Small Business Glossary and Definitions

A Carve-Out Benefit is a healthcare insurance plan designed to cover a specific treatment of or service for a particular disease. It is a supplement to the employee’s standard healthcare insurance plan. The plan is offered by a third party and pays for specialized products or care, like chronic illness treatment or prescription drugs. It can be offered to all the company’s employees or just certain groups, like senior executives.

The plan often can work better for healthcare or products that a traditional healthcare insurance plan would say is too expensive, and the premiums can be lower as well. So they can be attractive to people with special prescription drug needs, chronic diseases or behavioral health problems.