Glossary of Medicare Terms

One of the difficulties in understanding Medicare choices is the terminology used. Here are some of the terms associated with Medicare. Please free to call me for any clarification needed:

Annual Enrollment Period (AEP)

The AEP begins October 15 and ends December 7 annually. During this time, Medicare beneficiaries may change and/or enroll in a Medicare Advantage (MA), Medicare Advantage Prescription Drug (MAPD), or Prescription Drug Plan (PDP), or return to Original Medicare. All changes made during AEP will take effect on January 1 of the following year.

Annual Notice of Change (ANOC)

CMS The Centers for Medicare & Medicaid Services) mandates that every health plan notifies enrolled members by mail information about yearly changes to their benefits. It is important to read of any changes in plan benefits, services, and costs for the next calendar year.

Appeal

CMS has a process to request that your Medicare health plan reconsider, or perhaps change, a decision that denies your request for the medical care coverage that you want.

Beneficiary

In this context, it is any person eligible for health insurance through the Medicare or Medicaid program.

Benefit Period

This refers to the time during which you are admitted and treated at a hospital or Skilled Nursing Facility (SNF). A benefit period begins the day you enter the facility and ends when you have not received hospital or skilled nursing care for 60 days in a row. If you go into the hospital after one benefit period has ended, a new benefit period begins. For each benefit period, there is a deductible to pay, with no limit to the number of benefit periods.

Blood (First 3 pints)

This is a benefit included in all Medigap plans and pays for the first 3 pints of blood needed in a blood transfusion, with Medicare paying for the 4th pint and above. This is considered an important benefit, as Blood is expensive.

Catastrophic Coverage

This is prescription drug coverage that kicks in after you have paid a certain amount in a calendar year.

CMS (Centers for Medicare and Medicaid Services)

The Centers for Medicare & Medicaid Services (CMS) is a federal agency within the United States Department of Health and Human Services (HHS). CMS administers the Medicare program, as well as working in partnership with state governments to administer Medicaid, the State Children’s Health Insurance Program (SCHIP), and health insurance portability standards.

Coinsurance

This is the percentage of billed charges that you may have to pay after paying any plan deductibles. The coinsurance payment is a percentage of the cost of the service. For example, if your health plan pays 80 %  of billed charges, your coinsurance payment is the remaining 20%.

Copayment (or Copay)

This is a flat amount you may need to pay to a healthcare provider or pharmacy at the time of service. Copayments are determined by which plan you have and what services you receive. Note that Copayments do not count toward your annual deductible.

Cost Sharing

This includes any expense that the policyholder is responsible for, except premiums. Generally, this is a combination of deductibles, coinsurance, and copays.

Coverage Gap

Also known as the “doughnut hole,” this is a stage in the Part D drug benefit that begins when your prescription costs have reached the initial coverage limit and ends when you have paid enough to become eligible for catastrophic coverage.  During the Gap period,  you pay a percentage of prescription drug costs set by Medicare.

Deductible

The total amount you must pay for services before your health plan begins to pay.

Dual Eligible Beneficiaries

This refers to people who qualify for both Medicare and Medicaid benefits.

Durable Medical Equipment (DME)

This indicates certain medical equipment that is ordered by your doctor for use in your home. Examples are walkers, wheelchairs, and hospital beds.

Effective Date

This is the date your coverage begins.

End-Stage Renal Disease (ESRD)

ESRD indicates permanent kidney failure requiring dialysis or a kidney transplant.

Evidence of Coverage (EOC)

This is a document that CMS requires all Medicare Advantage and Prescription Drug Plans to post on their websites, detailing and explaining the plan’s benefits and services. It must be posted by October 15 of each year, and printed copies must be available to any member upon request

Exclusions

These are services or items that your plan does not cover.

Extra Help

Also known as the low-income subsidy (LIS), this indicates financial assistance from Medicare to help cover Part D drug plan costs.  To determine your eligibility or other government assistance, visit the Medicare website. 

Foreign travel emergency care

The cost of care in foreign countries is not covered by Original Medicare, which is a U.S. health insurance program. Some Medigap plans include a foreign travel benefit, generally paying 80% of your expenses up to $50,000 after you pay a small deductible.

Formulary

Also called a Prescription Drug Guide, this is a list of prescription medications that a health plan covers. Formularies list each covered drug, indicating which pricing category it falls into. Each Medicare Advantage and prescription drug plan reviews their formulary on an annual basis and is required by CMS to post copies of their drug guides to their websites by October 15 and provide printed copies to members upon request.

