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10 Basic Definitions to better understand Health Insurance

Barb Hunt

Do you own a business and want to start a group health insurance policy for you and your employees? It can be very confusing to start any insurance policy. Here are some definitions to get you started on understanding what is involved in group coverage!


  • Allows employees or employee’s dependents to stay on the group coverage plan for up to 18 months at the employee’s expense after an employee is terminated or quits their job

Eligible Employee

  • An employee that is eligible for insurance under a group plan by meeting stipulations made by the group
    • Example would be if the group requires employees to work a certain number of hours each week to be eligible for insurance(often 30-40 hours per week)

Employee Contribution

  • The amount the employee pays for his/her premium through group coverage
  • Usually deducted out of the individuals wages by his/her employer

Employer Contribution

  • The portion the employer pays for employee’s health insurance

Employer Wage and Tax Statement

  • Employer tax statement submitted to report the employer’s tax responsibilities

Group Health Insurance

  • A health plan offered by an employer for his/her employees and their dependents under a single policy

Rating Process

  • How a rate or premium for group health insurance is determined

Schedule C

  • A federal tax form used to report business losses or income
  • May be required when applying for group health insurance

Schedule K-1

  • A federal tax form used to report a business partner’s income or share of the business

Small Group Market

  • Market for small groups with between 2-50 employees to get health insurance


  • Agreement which an employee decides to waive group coverage

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