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Medicare 101

New to Medicare Series: Part 2

by Rebecca Hambleton    |    Published Nov 26, 2019    |    Reviewed by John Krahnert

Glossary of Medicare Terms

Medicare doesn’t have to be complicated, and learning important Medicare terms can help ensure you fully understand your coverage. From deductibles and copayments to benefit periods and excess charges, this guide covers it all.

A

Advance coverage decision – A notice from a Medicare Advantage plan informing you in advance whether or not it will cover a service.

Annual Election Period (AEP) – A time when you can make changes to your Medicare Advantage or Medicare Prescription Drug Plan. The Annual Election Period runs from October 15 to December 7 each year, and is also known as the Fall Open Enrollment Period.

Annual wellness visit – A no-cost yearly visit with your primary care physician. Your annual wellness visit is a time for you and your doctor to discuss your health and develop a strategy to better manage your health care.

Appeal – The action you take if you disagree with a coverage or payment decision made by Medicare.

Assignment – An agreement by your doctor to accept the payment amount Medicare approves for a service. If your doctor approves Medicare assignment, they will not bill you for more than the Medicare deductible and coinsurance.

B

Beneficiary An individual who is entitled to benefits under Medicare.

Benefits – The health care services covered by Medicare.

Benefit Period – Medicare Part A measures your use of hospital and skilled nursing facility services through benefit periods. A benefit period under Medicare Part A begins the day you’re admitted to the hospital and ends when you’ve been discharged for at least 60 days. If you’ve been out of the hospital for more than 60 days and are admitted again, a new benefit period begins. This means that you could potentially be required to meet your Part A deductible multiple times in a given calendar year.   

C

Coinsurance – The amount you pay for a covered service after your deductible is met. Coinsurance is usually a percentage (for example, 20%).

Copayment – The amount you pay for a covered service after your deductible is met. Copayments are usually set amounts rather than a percentage (for example, $20 for a doctor’s visit).

Cost sharing – The amount you may be required to pay as your share of the cost of healthcare services. Cost sharing can include coinsurance, copayments and deductibles.

Coverage gap – This term applies to Medicare Prescription Drug Plans and is the period of time in which you pay higher cost sharing for prescription drugs. The coverage gap (also known as the donut hole) begins when you and your drug plan have paid a set amount for prescription drugs in a given year.

D

Deductible – The amount you must pay out of pocket before Medicare will pay its share for covered services.

Durable medical equipment – Certain equipment such as wheelchairs and hospital beds that your doctor orders for use in the home. Durable medical equipment is usually covered by Medicare Part B.

E

Enrollment periods – Specific times during which you can enroll in Medicare.

Excess charge – The difference between what Original Medicare will pay and the amount a doctor can legally charge for a service.

Extra Help – a Medicare program that helps individuals with lower incomes pay for Medicare prescription drug costs, such as deductibles premiums and coinsurance.

F

Fall Open Enrollment Period – A time when you can make changes to your Medicare Advantage or Medicare Prescription Drug coverage. Fall Open Enrollment runs from October 15 to December 7 each year. The Fall Open Enrollment Period is also known as the Annual Election Period.

Fee-for-service – Medicare fee-for-service plans are a type of Medicare Advantage plan that contracts with certain Medicare-participating providers.

Formulary – A list of prescription drugs that are covered by a prescription drug plan.

G

General enrollment period – A time when Medicare eligible people who missed their Initial Enrollment Period and don’t qualify for special enrollment can enroll in Medicare. The General Enrollment Period runs from January 1 to March 31 each year, and Medicare coverage begins on July 1 of the same year.

Group health plan – A health insurance plan provided by an employer or employee organization.

Guaranteed issue rights – Rights that you have during your Medigap Open Enrollment Period that ensures you can buy any Medigap policy offered in your state.

Guaranteed renewable policy – Insurance policies that cannot be terminated by insurance companies as long as you pay your premiums.

H

Health care provider – Individuals and organizations that are licensed to give health care, such as doctors, nurses and hospitals.

Health Maintenance Organization (HMO) – A type of Medicare Advantage plan that offers healthcare services through a specific network of providers. Generally, if you have an HMO plan and go outside of your plan’s network for care, your Medicare Advantage plan will not cover the services.

Home health care – Health care services that a doctor decides you may get in your home. Medicare only covers some home health care services.

Hospice – A type of care that focuses on the terminally ill and their families. Hospice care is covered by Medicare Part A.

I

Initial Coverage Election Period – The period of time during which newly eligible Medicare beneficiaries can enroll in a Medicare Advantage plan. This period usually runs parallel to your Medicare Initial Enrollment Period.

Initial coverage limit – A drug plan’s out-of-pocket maximum, which is reached after you’ve paid your deductible and copayment/coinsurance for covered drugs.

Initial Enrollment Period – The seven-month period in which newly eligible Medicare beneficiaries can sign up for Medicare. Your Initial Enrollment Period begins three months before your 65th birthday, includes your birthday month, and ends three months after your 65th birthday.

In-network – Hospitals, doctors, pharmacies and health care providers that are part of a health insurance plan’s network of providers.

Inpatient care – Health care received when you’re admitted to the hospital

L

Late enrollment penalty – The penalty you may have to pay if you do not enroll in Medicare during your Initial Enrollment Period. The penalty is added to your monthly premium and can increase each year you are eligible for Part B and do not enroll.

