Medicare Glossary
Medicare Glossary: Common Medicare Terms Explained
Medicare comes with its own language, and understanding the terminology can make your Medicare decisions much easier.
At Health Coverage Solutions, we believe Medicare should be explained in plain English. This glossary covers many of the Medicare terms you are likely to hear when enrolling in Medicare, comparing coverage options, reviewing prescription drug plans, or making changes to your Medicare coverage.
If you have a question about a Medicare term you see here—or something you don’t see—our team is available to help explain it.
A
Annual Enrollment Period (AEP)
The Medicare Annual Enrollment Period occurs each year from October 15 through December 7.
During this period, people with Medicare can make certain changes to Medicare Advantage and Medicare prescription drug coverage for the following year. This may include changing Medicare Advantage plans, changing Part D plans, moving from Original Medicare to Medicare Advantage, or returning from Medicare Advantage to Original Medicare.
Changes generally take effect January 1.
Annual Notice of Change (ANOC)
The Annual Notice of Change is a document Medicare Advantage and Medicare Part D plans send to members each year explaining changes that will take effect the following year.
Changes may include premiums, deductibles, copayments, drug coverage, provider networks, or other plan benefits.
It is important to review your ANOC each year rather than assuming your current plan will remain exactly the same.
Assignment
Assignment means a doctor or other health care provider agrees to accept the Medicare-approved amount as full payment for a Medicare-covered service.
When a provider accepts Medicare assignment, your responsibility is generally limited to the applicable Medicare deductible and coinsurance.
B
Benefit Period
A benefit period is the way Original Medicare measures your use of inpatient hospital and skilled nursing facility services.
Unlike a calendar-year deductible, a new Part A benefit period can begin after you have been out of a hospital or skilled nursing facility for a specified period of time.
C
Centers for Medicare & Medicaid Services (CMS)
CMS is the federal agency that administers Medicare and works with states to administer Medicaid and other health care programs.
CMS establishes many of the rules that Medicare Advantage plans, Medicare prescription drug plans, and Medicare Supplement insurance companies must follow.
Coinsurance
Coinsurance is the percentage of the cost of a covered medical service that you are responsible for paying.
For example, under Original Medicare Part B, Medicare generally pays a percentage of the Medicare-approved cost and you are responsible for the remaining percentage after the applicable deductible.
Copayment or Copay
A copayment is a fixed dollar amount you pay when receiving a covered service or prescription.
For example, a Medicare Advantage plan may charge a set copayment for a primary care visit, specialist visit, hospital stay, or prescription medication.
Creditable Prescription Drug Coverage
Creditable prescription drug coverage is prescription coverage that is expected to pay, on average, at least as much as standard Medicare prescription drug coverage.
This is especially important for people considering delaying Medicare Part D. Going without Part D or other creditable prescription coverage for too long may result in a Part D late enrollment penalty.
D
Deductible
A deductible is an amount you are responsible for paying before Medicare or an insurance plan begins paying according to its benefits.
Medicare Part A, Medicare Part B, Medicare Part D plans, Medicare Advantage plans, and certain Medicare Supplement options may have deductibles.
Dual Eligible
Someone who qualifies for both Medicare and Medicaid is commonly referred to as dual eligible.
The amount of assistance Medicaid provides depends on the individual’s eligibility and state Medicaid program.
Durable Medical Equipment (DME)
Durable Medical Equipment is certain medical equipment used in the home that meets Medicare’s coverage requirements.
Examples may include walkers, wheelchairs, hospital beds, oxygen equipment, CPAP machines, and certain other medically necessary equipment.
E
Evidence of Coverage (EOC)
The Evidence of Coverage is a detailed document provided by a Medicare Advantage or Medicare prescription drug plan explaining the plan’s benefits, costs, rules, and coverage.
It provides considerably more detail than a general plan summary.
Excess Charge
A Medicare Part B excess charge may occur when a provider does not accept Medicare assignment and is legally permitted to charge more than the Medicare-approved amount.
Whether excess charges can apply may depend on the provider, service, state, and Medicare Supplement plan you have.
Extra Help
Extra Help is a federal program that helps qualifying individuals with some of the costs associated with Medicare prescription drug coverage.
Extra Help is also commonly called the Low-Income Subsidy, or LIS.
F
Formulary
A formulary is the list of prescription medications covered by a Medicare Part D or Medicare Advantage prescription drug plan.
Medications are generally placed into different tiers that can affect what you pay.
