Confused by all the Medicare terminology? It’s important to understand the often–used Medicare terms so you can comprehend your coverage fully. Bookmark this page to reference in the future when you need a Medicare resource you can trust.
Let’s break down some of the frequently used Medicare terms from copayments and deductibles to penalty/excess charges and benefit periods.
- Advance coverage decision – Medicare Advantage plans will send these notices to inform you in advance whether it will cover a service.
- Annual Election Period (AEP) – a Time period where you can make changes to your Medicare Advantage or Medicare Prescription Drug Plan. The AEP starts October 15th and ends December 7th every year. This AEP period is commonly mistaken for the Open Enrollment Period or the Medicare Supplement Open Enrollment Period. To better understand the differences we have a comparison breakdown.
- Annual Wellness Visit – Yearly visit with your primary care physician, Medicare covers the cost of this visit. You should take advantage of this Annual Wellness visit to discuss your health with your doctor and make up a plan to manage your health better.
- Appeal – If you disagree with a certain coverage or payment decision made by Medicare this is the action you take. Some people file a Part B IRMAA appeal; however, there are many different appeals. When you don’t agree with a decision, file an appeal.
- Assignment – An agreement from your doctor to accept the Medicare-approved amount of payment for a service. Your doctor will not bill you for more than the Medicare deductible and coinsurance if they approve Medicare assignment.
- Beneficiary – A person receiving benefits under Medicare.
- Benefits – The healthcare services Medicare covers.
- Benefit Period – The benefit period under Medicare Part A begins the day going into the hospital and ends when you leave for at least 60 days. A new benefit period may begin if you go to the hospital after leaving for 60 days. It’s possible you might need to meet your Part A deductible multiple times in one calendar year.
- Copay – Once you pay enough out-of-pocket to meet your deductible, this is the amount you pay every time you receive services Medicare covers.
- Coinsurance – Similar to copay, coinsurance is also the amount you are responsible for paying every time you receive a Medicare-approved service. Coinsurance is a specific percentage of the total cost of the services. For instance, under Medicare Part B the coinsurance you’re responsible for is 20%, Medicare handles the other 80% of the cost.
- Cost sharing – Amount you might be responsible to pay as your share of the cost of healthcare services. Cost sharing may include coinsurance, copayments, and deductibles.
- Coverage gap – This is also known as the ‘donut hole’. The coverage gap starts when a set amount is paid for prescription drugs in a given year from you and your drug plan. The coverage gap is applied to your Medicare Prescription Drug Plans and is when you may have to pay higher cost sharing for prescription drugs.
- Deductible – Out-of-pocket cost you pay before your insurance plan starts to cover costs for services. You may have deductibles per benefit period as well as annual deductibles.
- Durable Medical Equipment (DME) – Equipment your doctor suggests for use at home; such as wheelchairs, hospital beds for your house, etc. Medicare Part B usually covers the cost of DME.
- Enrollment Periods – Specific timeframes when you may enroll in Medicare.
- Excess charge – The difference of amounts between what Original Medicare pays and the amount your doctor can increase the costs to; the increase can only be 15% higher than Medicare.
- Extra Help – a program that helps people who have lower incomes pay for Medicare prescription drug costs; like deductibles, premiums, and coinsurance.
- Fee-for-service – A type of Medicare Advantage plan that is contracted with certain Medicare-participating providers.
- Formulary – Wondering where to see if your prescription will have coverage from your Medicare Part D plan? This is where you look; this is the list of drugs under the Medicare Part D plan. When changing or joining plans you will want to check this list before making any decisions because a plan may not cover what you need.
- General Enrollment Period – The GEP runs from January 1st to March 31st every year, coverage begins on July 1st of the same year. If you missed your Initial Enrollment Period and don’t qualify for a Special Enrollment Period, this is the time you may enroll in Medicare.
- Group Health Plan – A health insurance plan that is provided by your employee or employee organization.
- Guarantee Issue- A policy that is Guarantee Issue requires no underwriting; this also means insurance companies can’t deny coverage because of health issues.
- Guaranteed Renewable Policy – As long as you pay your premium, insurance companies can’t terminate your coverage.
- Health Maintenance Organization (HMO) – A type of Medicare Advantage plan that works through a specific network of providers that offer healthcare services. Typically, if you go outside of your plan’s network for care, your services will not be covered.
