Definitions of Medicare Terms

A

  • Accreditation: The process by which a certification body reviews a health care provider’s procedures, policies, and performance and compares them to industry standards.
  • Actuarial equivalent: A sponsored drug plan that provides similar or better benefits than another.
  • Advance Beneficiary Notice (ABN): The notice that a health care provider gives you before providing a service that Medicare might not cover.
  • Advance coverage decision: A preliminary notice that explains if a particular health service is covered.
  • Advance directive: A document that explains how certain medical decisions should be made if you lose the ability to make them for yourself.
  • Ambulatory surgical center: A medical facility where simple surgeries, requiring less than 24 hours of care, are performed on patients.

B

  • Beneficiary: A person who receives health care coverage through the Medicare program.
  • Benefit: The items or services covered under a health insurance plan.
  • Benefit period: The amount of time that an insurance provider covers for hospital and skilled nursing facility services.
  • Brand name: A medication marketed under a trademark-protected name.

C

  • Catastrophic coverage: An insurance plan designed to protect a person from large out-of-pocket costs and is usually for healthy beneficiaries who do not visit their physician frequently.
  • Centers for Medicare & Medicaid Services (CMS): A federal agency that administers both Medicare and Medicaid services.
  • Claim: A payment request submitted to Medicare or other insurance providers for services that you believe are covered.
  • Co-insurance: The fixed percentage of the cost of services that you must pay in order to get the remaining percentage covered.
  • Comprehensive Outpatient Rehabilitation Facility (CORF): A medical facility that provides outpatient therapeutic, diagnostic, psychological, and restorative services for injury or disease rehabilitation.
  • Co-payment: A fixed amount that you must pay in order to get specific medical services covered.
  • Cost sharing: The out-of-pocket amount required to pay for health care services or prescriptions and can include co-payment, co-insurance, or deductibles.
  • Coverage gap: The time period after a Medicare Part D beneficiary spends a certain amount on covered drugs when they have to pay higher cost sharing. It is also called the “donut hole.”
  • Creditable coverage: Health coverage in the past which was not interrupted by a large time break.
  • Custodial care: Simple care such as assistance with cooking, cleaning, shopping, and eating.

D

  • Deductible: The overall cost for health care services or prescriptions that must be paid before Medicare or other insurance plans will pay anything.
  • Department of Health and Human Services (HHS): A department of the U.S. government that manages health programs and human services for all Americans.
  • Donut hole: The time period after a Medicare Part D beneficiary spends a certain amount on covered drugs when they need to pay higher cost sharing. It is also called a coverage gap.
  • Drug List: A list of an insurance plan’s approved drugs. It is also called a formulary.

E

  • Employer or union retiree plans: A health care plan offered by employers or a Union to their current or former employees.
  • End-Stage Renal Disease: ESRD is usually caused by diabetes or high blood pressure and can lead to permanent kidney failure and eventually death without dialysis or a kidney transplant.
  • Exception: This occurs when a drug plan decides to cover a drug that is not on its drug list.
  • Excess charges: The cost above Medicare approved amounts, usually less than 15%, that health care providers can legally charge.
  • Extra help: This program, also known as the Low-Income Subsidy, covers out-of-pocket expenses for low income beneficiaries on Medicare Part D.

F

  • Fee-for-service: A system where a payment is made for each service provided.
  • Formulary: A list of prescription drugs covered by an insurance plan. It is also called a drug list.

G

  • Generic: A copy of a brand-name prescription that is identical in quantity, strength, and performance but less expensive.
  • Grievance: A complaint about a Medicare health or drug plan.
  • Group health plan: An employer or union-based health plan provided through a current or former employer.
  • Guaranteed issue rights: Rights that protect consumers when they buy a Medigap supplemental insurance policy and prevent an insurer from denying coverage because of pre-existing conditions.
  • Guaranteed renewable policy: An insurance policy that cannot be terminated by the insurer unless the consumer makes untrue statements, commits fraud, or fails to pay the premium. All Medigap policies issued after 1992 fall within this category.