Because formularies can vary between plans and can change from year to year, we recommend comparing prescription drug plans using your actual medication list.
G
General Enrollment Period (GEP)
The General Enrollment Period provides an opportunity for certain people to enroll in Medicare Part A and/or Part B if they did not enroll when initially eligible and do not qualify for another enrollment period.
Late enrollment penalties may apply depending on the circumstances.
Guaranteed Issue (GI)
Guaranteed issue means you have a protected right to purchase certain Medicare Supplement policies without being denied because of your health.
Guaranteed issue rights only apply in specific circumstances under federal or state law.
Examples can include losing certain types of coverage or exercising specific Medicare protections.
Because guaranteed issue periods can be time-sensitive, it is important to understand your rights before making changes to existing coverage.
Guaranteed Issue Right
A guaranteed issue right is the specific circumstance that gives you the right to purchase certain Medicare Supplement coverage without medical underwriting.
Federal law provides guaranteed issue protections in specific situations, and some states provide additional Medicare Supplement protections.
H
Health Maintenance Organization (HMO)
An HMO is a type of Medicare Advantage plan that generally requires members to receive routine care from doctors, hospitals, and other providers participating in the plan’s network.
Some HMO plans also require referrals to see certain specialists.
Specific rules vary by plan.
High-Deductible Plan G (HDG)
High-Deductible Plan G is a Medicare Supplement option that can offer a significantly lower monthly premium in exchange for accepting a higher annual deductible.
You are responsible for Medicare-covered out-of-pocket expenses until the annual high deductible has been reached. After the deductible is satisfied, the policy provides the applicable Plan G benefits for the remainder of the year.
The deductible amount is determined annually and can change from year to year.
I
Initial Enrollment Period (IEP)
Your Initial Enrollment Period is generally your first opportunity to enroll in Medicare.
For most people becoming eligible at age 65, the Initial Enrollment Period lasts seven months: the three months before the month you turn 65, the month you turn 65, and the three months following your birthday month.
In-Network
In-network means a doctor, hospital, pharmacy, or other health care provider participates with your particular insurance plan.
Provider and pharmacy networks can be especially important with Medicare Advantage and Part D plans.
Inpatient
Inpatient care generally means you have been formally admitted to a hospital under a doctor’s order.
Whether a hospital stay is classified as inpatient or outpatient can affect which part of Medicare covers the service and what you may owe.
Income-Related Monthly Adjustment Amount (IRMAA)
IRMAA is an additional amount some higher-income Medicare beneficiaries pay in addition to their Medicare Part B and Part D costs.
IRMAA is generally determined using income reported on an earlier federal income tax return.
Certain qualifying life-changing events may allow you to ask Social Security to reconsider your IRMAA amount.
L
Late Enrollment Penalty (LEP)
A late enrollment penalty is an additional amount you may have to pay if you delay enrolling in certain parts of Medicare without having qualifying coverage.
Separate late enrollment rules apply to Medicare Part A, Part B, and Part D.
Lifetime Reserve Days
Lifetime reserve days are additional inpatient hospital days available under Original Medicare after certain hospital coverage periods have been exhausted.
You have a limited number of these days available during your lifetime.
Low-Income Subsidy (LIS)
The Low-Income Subsidy is another name for Medicare’s Extra Help program.
It helps qualifying Medicare beneficiaries with certain Medicare prescription drug costs.
M
Medicaid
Medicaid is a joint federal and state health coverage program for people who meet their state’s eligibility requirements.
Medicare and Medicaid are different programs. Some individuals qualify for both programs.
Medicare
Medicare is the federal health insurance program primarily for people age 65 and older, along with certain younger people with disabilities or specific medical conditions.
Medicare includes different parts that provide coverage for hospital care, physician and outpatient services, and prescription medications.
Medicare Advantage – Part C
Medicare Advantage is a private insurance alternative to receiving your Medicare benefits directly through Original Medicare.
Medicare Advantage plans are offered by private insurance companies approved by Medicare and provide your Medicare Part A and Part B benefits.
Most Medicare Advantage plans use a network of doctors and hospitals and may have copayments, coinsurance, prior authorization requirements, and other plan rules.
Many Medicare Advantage plans also include Part D prescription drug coverage and additional benefits.
Medicare Advantage Open Enrollment Period (MA OEP)
The Medicare Advantage Open Enrollment Period generally runs from January 1 through March 31 each year for people already enrolled in Medicare Advantage.
During this period, someone enrolled in a Medicare Advantage plan can generally make one change to another Medicare Advantage plan or leave Medicare Advantage and return to Original Medicare.
