Medicare Terminology Explained
Medicare can be complex and is full of confusing terms that may not be clear to those with only a basic understanding of this type of insurance.
Below are 10 Medicare-related words and phrases that are often misinterpreted or misunderstood by Medicare beneficiaries.
When a doctor or other health care provider is said to “accept assignment,” it means they have agreed to accept the payment amount Medicare has established for the type of service performed or product supplied as payment in full. When a health care provider accepts assignment, they cannot bill you for more than the agreed upon amount.
2. Benefit Period
When you’re admitted to a hospital or skilled nursing facility as an inpatient, you are required to first pay a deductible before your Medicare Part A coverage kicks in. But unlike most deductibles, the Part A deductible is not measured on an annual basis.
Instead, this deductible is based on a “benefit period.” The benefit period begins the day you are admitted to a hospital or skilled nursing facility. The benefit period ends once you have been out of the hospital or skilled nursing facility for 60 consecutive days.
Should you return for inpatient hospital care again after the benefit period has ended, a new benefit period would begin. There is no limit to the number of benefit periods that you may undergo within a calendar year.
Example: You are admitted to the hospital and are released after 20 days. You are home for 30 days are then readmitted. Because you were home for less than 60 days, you are still on the same benefit period.
If your deductible was satisfied during the first stay, you wouldn't start over with a new deductible for the second stay. Your Medicare Part A coverage would pick up again right where it left off.
However, if you were to be home for at least 60 days in a row and then readmitted again, you would need to meet the Medicare Part A deductible again before any cost-sharing took effect.
3. Durable Medical Equipment
Durable Medical Equipment, or DME, is a classification of medical equipment that is covered by Medicare. Durable Medical Equipment must be deemed medically necessary by a prescribing doctor and can include things like wheelchairs, walkers, canes, crutches, braces, oxygen equipment, diabetes testing equipment and more.
There are five requirements for a piece of equipment to be classified as DME:
- It must be designed specifically to aid with an injury or medical condition.
- It must be suitable for use in the home (although it may be used outside of the home as well).
- It must be likely to last for at least three years (hence the word “durable.”). This does not mean you must use the equipment for three years, however.
- It must be used for a medical reason.
- It must not be used by someone who is not sick or injured.
4. Excess Charge
If a doctor or health care provider does not accept assignment, they may still agree to see Medicare patients. If so, they are allowed to charge up to 15 percent more than what Medicare approves for the service or product rendered.
This extra amount is known as an “excess charge.” Patients are typically responsible for paying the difference, unless they have a Medicare Supplement Insurance (Medigap) plan that covers excess charges.
5. Guaranteed-Issue Rights
There are certain situations in which an insurance company may be able to charge more for a Medigap policy, or even deny you a plan altogether based on a pre-existing condition. But there are other situations in which you may have guaranteed issue rights (or “Medigap protections”) and cannot be denied coverage or charged more for a plan.
Two examples of guaranteed-issue rights include:
- Losing a Medigap plan due to no fault of your own
- Having an employer group plan that is ending
6. Guaranteed Renewable
“Guaranteed renewable” means that an insurance company cannot terminate your Medigap policy as long as you continue to pay your premiums and do not commit fraud or make untrue statements.
In fact, insurance companies must continue to provide existing patients with their chosen Medigap plan even after the plan is discontinued for new patients.
7. Lifetime Reserve Days
Medicare Part A provides hospital coverage for 90 days of an inpatient stay for each benefit period. Should you total more than 90 days in a hospital or skilled nursing facility within the same benefit period, you will then begin to dip into your “lifetime reserve days.”
You are given 60 lifetime reserve days to use over the course of your life. During these lifetime reserve days, you pay an increased daily coinsurance amount. Once all 60 lifetime reserve days are exhausted, you are responsible for all hospital costs.
8. Medicare Advantage
A Medicare Advantage plan is an insurance plan that may be used in place of Original Medicare (Medicare Part A and Part B). By law, a Medicare Advantage plan must provide the same minimum coverage as Original Medicare. However, many Medicare Advantage plans offer additional benefits such as vision, dental or prescription drug coverage.
Medicare Advantage plans are sold on the private marketplace just like traditional health insurance plans.
9. Medicare-Approved Amount
The Medicare-approved amount is the amount that Medicare will pay a health care provider or medical equipment supplier for their service or products. This amount may be less than what the provider or supplier normally charges, and the amount must be agreed upon by any provider or supplier that accepts assignment from Medicare.
“Medigap” is another term used for Medicare Supplement Insurance. There are 10 Medigap plans that provide varying levels of coverage for some of Medicare’s out-of-pocket expenses. Some of these out-of-pocket expenses include deductibles, copayments, coinsurance and excess charges.
Medigap plans are sold by private insurance companies much like traditional health insurance plans.
To learn more about Medigap, including which plans are available in your area, speak with a licensed agent at 1-800-995-4219.