or make changes to a health insurance plan outside of the standard open enrollment period.
Special Enrollment Period (SEP). A time outside of the annual open enrollment period when you’re allowed to enroll in or change your health plan due to a Qualifying Life Event.
Dependent Coverage refers to the inclusion of spouses, children, or other eligible family members under an employee’s health plan. Certain life events, such as a child turning 26 or a divorce, can trigger the end of dependent coverage. Even if employers allow employee dependents to be covered under the company plan, employees typically have to pay 100% of the dependents’ monthly or yearly premiums through payroll deductions.
The bottom line…
Understanding these terms is the first step in making smart decisions about U.S. healthcare coverage. At Management inSites, we help our international clients design benefits packages that are competitive, compliant, and culturally aligned with U.S. expectations—without overextending your resources or your team.
Need help structuring a health benefits program for your U.S. employees?
We’re here to help. Reach out to learn how we support foreign-owned companies with payroll, benefits, and HR operations that make sense through our International Business Incubator program.