Employee Benefits Key Terms

Learning key terms can help you make the most of your employee benefits

By Deborah Barr

If you are lucky enough to have a job with benefits, be sure to take full advantage of everything that is available to you. To make the most of your employee benefits, you'll have to spend some time reading the documents that explain them. But don't let the benefits lingo trip you up.

Here are some of the key terms you are likely to encounter as you navigate your way through your employee benefits materials.

Effective date

The effective date is the date when your benefit coverage begins. It is important to know this date so that you don't try to use a benefit before your coverage kicks in. For example, if you start a new job in August, but don't get paid until September, you might have a health insurance benefit effective date of October 1.
Try: You can see an example of one employer's medical insurance effective date rules at The California State University website.

Explanation of benefits (EOB)

After you or your health or dental provider files an insurance claim on your behalf, you will receive an explanation of benefits (EOB) by mail or email. The EOB specifies the services you received, the amount your insurance company will pay and the amount you are responsible for.
Try: For more detailed information about EOBs visit HealthLink.

Summary plan description (SPD)

A summary plan description or SPD is the document that summarizes your health or retirement benefit plan in plain language. The SPD explains the plan features, how benefits are calculated and paid and how to file a claim. When you have a question about your benefit, consult your SPD.
Try: You can learn more about summary plan descriptions at the U.S. Department of Labor website.

Qualifying event

A qualifying event is a major life change that can affect yours or your dependents' eligibility for benefits. Getting married, having a baby or experiencing the death of a spouse are examples of qualifying events. When you have a major change in your life, be sure to inform the human resources department where you work. A qualifying event may allow you to make changes to your benefits coverage.
Try: For an expanded list of qualifying events, visit the University of Illinois website.

Open enrollment

In most companies, there is one period of time during the year when you may enroll for new benefits or make changes to your current benefits. If you miss this enrollment window you will not be able to make changes to your current benefits until the next open enrollment period. The exception may be when a qualifying event occurs in your life.
Try: For tips on making good decisions at open enrollment visit SmartMoney.

Voluntary benefits

Voluntary benefits are optional benefits that employees, not the employer, pay for. Life insurance, long-term disability insurance, cancer insurance and critical illness insurance are typically offered as voluntary benefits.
Try: To learn more about voluntary benefits visit MainStreet.com.