H

  • Health care provider: A person or facility licensed to provide health care services.
  • Health Insurance Marketplace: An online resource where individuals, families, and small businesses can research, compare, and buy health insurance plans.
  • Health Insurance Portability and Accountability Act of 1996 (HIPAA): A set of federal rules for group and individual health plans that protects the privacy of personal and identifiable medical information.
  • Health Maintenance Organization: HMOs are a type of insurance plan where members pay a premium for access to a certain group of health providers.
  • Hospice: A method of caring for terminally ill patients and providing support for their families.

I

  • In-Network: Pharmacies, hospitals, and doctors that have agreed to provide insurance plan members with care and products according to that plan’s policies.
  • Inpatient care: Medical care provided in a facility such as a hospital.

L

  • Lifetime reserve days: Original Medicare provides an additional 60 reserve days for hospital care which can be used during your lifetime.
  • Long-term care: Medical and non-medical care provided to those who cannot perform simple daily tasks such as washing and dressing. These services can be provided in the home, in assisted living facilities, or in nursing homes.

M

  • Medicaid: A state and federal program that assists low-income citizens with medical costs.
  • Medically necessary: Health care services that are needed to prevent, diagnose, or treat an illness, disease, or injury that meets medical standards.
  • Medical underwriting: The process where insurance companies use an applicant’s medical history to determine if the person is approved or denied, whether or not to submit them to a waiting period, and how much to charge for coverage.
  • Medicare: The federal health insurance program for those over 65 or for younger individuals with certain disabilities.
  • Medicare Advantage: A type of Medicare health plan, also called Part C, which is offered by a private company and provides all of the benefits of Original Medicare.
  • Medicare Savings Programs: A Medicaid program that helps people with limited financial resources pay for some or all of their Medicare costs.
  • Medicare SELECT: A Medigap policy that requires you to use hospitals and certain doctors within its network to be eligible for full benefits.
  • Medicare Supplemental Insurance: A standardized private insurance policy available to Medicare beneficiaries that covers the gaps in Original Medicare. Also referred to as Medigap.
  • Medigap: A supplemental insurance policy, standardized in 47 U.S. states and provided by private insurers, which fills the holes in Medicare. Also referred to as Medicare Supplemental Insurance.

N

  • Network: A group of medical professionals and facilities contracted to provide care for a specific insurer’s members.

O

  • Open Enrollment Period: The time period where insurance applicants can select a health plan usually without providing health records or waiting for coverage.
  • Original Medicare: The federal health insurance program in which the government pays health care providers directly for services. Original Medicare has two parts: Part A, which is hospital insurance, and Part B, which is medical insurance.
  • Out-of-network: Benefits and services that are not contractually provided by your specific health insurance plan.
  • Out-of-pocket costs: Services or prescription drug costs that are not covered by an insurance plan and must be paid by the insured person.
  • Outpatient hospital care: Medical care that does not require an overnight hospital stay.

P

  • Plan sponsor: An entity, such as an employer or union, that creates and maintains an employee benefit plan.
  • Pre-existing condition: An illness or condition that was diagnosed before beginning a new health insurance plan.
  • Premium: The amount paid by the insured party to the insurance company.
  • Prescription drug plan: A stand-alone plan that provides drug coverage to Original Medicare and other insurance plans.
  • Preventative services: Health care services provided to prevent illness and promote general wellness and can include flu shots, mammograms, pap tests, and pelvic exams.
  • Primary care doctor: A physician or doctor that provides basic medical care and is usually the first contact for both preventative care and for undiagnosed problems.
  • Prior authorization: A restriction that requires your doctor to get special permission from the insurance company before a service or medication is covered.
  • Programs of All-inclusive Care for the Elderly (PACE): Programs that provide social, medical, and long-term care to individuals 55 years of age and older who require nursing home care.

