Medicare Glossary and Definition of Health Care Terms
Annual Enrollment Period (AEP): Add, switch or drop Part C (MA, MA-PD) or add, drop or switch Part D (PDP). This period is held every year from October 15 through December 7. Coverage begins January 1.
Assignment: In Original Medicare, this means a doctor or supplier agrees to accept the Medicare-approved amount as full payment. If you are in Original Medicare, it can save you money if your doctor accepts assignment. You still pay your share of the cost of the doctor’s visit.
Benefit Period: A “benefit period” begins the day you go to a hospital or skilled nursing facility (SNF). The benefit period ends when you haven’t received any hospital care (or skilled care in a SNF) for 60 days in a row. If you go into a hospital or SNF after one benefit period has ended, a new benefit period begins. You must pay the inpatient hospital deductible for each benefit period. There is no limit to the number of benefit periods.
CMS: The Centers for Medicare & Medicaid Services (CMS) of the US Department of Health and Human Services is responsible for running Medicare today.
Cost Sharing: The amount you pay for health care and/or prescriptions. This amount can include copayments, coinsurance, and/or deductible.
Coinsurance: An amount you may be required to pay as your share of the cost for services, after you pay any deductibles. Coinsurance is usually a percentage (for example, 20%)
Copayment: An amount you may be required to pay as your share of the cost for a medical service or supply, like a doctor’s visit or a prescription. A copayment is usually a set amount, rather than a percentage. For example, you might pay $10 or $20 for a doctor’s visit or prescription.
Creditable Coverage: Health coverage you have had in the past, such as group health plan (including COBRA continuation coverage), an HMO, an individual health insurance policy, Medicare or Medicaid, and this prior coverage was not interrupted by a significant break in coverage. The prior coverage should be at least as good (or better) than Medicare coverage.
Deductible: The amount you must pay for health care or prescriptions, before Original Medicare, your prescription drug plan, or other insurance begins to pay. For example, in Original Medicare, you pay a new deductible for each benefit period for Part A, and each year for Part B. These amounts can change every year.
End-Stage Renal Disease (ESRD): Permanent kidney failure that requires a regular course of dialysis or a kidney transplant.
Excess Charges: If you are in Original Medicare, this is the difference between a doctor’s or other health care provider’s actual charge (which may be limited by Medicare or the state) and the Medicare-approved payment amount.
Extra Help: A Medicare program to help people with limited income and resources pay Medicare prescription drug program costs, such as premiums, deductibles, and coinsurance.
Formulary: A list of drugs covered by a plan.
General Enrollment Period (GEP): A time in which people can enroll in Medicare Part A or Part B if they have missed the opportunity to enroll during their Initial Enrollment Period or their Special Enrollment Period. Held January 1 through March 31 every year, coverage will begin July 1.
Guaranteed Issue Rights: Rights you have in certain situations when insurance companies are required by law to sell or offer you a Medigap policy. In these situations, an insurance company can’t deny you a policy, or place a condition on a policy, such as exclusions for pre-existing conditions, and can’t charge you more for a policy because of because of past or present health problems.
Guaranteed Renewable: A right you have that requires your insurance company to automatically renew or continue your Medigap policy, unless you make untrue statements to the insurance company, commit fraud or don’t pay your premiums.
Health Maintenance Organization (HMO): A type of Medicare Advantage Plan that is available in some areas of the country. Plans must cover all Medicare Part A and Part B health care. Some HMOs cover extra benefits, like extra days in hospital. In most HMOs, you can only go to doctors, specialists, or hospitals on the plan’s list except in an emergency. Your costs may be lower than in Original Medicare.
Initial Enrollment Period (IEP): The 7-month period that includes the 3 months before, the month of, and the 3 months after the triggering event to be eligible for Medicare.
Lifetime Reserved Days: In Original Medicare, a total of 60 extra days that Medicare will pay for when you are in a hospital more than 90 days during a benefit period. Once these 60 reserve days are used, you don’t get any more extra days during your lifetime. For each lifetime reserve day, Medicare pays all covered costs except for a daily coinsurance.
Medicaid: A joint Federal and state program that helps with medical costs for some people with limited incomes and resources. Medicaid programs vary from state to state, but most health care costs are covered if you qualify for both Medicare and Medicaid.
Medical Underwriting: The process that an insurance company uses to decide, based on your medical history, whether or not to take your application for insurance, whether or not to add a waiting period for pre-existing conditions (if your state law allows it), and how much to charge you for that insurance.
Medicare Advantage Disenrollment Period (MADP): Held January 1 through February 14. During this time Medicare Advantage members can disenroll from their current plan, but only return to Original Medicare. They can also select a PDP for Part D coverage.
