Medicare Advantage Glossary

checkmark Fact checked Contributing expert: Roseann Birch; Reviewed by: Leron Moore - Published: September 14, 2020

What You Should Know

  • 1 Failure to properly understand the terminology can lead to hard to correct and costly mistakes.
  • 2 Understanding the basics and knowing the terminology can save you thousands of dollars.
  • 3 23% of people make mistakes when signing up for Medicare due to a lack of understanding terms.
  • 4 Only 9% of eligible adults know the basics of medicare.

A-D

Annual Enrollment Period

During this two-month period, which runs from October 15th to December 7th, those enrolled in Medicare Part A and B are able to enroll in a Medicare Advantage plan or a Part D, prescription drug, plan. Those who are currently enrolled in a Medicare Advantage can also disenroll or change their existing coverage. Coverage begins January 1st of the new year. 

Annual Notice of Changes (ANOC)

The notification received by enrolled Medicare members each year before the Annual Enrollment Period opens. The ANOC provides deadlines and information about changing Medicare plans, as well as detailing changes in benefits, costs, or services.

Beneficiary

A person who is eligible for Medicare health insurance and enrolled in the program.

Benefit Period

The time during which Medicare pays for your treatment at a hospital or skilled nursing facility. The benefit period begins the day you enter the hospital and ends 60 days after you’re no longer receiving inpatient care. Each benefit period incurs a new deductible. If you go back into a hospital after your benefit period ends, a new benefit period begins. There is no limit to the number of benefit periods.

Coinsurance

The amount you’re responsible for paying for health care services after paying your deductibles. With Medicare Parts A and B, this is usually 20% of the charge for the service that’s approved by Medicare. In a Medicare Prescription Drug Plan, it may be as much as 50%.

Copayment

The amount you’re required to pay for each medical service you receive, including doctor’s visits, prescription drugs, and some hospital outpatient services. The copayment is typically a set amount, not a percentage of the overall charge.

Deductible

The amount you’re required to pay for health care or prescriptions before Medicare or other insurance kicks in and starts to pay. Deductibles for Medicare Part A reset every benefit period. Deductibles for Medicare Part B reset every calendar year. Deductible amounts may change every year.

Durable Medical Equipment (DME)

Medical equipment that a doctor orders for use in a beneficiary’s home, typically for therapeutic reasons or to help the beneficiary perform tasks they couldn’t manage otherwise. DME may include hospital beds, walkers, and wheelchairs.

E-H

Evidence of Coverage

A document that certifies that a beneficiary is enrolled in a health plan and explains the services and benefits of the plan. All Medicare plans post their EOC documents to their websites every October 15th.

Exclusions

Any medical services or items that a health plan doesn’t cover.

Formulary

The list of prescription drugs that a prescription drug health plan will pay for. The list is subject to change on a yearly basis. Medicare plans post copies of their formulary on their websites by October 15th each year. Also known as a Prescription Drug Guide or a drug list.

Health Maintenance Organization (HMO)

A managed health care plan that covers services only within the plan’s network of health care providers, with a primary care physician referring patients to specialists as needed. Beneficiaries’ choices of hospitals and doctors are typically somewhat restricted. Medicare Advantage members may opt to receive their health care plan’s benefits through an HMO.

I-L

Initial Coverage Election Period (ICEP)

The seven-month period during which a beneficiary is first eligible to enroll in Medicare and Medicare Advantage plans. The ICEP begins three months before the beneficiary’s 65th birthday month and ends three months after their birthday month. If the beneficiary doesn’t enroll in Medicare during this period, they may face a penalty for enrolling later. Also known as the Initial Enrollment Period (IEP).

In-Network Provider

Any health care provider that has agreed to provide beneficiaries of a specific health insurance plan with discounted rates on medical services and supplies. In-network health care providers may include physicians, hospitals, pharmacies, and other medical facilities. Some insurance plans will only cover services provided by in-network providers. Also known as participating providers.

Limiting Charge

The maximum amount of money you can be charged by any health care provider that doesn’t accept the charge pre-approved by Medicare. The limiting charge, which is 15% higher than the amount approved by Medicare, only applies to specific services. It doesn’t apply to equipment or supplies. You are responsible for the limiting charge, although some Medigap health insurance policies cover it. The limiting charge does not apply to in-network Medicare Advantage coverage.

Medicaid

A program administered jointly by the federal government and state governments to pay health care costs for people with low incomes and limited assets, as well as those with disabilities. Each state offers its own version of Medicaid, and programs vary across states. People who qualify for both Medicare and Medicaid have most of their health care costs covered by the programs.

Medicare Advantage

Another name for Medicare Part C. (See Medicare Part C)

Medicare Part A

One part of the federal health insurance plan for people aged 65 and older, as well as those with certain disabilities or with end-stage renal disease. Medicare Part A, which provides hospital insurance, covers inpatient hospital care as well as care for beneficiaries needing a skilled nursing facility, hospice, or home health care. Medicare Parts A and B together are sometimes referred to as Original Medicare or traditional Medicare.