Lifetime reserve days – Additional days of inpatient care that Medicare Part A will cover if you’re in the hospital for more than 90 days during a benefit period. Every Medicare beneficiary is limited to 60 lifetime reserve days over the course of their life.

Long-term care – Services provided to people who are unable to perform basic daily activities such as dressing or bathing. Medicare does not pay for long-term care.

M

Medically necessary – When an injury or illness requires immediate medical attention to prevent permanent disability or death.

Medical underwriting – A process used by insurance companies to determine a person’s coverage eligibility and/or monthly premium amounts. Medical underwriting usually involves a physical examination and/or a health questionnaire.

Medicare – The federal health insurance program for people age 65 and older and people with disabilities or certain medical conditions.

Medicare Advantage (Medicare Part C) – Medicare health insurance plans sold by private insurance companies as an alternative to Original Medicare (Medicare Part A and Part B). Most Medicare Advantage plans provide prescription drug coverage, and some offer additional benefits such as vision, hearing and dental coverage.

Medicare Part A – Hospital insurance through Medicare that covers inpatient hospital stays, hospice care, care in a skilled nursing facility and some home health care.

Medicare Part B – Medical insurance through Medicare that covers certain doctors’ services, medical supplies, preventive services and outpatient care.

Medicare Prescription Drug Plan (Medicare Part D) – Optional coverage for prescription drugs, which are not covered by Original Medicare.

You can compare Part D plans available where you live and enroll in a Medicare prescription drug plan online when you visit MyRxPlans.com.

Medicare Supplement Insurance (Medigap) – Plans sold by private insurers to help cover some of Original Medicare’s out-of-pocket costs such as deductibles, copayments and coinsurance.

Medigap Open Enrollment Period – A six-month period that enables those enrolled in Original Medicare to purchase Medicare Supplement Insurance. You only get one Medigap Open Enrollment Period, and failing to enroll in a Medigap plan during this time could cause you to pay more for a Medigap plan or be denied coverage altogether.

N

Network – A group of physicians, hospitals and health care providers that agree to provide medical services to a plan’s members at a discounted rate.

O

Original Medicare – Together, Medicare Part A and Medicare Part B are known as Original Medicare. Original Medicare is the federally managed health insurance program for people age 65 and older and people younger than 65 who have a disability or certain medical conditions.

Out-of-pocket costs – The expenses you pay for medical care that are not covered or reimbursed by Medicare.

Outpatient hospital care – Medical care that does not require an overnight stay in a hospital or medical facility.

P

Part A – Hospital insurance through Medicare that covers inpatient hospital stays, hospice care, care in a skilled nursing facility and some home health care.

Part B – Medical insurance through Medicare that covers certain doctors’ services, medical supplies, preventive services and outpatient care.

Part C – Medicare health insurance plans sold by private insurance companies as an alternative to Original Medicare (Medicare Part A and Part B). Most Medicare Advantage plans provide prescription drug coverage, and some offer additional benefits such as vision, hearing and dental coverage. Medicare Part C is also known as Medicare Advantage.

Part D – Optional coverage for prescription drugs, which are not covered by Original Medicare. Medicare Part D plans are also known as Medicare Prescription Drug Plans.

Preferred Provider Organization (PPO) – A type of Medicare Advantage plan that allows you to visit any in-network provider without requiring a referral from your primary care physician.

Premium – What you pay each month for your Medicare coverage.

Preventive services – Health care services that help prevent illness or detect illness at an early stage (for example, flu shots, pap tests and mammograms).

Primary care physician – The doctor you see first for most health problems. Many Medicare Advantage plans require you to see your primary care physician before you can see a specialist.

R

Red, white and blue card – Another name for your the Medicare card you’ll receive in the mail. If you’re automatically enrolled, you’ll receive your red, white and blue card in the mail 3 months before your 65th birthday or on your 25th month of receiving disability benefits.

Referral – A written order from your primary care physician to see a specialist. Some Medicare Advantage plans require referrals.

S

Service area – A specific area where Medicare Advantage plans are accepted. If you move out of your plan’s service area, the plan may disenroll you, and you may have to choose a different plan.

Skilled nursing facility – A nursing facility that focuses on rehabilitation and provides care for patients who require intense skilled medical care.

Special Enrollment Period – A time outside of the yearly Open Enrollment Period when you can sign up for Medicare. Certain life events, such as moving or losing your health insurance coverage may qualify you for a Special Enrollment Period.

T

Tiers – Medicare Prescription Drug Plans split drugs into different tiers. Typically, a drug in a lower tier will cost less than a drug in a higher tier.

W

Welcome to Medicare preventive visit – A one-time appointment covered by Medicare Part B where you and your doctor can develop a health plan based on your preventive screenings and medical history.

Keep Reading

To learn more about Medicare, read through some of the other articles in this series or speak with a licensed insurance agent.

New to Medicare Series

Part 1: Medicare 101

Part 2: Glossary of Medicare Terms

Part 3: Understanding Your Medicare Out-of-Pocket Costs

Part 4: Your Guide to Medicare Enrollment Periods

Part 5: What Every Medicare Beneficiary Should Know About Their Medicare Card

Part 6: What Original Medicare Covers

Part 7: Exploring Your Medicare Options

 

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