Employers, brokers and administrators use their own shorthand. Knowing the common terms helps you follow the conversation and ask better questions. Here are the ones you're most likely to hear, in plain terms.
Pricing and billing terms
- PEPM: per employee per month. A price for each employee each month, whether or not they use the service, depending on the contract.
- PMPM: per member per month. A price for each enrolled person, including dependents if they count as members.
- Census: the employer's list of eligible employees and dependents, with the details you need for billing and enrollment. Here are the columns to ask for.
- True-up: an adjustment to a past invoice when the census changes after billing. This post covers them.
- Retro: short for retroactive. A change dated before the invoice it shows up on.
Plan and enrollment terms
- Plan year: the 12 months a health plan runs.
- Open enrollment: the window before the plan year when employees choose their benefits.
- Qualifying event: a life change, like marriage or a new child, that lets an employee change benefits mid-year.
- Eligibility: who can enroll, like full-time employees after a waiting period.
- Waiting period: the time a new hire waits before benefits start.
Plan types
- Fully insured: the employer pays a premium and the insurer pays claims.
- Self funded: the employer pays claims itself. More on plan types.
- Level funded: a fixed monthly payment that covers expected claims, fees and stop-loss.
- HDHP: high-deductible health plan, often paired with an HSA.
- HSA: health savings account. How it works with employer DPC.
People and companies
- Broker: advises the employer on benefits. Working with brokers.
- TPA: third-party administrator. Runs claims and paperwork for self-funded plans.
- Stop-loss: insurance that caps a self-funded employer's large claims.
- Benefits consultant: a paid advisor on benefits.
Contract terms
- Term: how long the contract runs.
- Auto-renewal: the contract continues unless one side gives notice.
- Minimum enrollment: the fewest members the employer pays for. How to set one.
- Net 30: payment is due 30 days after the invoice date.
What I'd do this week
- Bookmark this page for your next employer meeting.
- Note any term your current contracts use that isn't defined in them.
- Ask your attorney to define the key terms in your contract template.
Common questions
What's the difference between PEPM and PMPM?
PEPM counts employees. PMPM counts every enrolled member, which can include spouses and children. Check which one a contract uses.
Do I need to know all of these?
No. Start with census, plan year, PEPM and net 30. The rest help you follow the conversation.
Where can employers learn more?
Their broker or benefits consultant is the right first stop for their plan.
Want employer billing that follows your contracts?
We reconcile every account every month and send your P&L and Balance Sheet by the 15th, so decisions like this start from real numbers. If that's what you need, apply to work with us.