Medicare Part B

The second part of Medicare, Part B provides health care insurance to cover physician services and outpatient care. Costs covered include lab tests, X-rays, chemotherapy, and emergency room visits, as well as some durable medical equipment. Medicare Part B also covers some preventative and health maintenance care. Medicare Parts A and B together are sometimes called Original Medicare or traditional Medicare.

Medicare Part C

A Medicare health plan provided by a private health insurance company contracting with Medicare. Part C plans, which are also known as Medicare Advantage plans, provide all benefits under Medicare Parts A and B, excluding hospice care. Many Medicare Advantage plans offer prescription drug coverage. They may also include coverage for vision, dental, hearing, and wellness care. Medicare Advantage plans include HMOs, PPO, PFFS, SNP, and MSA plans. While Medicare Advantage plans must offer all the benefits of Medicare Parts A and B, they often have different costs, rules, and restrictions. Beneficiaries must be eligible for Medicare Parts A and B to qualify for a Medicare Advantage plan, and they must live in the service area for the plan they use.

Medicare Part D

An optional benefit plan covering prescription drugs and available to all Medicare beneficiaries for a charge. Coverage is provided by private insurance companies that have contracted with Medicare and are federally subsidized. Beneficiaries’ prescription costs are generally lower with Medicare Part D than they would be without the coverage. Medicare Part D may be added to Original Medicare and Medicare Advantage plans. On a standalone basis, Medicare Part D plans are also referred to as Prescription Drug Plans, or PDP. When part of a Medicare Advantage plan, they are also known as MA-PD.

Medicare Supplemental Insurance

Insurance sold by private insurance companies to fill coverage gaps in Original Medicare plans. Beneficiaries must be enrolled in Original Medicare to qualify for this supplemental insurance, which is also known as Medigap insurance. People covered by Medicaid or Medicare Advantage are usually not eligible for Medigap supplemental plans. Medigap policies cover additional hospital benefits not covered by Original Medicare, and some also include emergency health care when traveling in foreign countries. They typically cover copayments and deductibles not already covered by other health insurance plans (such as Veterans Affairs, employer, and union coverage). Twelve standardized Medigap plans are available in most states.

Original Medicare

A collective name for Medicare Parts A and B. The federal government manages this fee-for-service health insurance, paying its share of the amounts approved by Medicare. Beneficiaries pay an annual deductible and coinsurance costs. Also known as traditional Medicare.

Out-of-Network Benefits

Benefits usually available through Medicare Advantage that allow beneficiaries to seek health care services from health care providers outside the insurance plan’s network. You can expect to pay higher costs for out-of-network services.

Preferred Provider Organization (PPO) Plan

A type of Medicare Advantage plan that allows flexibility in the choice of health care provider. Beneficiaries may see physicians, hospitals, and other health care providers that are out-of-network for an additional cost, with the Medicare Advantage plan still covering some costs. No referrals are needed to see specialists with a PPO plan.

Premium

The monthly payment that beneficiaries pay to Medicare or another health insurance company for health insurance and/or prescription drug coverage. Premiums don’t count toward your out-of-pocket maximum or your deductible.

Private Fee-for-Service (PFFS) Plan

A type of Medicare Advantage plan offered by private insurance companies. PFFS plans allow beneficiaries to see any Medicare-approved health care provider. The PFFS plan’s reimbursements, deductibles, and copayments may differ from Medicare’s, and the PFFS plan decides what you have to pay. PFFS plans may provide benefits and services not included in Original Medicare.

Q-T

Referral

A written order from your primary care physician that allows you to see a specialist or to receive medical services not provided by your primary care provider. Some Medicare Advantage plans, especially HMOs, will not pay for any services if the required referral hasn’t been obtained.

Special Enrollment Period

A period during which you can change your Medicare plan outside of the annual enrollment period or your initial enrollment in the plan. Events that trigger the opening of a special enrollment period include loss of a job, loss of health insurance under an employer or union plan, moving to a new coverage area, and moving into or out of a long-term care facility.

Special Needs Plan (SNP)

A Medicare Advantage plan that serves beneficiaries with chronic conditions, such as diabetes. SNPs also cover people in long-term care facilities or nursing homes, those who require institutional care, and those with dual eligibility for Medicare and Medicaid. SNPs may cover multiple special needs. They provide primary care providers or care coordinators to manage care, and they typically include prescription drug coverage.

U-Z

Urgently Needed Care

Immediate medical care required for a sudden illness or injury that isn’t life-threatening. If you’re within your plan’s service area, your primary care physician should provide this care. If you are out of your plan’s service area, your plan must pay for your urgently needed care.

Waiting Period

The time between when you’re eligible to enroll in a Medicare Advantage or Medigap plan and when the coverage begins. This waiting period does not count as a gap in coverage.

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Contributing Expert:

Roseann Birch, Medicare Consultant

With experience in the insurance field since 1986, Roseann Birch is a seasoned Medicare consultant who is passionate in educating and guiding seniors through their Medicare and Medicare Advantage journey.

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Reviewed by:

Leron Moore, Medicare Consultant

With over 10 years of experience in the Medicare industry, Leron Moore has dedicated his career to effecting change, educating, informing, and resolving issues for Medicare patients and their families.