It is not an opportunity for someone with Original Medicare to enroll in Medicare Advantage.
Medicare-Approved Amount
The Medicare-approved amount is the amount Medicare determines is appropriate for a covered health care service or item.
A provider who accepts Medicare assignment agrees to accept this amount as full payment for a Medicare-covered service.
Medicare Part A – Hospital Insurance
Medicare Part A primarily covers inpatient hospital care, skilled nursing facility care under qualifying circumstances, hospice care, and certain home health services.
Many people qualify for premium-free Part A because they or their spouse paid Medicare taxes while working.
Medicare Part B – Medical Insurance
Medicare Part B primarily covers physician services, outpatient medical care, certain preventive services, diagnostic testing, durable medical equipment, and other medically necessary services.
Most Medicare beneficiaries pay a monthly premium for Part B.
Medicare Part C – Medicare Advantage
Medicare Part C is another name for Medicare Advantage.
Medicare Advantage plans are private Medicare-approved plans that provide your Medicare Part A and Part B benefits instead of receiving those benefits directly through Original Medicare.
Medicare Part D – Prescription Drug Coverage
Medicare Part D provides coverage for outpatient prescription medications.
Part D plans are offered by private insurance companies approved by Medicare.
Prescription coverage may be purchased through a stand-alone prescription drug plan or included within many Medicare Advantage plans.
Because plans can have different formularies, premiums, pharmacies, deductibles, and medication costs, it is important to compare plans using your actual medications.
Medicare Supplement Insurance – Medigap
Medicare Supplement insurance, commonly called Medigap, is private insurance designed to work alongside Original Medicare.
Original Medicare pays its portion of Medicare-approved medical expenses first. Your Medicare Supplement policy can then pay some or all of the remaining Medicare-approved expenses depending on the standardized plan you selected.
A Medicare Supplement does not replace Original Medicare. It works together with Original Medicare.
Medicare Supplement Open Enrollment Period
Your Medicare Supplement Open Enrollment Period is an important one-time opportunity to purchase Medicare Supplement insurance.
Under federal law, this six-month period begins the first month you are 65 or older and enrolled in Medicare Part B.
During this period, an insurance company generally cannot use medical underwriting to deny you a Medicare Supplement policy it offers because of your health.
This period does not repeat each year.
Medical Underwriting
Medical underwriting is the process an insurance company may use to evaluate your health when you apply for Medicare Supplement insurance outside certain protected enrollment periods.
Depending on the circumstances, underwriting can include health questions and other health information.
Outside your Medicare Supplement Open Enrollment Period or another guaranteed issue situation, an insurance company may be permitted to decline an application based on its underwriting requirements.
State laws can provide additional protections.
Medically Necessary
Medically necessary refers to health care services, supplies, or treatments needed to diagnose or treat a medical condition and that meet accepted standards of medical practice.
Medicare generally requires services to meet its coverage requirements, including medical necessity when applicable.
Maximum Out-of-Pocket (MOOP)
The Maximum Out-of-Pocket amount is the maximum amount a Medicare Advantage member would generally be responsible for paying during a calendar year for covered medical services subject to the plan’s MOOP.
Once the applicable limit is reached, the Medicare Advantage plan generally pays the covered medical costs subject to that limit for the remainder of the year.
Original Medicare by itself does not have an annual maximum out-of-pocket limit.
MA-PD
MA-PD stands for Medicare Advantage Prescription Drug plan.
It is a Medicare Advantage plan that includes Medicare Part D prescription drug coverage within the same plan.
N
Network
A network is the group of doctors, hospitals, pharmacies, and other health care providers that have contracted with an insurance plan.
Networks are especially important when evaluating Medicare Advantage and Medicare Part D plans.
O
Original Medicare
Original Medicare is the traditional federal Medicare program and consists of Medicare Part A and Medicare Part B.
With Original Medicare, you can generally receive covered services from any doctor or hospital in the United States that participates in Medicare.
Original Medicare does not provide most outpatient prescription drug coverage, so beneficiaries may choose to enroll in a separate Part D plan.
Beneficiaries may also choose Medicare Supplement insurance to help reduce their exposure to certain Medicare deductibles, coinsurance, and other Medicare-approved expenses.
Out-of-Network
Out-of-network means a doctor, hospital, pharmacy, or other provider does not participate in your particular insurance plan’s network.
Your coverage and costs for out-of-network services depend on the type of plan and its specific rules.