Medicare Advantage Plan (MA): A plan offered by a private company that contracts with Medicare to provide you with all your Medicare Part A and Part B benefits. Medicare Advantage Plans are HMOs, PPOs, or Private Fee-for-Service Plans. If you are enrolled in a Medicare Advantage Plan, Medicare services are covered through the plans, and are not paid for under Original Medicare.
Medicare Advantage Prescription Drug Plan (MAPD): A Medicare Advantage plan that offers Medicare Prescription Drug coverage and Part A and Part B benefits in one plan.
Medicare Savings Account (MSA): A type of Medicare Advantage Plan which combines a high-deductible health plan with a medical savings account. Enrollees can initially use their savings account to help pay for health care, and then will have coverage through a high-deductible insurance plan once they reach their deductibles.
Medicare Select: A type of Medigap policy that may require you to use hospitals and, in some cases, doctors within its network to be eligible for full benefits.
Medicare-Approved Amount: In Original Medicare, this is the amount a doctor or supplier that accepts assignment can be paid. It includes what Medicare pays and any deductible, coinsurance, and copayment that you pay. It may be less than the actual amount a doctor or supplier charges.
Medigap Policy: Medicare supplement insurance sold by private insurance companies to fill “gaps” in Original Medicare coverage. Except in Massachusetts, Minnesota, and Wisconsin, there are 10 standardized plans labeled Plan A through Plan N. Medigap policies only work with Original Medicare.
Open Enrollment Period (for Medigap): A one-time-only six month period when you can buy any Medigap policy you want that is sold in your state. It starts in the first month that you are covered under Medicare Part B and you are age 65 or older. During this period, you can’t be denied coverage or charged more due to past or present health problems.
Original Medicare: A fee-for-service health plan that lets you go to any doctor, hospital, or other healthcare supplier who accepts Medicare and is accepting new Medicare patients. You must pay the deductible. Medicare pays its share of the Medicare approved amount, and you pay your share (coinsurance). In some cases you may be charged more than the Medicare-approved amount. Original Medicare has two parts: Part A (Hospital Insurance) and Part B (Medical Insurance).
Pre-Existing Condition: A health problem you had before the date that a new insurance policy starts.
Prescription Drug Plans (PDPs): Drug plan offered through a Medicare Advantage Plan (MA-PD) or through a standalone prescription drug plan.
Preferred Provider Organization Plan (PPO): A type of Medicare Advantage Plan which pay less if you use doctors, hospitals, and providers that belong to the network. You can use doctors, hospitals, and providers outside of the network for an additional cost.
Premium: The periodic payment to Medicare, and insurance company, or a health care plan or prescription drug plan.
Private Fee-for-Service Plan (PFFS): A type of Medicare Advantage Plan in which you may go to any Medicare-approved doctor or hospital that accepts the plan’s payment. The insurance plan, rather than the Medicare Program, decides how much it will pay and what you pay for the services you get. You may pay more or less for Medicare-covered benefits. You may have extra benefits the Original Medicare doesn’t cover.
Secondary Payer: An insurance policy, plan, or program that pays second on a claim for medical care. This could be Medicare, Medicaid, or other insurance depending on the situation.
Special Election Period (SEP): Special Election Periods (also referred to as SEPs) exist for MA plans and Part D plans in certain circumstances. They are defined as the time that a beneficiary can change health plans or return to Original Medicare, such as: you move outside the service area, your Medicare Advantage plan violates its contract with you, the organization does not renew its contract with CMS, or other exceptional conditions determined by CMS. The Special Election Period is different from the Special Enrollment Period.
Special Enrollment Period (SEP): A Special Enrollment Period (SEP) exists for Part B. It is defined as a set time when you can sign up for Medicare Part B if you didn’t take Medicare Part B during the Initial Enrollment Period, because you or your spouse were working and had group health plan coverage through the employer or union. You can sign up at any time you are covered under the group plan based on current employment status. Alternatively, you may sign up during eight months starting the month after the employment ends or the group health coverage ends, whichever comes first.
Special Needs Plan (SNP): A special type of plan that provides more focused health care for specific groups of people, such as those who have both Medicare and Medicaid, who reside in a nursing home, or who have chronic medical conditions.
Tiers: To have lower costs, many plans place drugs into different “tiers’, which cost different amounts. Each plan can form their tiers in different ways. Here is an example of how a plan might form its tiers.
- Tier 1 – Generic drugs. Tier 1 drugs will cost you the least amount.
- Tier 2 – Preferred brand-name drugs. Tier 2 drugs will cost you more than Tier 1 drugs.
- Tier 3 – Non-preferred brand-name drugs. Tier 3 drugs will cost you more than Tier 1 and Tier 2 drugs.