Q

  • Qualified beneficiary: Usually an insured individual, their spouse, and dependent children who are covered under a group health plan on the day before a qualifying event occurs.
  • Quantity limit: An insurance restriction where the quantity of prescription medication must remain below a set amount for a certain time period.

R

  • Referral: A practitioner’s written order to visit a specialist and have it covered by an insurance company.
  • Rehabilitation: Medical services provided with the intent to cure, improve, or prevent a condition caused by illness or injury.
  • Religious nonmedical health care institution: A facility that provides non-medical services and supplies to people that need care that is consistent with their religious beliefs.
  • Respite care: Temporary care provided in a hospice inpatient facility, a hospital, or a nursing home which allows a patient’s caregiver to take time off, usually up to 5 days.

S

  • Secondary payer: An insurance policy, plan, or program that pays second on a Medicare care claim.
  • Service area: The geographical area where a health insurance plan provides medical service for its members and is usually where a network of providers is located.
  • Significant break in coverage: Usually a period of 63 consecutive days when an individual has no creditable health coverage.
  • Skilled nursing facility (SNF): A Medicare-approved facility that provides post-hospital nursing care for a short period of time.
  • State Health Insurance Assistance Program (SHIP): A state program sponsored by the federal government that gives free health insurance counseling to Medicare beneficiaries.
  • State Insurance Department: A state agency that regulates insurance and provides information about private health insurance policies.
  • State Pharmaceutical Assistance Program (SPAP): A state program that provides drug coverage assistance for those based on medical conditions, age, and financial need.
  • Supplemental Security Income (SSI): A benefit paid monthly by Social Security to those with low resources who are disabled, blind, or 65 and older.
  • Supplier: Any company, person, or agency which provides a service except when you are in a SNF or hospital.

T

  • Tiers: Drugs that have a different cost for each group level.
  • TRICARE: A health care program for active-duty and retired members of the military and their families.

V

  • Validation: A process that allows insurers to verify if data is factual.

W

  • Waiting period: The time period between when you sign up for a health plan and when the coverage begins.
  • Worker’s compensation: Employer-required insurance to protect employees who get sick or injured on the job.

Resource Center

Medigap Policies | Compare Free Quotes

Medigap policies can help cover some of Medicare's out-of-pocket costs. Learn about your eligibility and enrollment options today.

Read More

Does Medicare Cover CPAP Machines?

Medicare can help cover the cost of a CPAP machine for a 3-month therapy trial. If a doctor states that it helps your sleep apnea, it may be covered longer.

Read More

Does Medicare Cover Dental Care?

Does Medicare cover dental care? The simple answer is no. However, there are exceptions to this rule.

Read More

Does Medicare Cover Dermatologist Check Ups? | Part B Services

Medicare Part B will likely cover some of the costs of your dermatologist visit if it is medically necessary for the treatment of a condition or disease.

Read More

Original Medicare Does Not Cover Insulin Pens

Original Medicare doesn't cover insulin pens, but a Medicare Part D prescription drug plan may provide coverage for medical supplies used to inject insulin.

Read More

Medicare Coverage for Patients with End Stage Renal Disease

Health care for End Stage Renal Disease is included in Medicare coverage. Medigap Supplement Insurance may reduce costs for dialysis services.

Read More

Medigap vs. Medicare Advantage | Comparing Coverage

Medigap and Medicare Advantage plans provide private health insurance benefits, but they are very different and you can't be enrolled in both.

Read More

How To Choose The Right Medicare Supplement Insurance Plan

Medicare Supplement Insurance helps cover some of Original Medicare's cost sharing. Compare free quotes to find the right Medigap plan for you.

Read More

Will Medicare Cover a Vasectomy?

Original Medicare (Part A and Part B) will not cover a vasectomy. If you are looking to have elective sterilization, you may have to pay for it yourself.

Read More

Your information is safe with us.

Our agents are here to help you. 1-800-995-4219