Outpatient
Outpatient care is medical care received without being formally admitted to a hospital as an inpatient.
Physician visits, outpatient surgery, diagnostic testing, emergency department services, and observation stays are examples of services that may be considered outpatient
P
PPO – Preferred Provider Organization
A PPO is a type of Medicare Advantage plan that has a network of preferred doctors and hospitals but generally provides some coverage for eligible services received outside the network.
Using out-of-network providers will generally result in higher out-of-pocket costs, and providers must meet the plan’s requirements for services to be covered.
Premium
A premium is the amount you pay to maintain insurance coverage.
Depending on your coverage, you may pay premiums for Medicare Part B, Part D, Medicare Advantage, Medicare Supplement insurance, or other coverage.
Prescription Drug Plan (PDP)
A Prescription Drug Plan, or PDP, is a stand-alone Medicare Part D prescription drug plan offered by a private insurance company approved by Medicare.
PDPs are commonly used by people with Original Medicare who want outpatient prescription drug coverage.
Prior Authorization
Prior authorization means an insurance plan requires approval before certain health care services, procedures, medical equipment, or medications will be covered.
Prior authorization is commonly used by Medicare Advantage plans and prescription drug plans.
Provider
A provider is a health care professional or organization that provides medical services.
Providers can include physicians, specialists, hospitals, outpatient facilities, therapists, laboratories, home health agencies, and medical equipment suppliers.
R
Referral
A referral is a direction or authorization from one health care provider—often a primary care physician—to receive care from another provider or specialist.
Certain Medicare Advantage plans, particularly some HMO plans, may require referrals for specialist care.
S
Special Enrollment Period (SEP)
A Special Enrollment Period allows someone to enroll in or change certain Medicare coverage outside the normal enrollment periods when a qualifying circumstance occurs.
Examples can include retiring and losing qualifying employer coverage, moving outside a plan’s service area, losing certain coverage, or qualifying for particular assistance programs.
Different Special Enrollment Periods have different eligibility requirements and timeframes.
Skilled Nursing Facility (SNF)
A skilled nursing facility provides skilled nursing and rehabilitation services following certain illnesses, injuries, or hospitalizations.
Medicare coverage of skilled nursing facility care has specific eligibility requirements.
Skilled nursing care should not be confused with long-term custodial nursing home care.
Step Therapy
Step therapy is a coverage requirement that may require you to first try one or more alternative medications before your plan will cover another medication.
T
Turning 65 – T65
“T65” is a commonly used abbreviation for Turning 65.
Turning 65 is an important Medicare milestone because most people become eligible for Medicare around their 65th birthday.
If you are still working when you turn 65, your decision to enroll in or defer Medicare can depend on factors such as your employer coverage, employer size, prescription coverage, Health Savings Account considerations, and overall cost of your employer benefits.
Trial Right
A Medicare Supplement trial right is a federal protection available in certain situations when someone tries Medicare Advantage and later wants to return to Original Medicare.
For example, someone who drops a Medicare Supplement policy to join Medicare Advantage for the first time may have a 12-month trial right period allowing them to return to Original Medicare and obtain certain Medicare Supplement coverage.
Certain people who enroll in Medicare Advantage when first eligible for Medicare at age 65 may also have a trial right if they return to Original Medicare within their first year.
Specific eligibility requirements, Medicare Supplement plan options, and deadlines apply.
U
Underwriting
Underwriting is another term for the process an insurance company may use to evaluate an applicant’s eligibility for Medicare Supplement coverage.
Medical underwriting may be permitted when someone applies outside their Medicare Supplement Open Enrollment Period and does not have another guaranteed issue protection.
State rules can provide additional Medicare Supplement enrollment protections.
Skilled Nursing Facility (SNF)
A skilled nursing facility provides skilled nursing and rehabilitation services following certain illnesses, injuries, or hospitalizations.
Medicare coverage of skilled nursing facility care has specific eligibility requirements.
Skilled nursing care should not be confused with long-term custodial nursing home care.
Step Therapy
Step therapy is a coverage requirement that may require you to first try one or more alternative medications before your plan will cover another medication.
Still Have Questions About Medicare?
Understanding Medicare terminology is helpful, but knowing how all of the pieces work together is even more important.
At Health Coverage Solutions, our goal is to educate you about your Medicare choices so you can make an informed decision based on your health care needs, doctors, prescriptions, budget, and personal preferences.
Have a Medicare question? Schedule a Medicare consultation with Health Coverage Solutions.