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Medicare can feel like it’s own language with all of its special terms and acronyms. We have put together this glossary of commonly used Medicare terms and their definitions to help you better understand the terminology that often comes up in Medicare discussions.
Annual Election Period (AEP): This is the annual period during which Medicare plan enrollees can reevaluate their coverage and make changes. During open enrollment, a beneficiary can switch Medicare Advantage plans, switch from Medicare Advantage to Original Medicare or from Original Medicare to Medicare Advantage, join a Medicare Part D prescription drug plan, switch from one Part D plan to another or drop Medicare Part D coverage entirely.
Open enrollment does not apply to Medigap coverage, however.
The enrollment period runs from October 15 to December 7 each year, and changes you make during that time are effective January 1.
Annual Notice of Change (ANOC): A document that private Medicare plans send to plan members by September 30th. The ANOC includes the details of any changes in plan coverage, costs, or service area that will go into effect the following January 1
Appeals: An appeal is the action you can take if you disagree with a coverage or payment decision made by Medicare, your Medicare health plan, or your Medicare Prescription Drug Plan.
Assignment: Assignment means that your doctor, provider, or supplier agrees (or is required by law) to accept the Medicare-approved amount as full payment for covered services, meaning they cannot bill you for anything other than the Medicare deductible and coinsurance
*Most doctors, providers, and suppliers accept assignments, but you should always check to make sure.
Benefit Period: In Medicare Part A, a benefit period begins the day you go into a hospital or skilled nursing facility. It ends when you have been out for 60 days in a row. You may be in the hospital more than once during one benefit period. There is no limit on the number of benefit periods that Medicare will cover. Part A charges a deductible for each benefit period.
Catastrophic Coverage: A cost-sharing stage in a Medicare Part D during which you pay only a small copay or coinsurance for a covered drug and your plan pays the rest of the cost.
Coinsurance: The amount you have to pay for medical services after paying any deductibles your plan requires. Coinsurance is generally a percentage of the service.
Coordinated Care: In Medicare Advantage (Part C), this refers to a kind of health care plan that links providers and services to deliver efficient, cost-effective patient care. Plan members usually have to use doctors and hospitals that are within the plan’s network. These plans are also referred to as “managed care plans.”
Co-Payment: The amount you have to pay for a medical service or supply, for example, a doctor’s visit or a prescription. A co-payment is usually a set amount such as $10 or $25.
Coverage Gap: The cost-sharing stage of a Medicare Part D plan in which you pay most of the plan’s discounted price for your covered medications. You enter the coverage gap when you, others on your behalf and the plan together have paid a pre-set amount for your drugs. This amount is determined by the plan, but Medicare establishes a maximum. You remain in the coverage gap stage until you have spent your plan’s out-of-pocket limit in a single year. Deductibles, copays, coinsurance and other payments count toward the out-of-pocket limit, but premiums do not.
Creditable Drug Coverage: Prescription drug coverage from a health plan other than a Medicare Part D standalone plan or a Medicare Advantage plan that includes prescription drug coverage and that meets certain Medicare standards.
Deductible: The amount you have to pay for healthcare or prescriptions before Original Medicare, your prescription drug plan or other insurance kicks in.
Dual Eligible: A person who is eligible for both Original Medicare (Parts A and B) and Medicaid.
Durable Medical Equipment (DME): Any equipment that provides therapeutic benefits to a patient in need due to certain medical conditions, an illness, or both. The equipment or device must be primarily and customarily used to serve as a medical purpose and should have a lifetime expectancy of at least 3 years.
Explanation of Benefits (EOB) : A monthly notice that gives you a summary of claims and costs for services. Your EOB statement from your PDP carrier is especially important because it will give you information about the donut hole.
Evidence of Coverage (EOC) : Evidence of Coverage is a detailed explanation of the health and prescription drug benefits and services available to you. It includes information on how to use your coverage, details about your copays, a description of your member rights and responsibilities and a glossary of terms.
Excess Charge: The amount over the approved Medicare payment that some doctors and other healthcare providers can charge you under Original Medicare
Extra Help: A Medicare program that helps people with limited income and resources pay for Medicare prescription drug plan costs, such as premiums, deductibles and coinsurance.
Formulary: A list of the prescription drugs that are covered by a specific Medicare Part D plan.
