Medicare Advantage Glossary

checkmark Fact checked Contributing expert: Roseann Birch, insurance consultant; Reviewed by: Leron Moore, Medicare consultant - Updated: Nov 30, 2021

 

Understand commonly used Medicare terms.

What You Should Know

  • 1 Failure to understand Medicare terminology properly before you join a health care or drug plan can lead to hard-to-correct and costly mistakes.
  • 2 Understanding Medicare basics and knowing the terminology can save you thousands of dollars.
  • 3 Nearly one-fourth of people who sign up for Medicare make mistakes due to a lack of understanding the terms.
  • 4 There are helpful resources available to you so you can understand Medicare basics and terminology.

The first step toward deciding on your Medicare health plan is to understand the terminology. All terms with definitions are provided in alphabetical order in the Medicare and You publication. Below is a sample of commonly used Medicare terms.

A-D

Annual Enrollment Period

During this annual period, which runs from October 15 to December 7, you can enroll in a Medicare Advantage Plan or a Part D prescription drug plan if you have Medicare Part A and B. If you’re currently enrolled in a Medicare Advantage Plan, you can disenroll or change your existing coverage. Coverage begins January 1 of the new year.

Annual Notice of Changes

The notification received by enrolled Medicare members each year before the Annual Enrollment Period opens. The Annual Notice of Changes (ANOC) provides deadlines and information about changing Medicare plans and 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’s no limit to the number of benefit periods.

Coinsurance

The amount you’re responsible for paying for health care services after paying your deductibles. Medicare Part A has no coinsurance unless you’re hospitalized for more than 60 days in a benefit period. Part B coinsurance is usually 20% of the charge for the service that’s approved by Medicare. In a Medicare Prescription Drug Plan, the coinsurance varies depending on your plans’ formulary but 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

Medical equipment that a doctor orders for use in your home, typically for therapeutic reasons or to help you perform tasks you couldn’t manage otherwise. Examples of durable medical equipment (DME) include hospital beds, walkers, and wheelchairs.

E-H

Evidence of Coverage

A document that certifies a beneficiary is enrolled in a health plan and explains the services and benefits of the plan. All Medicare plans post their Evidence of Coverage (EOC) documents to their websites every fall before Open Enrollment.

Exclusions

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

Formulary

The list of prescription drugs 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 every fall. The formulary is 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 (PCP) 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 a health maintenance organization (HMO).

I-L

Initial Coverage Election Period

The seven-month period during which a beneficiary is first eligible to enroll in Medicare and Medicare Advantage plans. The Initial Coverage Election Period (ICEP) begins three months before the beneficiary’s 65th birthday month, includes the birthday month, and ends three months later. 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 preapproved 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’re responsible for the limiting charge, although some Medigap health insurance policies cover it as an excess charge. The limiting charge doesn’t 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, and 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, and those with certain disabilities or with end-stage renal disease. Medicare Part A provides hospital insurance and covers inpatient hospital care, skilled nursing facility (SNF) care, hospice, and some home health care. Medicare Parts A and B together are called Original Medicare or traditional Medicare.

Medicare Part B

Part B provides health care insurance to cover medical services like physician visits and outpatient care. Costs covered include lab tests, X-rays, chemotherapy, and emergency room visits, and some durable medical equipment. Medicare Part B also covers some preventative and health maintenance care. Medicare Parts A and B together are 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, also known as Medicare Advantage (MA) plans, provide all benefits under Medicare Parts A and B, excluding hospice care. Many Medicare Advantage plans offer prescription drug coverage. MA may also include coverage for vision, dental, hearing, and wellness care.

Types of Medicare Advantage plans include HMOs, preferred provider organization (PPO), Private Fee-For-Service (PFFS), special needs plan (SNP), and Medical Savings Account (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. You must be enrolled in Medicare Parts A and B to join a Medicare Advantage Plan, and you must live in the service area of the plan you choose.

Medicare Part D

An optional benefit plan covering prescription drugs that all Medicare beneficiaries can purchase. 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 stand-alone basis, Medicare Part D plans are also referred to as Prescription Drug Plans (PDP). When part of a Medicare Advantage Plan, they’re 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, also known as Medigap insurance. If you have Medicaid, you don’t typically need a Medigap plan. You aren’t eligible for a Medigap plan if you have a Medicare Advantage Plan. Medigap policies cover additional hospital benefits not covered by Original Medicare, and some also include emergency health care when traveling in foreign countries. Medigap plans typically cover copayments, coinsurance, and deductibles not already covered by other health insurance plans, such as Veterans Affairs, employer, and union coverage. There are 10 standardized Medigap plans that 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.

PPO Plan

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

Premium

The monthly payment that you 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.

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 PCP 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, won’t 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. Examples of 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.

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. SNPs 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 PCP should provide this care. If you’re 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 more than 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.