- Home Health Care – If your doctor decides you need it, you may get certain services provided to you in the comfort of your own home. Medicare only covers some of the home healthcare services offered.
- Hospice – Hospice care is covered under Medicare Part A; a type of healthcare that specializes in working with the terminally ill and their families.
- Initial enrollment period (IEP) – This is the period where you may sign up for Medicare for the first time. The IEP period is 7 months long; three months prior to turning 65, the month you turn 65, and the three months after you turn 65. Signing up during this period helps you avoid penalties.
- In-network – Health care providers, doctors, hospitals and pharmacies that are part of your health insurance plan’s network of Medicare-approved providers
- Inpatient care – Health care or services in the hospital or another inpatient hospital-like facility.
- Late Enrollment Penalty – If you don’t enroll in Medicare during your IEP this is the penalty you pay. The penalty increases the monthly premium; each year of eligibility for Medicare Part B without enrollment will increase the cost. There is also a Part D penalty for not picking up drug coverage when you’re first eligible.
- Lifetime Reserve Days – Part A will cover these additional days of inpatient care if you’re in the hospital for more than 90 days during one benefit period. Medicare beneficiaries have 60 allowable lifetime reserve days.
- Long-term care – For those people who unable to perform daily activities like getting dressed and washing; long-term care services help those individuals. Medicare won’t pay for long-term care.
- Medicare – Health insurance program, funds come from the federal government for people ages 65 and older. People with disabilities or certain medical conditions are also eligible for Medicare coverage.
- Medicare Part A – Insurance coverage for services in a hospital setting, Part A also covers inpatient hospital stays, hospice care, or care provided in a skilled nursing facility and even some home health care services.
- Medicare Part B – Medical insurance through Medicare that provides coverage for certain doctors’ visits, medical supplies, preventative and outpatient care services.
- Medicare Advantage Plans (Part C) – Alternative plans to Original Medicare. Advantage plans usually include a Part D prescription drug plan, dental, vision, and other benefits. Medicare Advantage plans have their own monthly premium; however, there is a limit on how much you may spend out-of-pocket with these plans.
- Medicare Part D – Your prescription drug plan. These plans may be stand-alone plans, or they may be part of a Medicare Advantage Plan.
- Medicare Premium – Your monthly fee that you pay for Medicare Services. Premium costs vary between each plan.
- Medigap (Medicare Supplement Insurance) – Medicare Supplement plans may cover the cost of copays, coinsurance and more. However, Medigap plans can be beneficial if you don’t have a Medicare Advantage Plan. Also, Medigap plans have their own premiums and costs but many would agree they are worth buying.
- Network – A group of health care providers, doctors, and hospitals that all agree to provide medical services to members of that plan at a discounted rate.
- Original Medicare – When grouped together, Medicare Part A and Medicare Part B make up Original Medicare.
- Out–of-pocket costs – The costs you pay for medical care that aren’t covered or reimbursed by your Medicare plan.
- Outpatient Hospital Care – Medical care or services received in a hospital or similar facility that doesn’t require you to stay overnight.
- Preferred Provider Organization (PPO) – Type of Medicare Advantage plan that gives you the freedom of seeing any doctor or specialist without needing a referral from your primary care doctor.
- Premium – The amount you pay each month for your Medicare coverage.
- Preventative Services – Services provided that are designed to help prevent or detect illness at an early stage. (Mammograms, flu shots, pap tests, EKGs, etc.)
- Referral – Written by your doctor, to go see a specialist. Some Medicare Advantage plans require referrals. Most Health Maintenence Organizations (HMO’s) require a referral to see a specialist.
- Skilled Nursing Facility – A facility for rehabilitation and provides intense medical care.
- Special enrollment period (SEP) – There are several special enrollment periods that allow you to enroll in Medicare. Those working and for a company with 20+ employees; SEP begins the month after you stop working or the month your coverage ends (whatever one happens first). Your SEP is an 8-month period once it starts.
- Tiers – Plans like the Medical Prescription Drug plans, separate drugs into different tiers. Generally, drugs that fall under the lower tier cost less than the drugs in higher tiers.
- Welcome to Medicare Preventative Visit – One-time, cost-free appointment under your Medicare Part B. This visit is to discuss and develop a health plan; the plan considers preventative screenings, medical history, and family medical history.