General Enrollment Period (GEP): This is when you can enroll in Medicare if you didn’t sign up during your Initial Enrollment Period. The General Enrollment Period (GEP) is January 1 – March 31 every year. You may have to pay a penalty for late enrollment. Coverage takes effect on July 1. If you want a Medicare Advantage plan, you will need to enroll between April 1st and June 30th for a July 1st effective date. If you miss this time frame you can choose a plan during the Annual Election Period and your plans effective date will be January 1st of the next year. It is important to enroll in Part D right away so you can avoid a Late Enrollment Penalty.
Grievances: A grievance is any complaint or dispute (other than an organization determination) expressing dissatisfaction with any aspect of the operations, activities, or behavior of a Medicare health plan, or its providers, regardless of whether remedial action is requested.
Guaranteed Issue Rights: (Also referred to as Medigap Protections) This means that Medigap plans can’t deny you a Medigap policy, refuse to cover pre-existing conditions, or charge more for the policy based on your age or medical status if you purchase the policy within 6 months of enrolling in Part B.
Guaranteed Renewable Policy: This means that an insurance policy cannot cancel your Medigap policy unless you commit fraud, lie on your application, or do not pay your monthly premiums.
Health Maintenance Organization (HMO): A type of Medicare Advantage plan in which you must use doctors and hospitals in the plan’s network for your care. If you go outside the network for services other than emergency care, urgent care or out-of-area renal dialysis, you are responsible for paying for your own care.
Initial Enrollment Period (IEP): When you first become eligible to enroll in Medicare or a Medicare plan. For most, it’s the seven-month period that begins three months before the month you turn 65 and ends three months after the month you turn 65.
Lifetime Reserve Days: In Medicare Part A, a set number of covered hospital days you can draw on if you are in the hospital longer than 90 days in a benefit period. You have 60 lifetime reserve days. A lifetime reserve day cannot be replaced. When it is used up, it is gone.
Long Term Care (LTC): is a range of services and supports which help meet both the medical and non-medical needs of people with a chronic illness or disability who cannot care for themselves for long periods of time. Most long term care is not medical care, but rather assistance with the basic personal tasks of everyday life.
Medicaid: A joint federal and state health insurance program for those who meet certain financial requirements.
Medical Savings Account (MSA): A Medicare Advantage plan that combines a high deductible with a medical savings account. The plan deposits money each year into your account. You do not have to pay taxes on the money or interest earned as long as you use the money for health care costs, including those not covered by Medicare. Any monies left in the account at the end of the year can still be used for future medical costs. Unlike non-Medicare medical savings accounts, you cannot deposit any money into this account.
Medicare: A federal government health program for:
• People age 65 or older
• People under age 65 with certain disabilities
• People of all ages with End Stage Renal Disease (ESRD)
Medicare Advantage (MA or Part C): A Medicare Advantage plan is a managed care Medicare plan. The insurance company contracts with Medicare to provide you with all of your Medicare Part A and Part B benefits. Most Medicare Advantage Plans also provide prescription drug coverage (MAPD).
Medicare Advantage Disenrollment Period (MADP): The period each year from January 1 to February 14 when you can leave a Medicare Advantage plan. You will return to Original Medicare automatically when you disenroll from the Medicare Advantage plan. If your Medicare Advantage plan included prescription drug coverage, you can enroll in a Medicare Part D prescription drug plan during this time.
Medicare Approved Amount: The maximum amount that doctors who accept Medicare assignment can be paid for a service they provide. This means they cannot bill you any extra.
Medicare Private Fee-for-Service (PFFS): A type of Medicare Advantage plan (Part C) in which you can see the same doctors and use the same hospitals as someone with Original Medicare. However, because the plan determines how much it will pay the doctors and hospitals, and how much you must pay when you receive care, you may pay more (or less) for Medicare covered benefits than if you had Original Medicare.
Medicare Select: a type of Medicare Supplement (Medigap) plan sold in some states that can be any of the standardized Medigap plans (A-N) but which requires the policy holder to receive services from within a defined network of hospitals, and in some cases, doctors- in order to be eligible for full benefits.
Medigap Supplement Plan: Government authorized supplemental insurance that you would purchase to cover costs not covered under Original Medicare.
Network: The group of health care providers, such as hospitals, doctors and pharmacies, that agrees to provide care to the members of a Medicare Advantage coordinated care plan or Medicare Part D prescription drug plan. These providers are called “network providers” and “network pharmacies.”
Open Election Period (OEP): begins on January 1st and ends on March 31st. This period is designed for beneficiaries enrolled in a Medicare Advantage, MA, or Medicare Advantage Prescription Drug Plan, MAPD, who is dissatisfied with the plan they elected during AEP or was not able to make an appropriate change during AEP.
Open Enrollment Period : This is a six month period that begins the first day of the month that you turn 65, or older, AND enrolled with Medicare Part B to select a Medigap health plan at the lowest rate, regardless of health. Basically, you do not have to prove insurability to get a good rate during this time.
Original Medicare: Original Medicare is fee-for-service insurance coverage in which the government directly pays healthcare providers for many hospital and medical costs. It includes Medicare Part A and Part B.
Over the Counter (OTC): Health plans will offer various benefits including an OTC allowance given to the beneficiary to order everyday items like pain relievers, toothpaste, incontinence items, bandages, walking canes and much more. The amount and frequency will vary by plan. The items are paid for by the health plan, not the beneficiary.
Out of Pocket Costs: The amount you pay directly for Medicare care and services, including deductibles, copays and coinsurance. Premiums do not count toward maximum out-of-pocket costs thresholds.
Maximum Out of Pocket Limit (MOOP): A limit that Medicare Advantage plans set on the amount of money you will have to spend out of your own pocket in a plan year. In Medicare Part D plans, this is the maximum amount of money you will have to spend out of your own pocket before catastrophic coverage begins for the remainder of the year.
Part A: The part of Original Medicare that provides help with the cost of hospital stays, skilled nursing services following a hospital stay and other kinds of skilled care.
Part B: The part of Original Medicare that provides help with the cost of doctor visits and other medical services including Durable Medical Equipment (DME).
Part C: Known as Medicare Advantage, this part of Medicare allows private insurance companies to offer plans that combine help paying for hospital costs (Part A) with coverage for doctor visits and other medical services (Part B) all in one plan. Many Medicare Advantage plans also include prescription drug coverage (Part D).
Part D (PDP): This part of Medicare allows private insurance companies to offer plans that help with the cost of prescription drugs. You can get Medicare Part D coverage as a standalone prescription drug plan or as part of a Medicare Advantage plan.
Point of Service Plan (POS): A type of Medicare Advantage HMO plan that allows members the ability to visit doctors and hospitals outside their network for some covered services, usually for a higher copayment or coinsurance. Some POS plans do not require referrals for specialty services.
Pre-Existing Condition: A health condition you had or have before a new insurance policy starts.
Preferred Provider Organization (PPO): A type of Medicare Advantage plan in which you can use doctors and hospitals in the plan’s network or go to doctors and hospitals outside the network. If you go outside the network, you’ll usually pay a larger share of the cost of your care.
Premium: A monthly fee paid to Medicare, an insurance company, or a healthcare plan to maintain your insurance coverage.
Prescription Drug Plan (PDP): A standalone Medicare Part D insurance plan that helps with the cost of prescription drugs.
Preventive Services: Healthcare to prevent illness or detect illness at an early stage. Some examples of preventive services are: mammograms, flu and pneumonia vaccines, cholesterol screenings.. For a complete list please visit:
https://www.medicare.gov/coverage/preventive-and-screening-services.html
Qualified Medicare Beneficiary (QMB): Someone who is entitled to Medicare Part A, whose income is not higher than the Federal Poverty Level, and whose resources (i.e. house, care etc) do not exceed twice the Supplemental Security Income level. These people are eligible to have their state Medicaid system pay their Medicare premiums, deductibles, coinsurance and copayment amounts, excluding Part D.
Service Area: In Medicare Advantage, the area in which a plan offers service. A service area is typically a county, state or region.
Special Enrollment Period (SEP): Specific times when people who qualify due to special circumstances may enroll in Medicare outside their Initial Enrollment Period or the General Enrollment Period. Usually, you don’t pay a late enrollment penalty if you sign up during a Special Enrollment Period.
Special Needs Plan (SNP): A type of Medicare Advantage plan that serves people with special health care needs. There are typically 2 types, DSNP which is for beneficiaries who have both Medicare and Medicaid, also known as Dual Eligible. The other is CNSP, and these plans are ideal for those with a chronic disease.
State Health Insurance Assistance Program (SHIP): This is a state program that provides free local health insurance counseling to people with Medicare. These programs are funded by the federal government.
Tiered Formulary: In Medicare Part D, a drug plan formulary that divides drugs into groups. Each group, or tier, has a different level of cost sharing. For example, a generic version of a drug may have a lower copay than a brand name version of the drug. The details of the cost sharing vary from plan to plan.