General Enrollment Period

This is from January 1 through March 31 each year. If you did not sign up for Part A or Part B when you were first eligible, you may sign up during General Enrollment, but you may have a late enrollment penalty resulting in higher premiums.

Generic Drug

This is a prescription drug containing the same active ingredient formula as a brand-name drug. Generics generally cost less than brand-name drugs, the Food and Drug Administration (FDA) rates them to be as safe and effective as brand-name drugs.

Grievance process

CMS will review any expression of dissatisfaction (complaint) you make about a plan, a network provider, or pharmacy, including a complaint concerning the quality of your care. Note that this process does not involve coverage or payment disputes.

Guaranteed Renewable

This means that once you own a policy, it will be renewed automatically each year, with no need to reapply. As long as you continue to pay the premiums, the company cannot cancel your policy for any reason, including a change in your health condition. All Medigap policies are Guaranteed Renewable.

Health Maintenance Organization (HMO)

HMO is a form of health plan (in this case a Medicare Advantage plan) in which you choose a primary care physician (PCP) who is in the plan’s network and provides referrals to any needed specialists, generally within network. Essentially, the PDP acts as a “gatekeeper,”

Health Maintenance Organization Point of Service (HMO-POS)

This is an HMO plan with a point of service (POS) option, allowing you to receive certain services from out-of-network providers.

Initial Coverage Election Period (ICEP)

Also called IEP, Initial Election Period, this is the 7-month period that begins three months immediately before the month of a person’s first entitlement to Medicare Part A and Part B, ending on the last day of the 3rd month following the entitlement month. The ICEP is the period during which an individual newly eligible for Medicare Advantage (MA) (generally the 65th birthday) may make an initial enrollment request to enroll in an MA plan.

In-Network Provider

Also called a “participating provider,” this indicates a physician, hospital, other medical facilities, and/or pharmacy that is contracted with the health plan to provide services at a set rate.

Lock-in Period

Individuals with a Medicare Advantage or prescription drug plan generally are “locked-in,” which means they can switch Medicare plans only during certain times of the year, such as AEP or OEP. Medicare recipients with special circumstances may be able to switch plans, and Medicare recipients in an area where a plan received a 5 out of 5 Plan Performance Rating from CMS can choose to switch to that plan during the year in which that plan has the overall 5-star rating. The Medicare recipients must meet requirements to enroll in the plan (e.g., living within the plan’s service area).

Maximum Out-of-Pocket Costs (MOOP)

This is the maximum dollar amount you would be required to pay for health services during a specified period of time. Note that Medicare Part A and Part B have no built-in out-of-pocket limit, and only two Medicare Supplement plans limit your potential out-of-pocket expenses.

Maximum Plan Benefit Coverage

This is the maximum dollar amount that a plan will cover per plan year. Medicare plans have a maximum plan benefit coverage limit applicable to service categories for which the plan offers enhanced benefits.

Medicaid

This is a joint federal and state program that helps pay medical costs for people with low incomes, limited assets, and disabilities. It is separate from Medicare, although it is overseen by CMS.

Medicare Approved Amount

This is the amount that Medicare pays to a physician or supplier for a service or supply. This amount may be less than the actual amount charged by a physician or supplier. If a provider does not accept Medicare’s approved payment amount as full payment, you may have to pay the difference between what Medicare allows or the plan pays and what the provider charges, unless you are not enrolled in a Medigap plan.

Medicare Part A

Part A covers the costs of inpatient care, hospice care, home health care, and skilled nursing care. It should be noted that all Medigap plans cover the very expensive daily hospital copays that you begin accruing after your 60th day in the hospital, as well as the parts of hospice not covered by Medicare. Part A does not cover long-term care, such as assisted living or memory care.

Medicare Part A deductible

For the year 2021, this is $1,484. Note that you may have to pay this more than once a year; for example, if you have multiple inpatient hospital stays more than 60 days apart.

Medicare Part B

Part B is the second component of what is called “Original Medicare.” It covers preventative care and medically necessary care, including doctor visits, laboratory tests, diagnostic health screenings, ambulance transport, medical equipment, and outpatient services. All Medigap plans cover copayments for this, as well. In general, Medicare covers 80% of your approved Part B outpatient expenses, and this benefit pays the other 20% for you. This can be crucial for high-ticket
costs, like cancer treatments.

Medicare Part B deductible

For 2021, this is $203, and is paid once per year for services such as doctor’s visits, lab-work, or physical therapy. This is the amount you must pay out of pocket before receiving benefits unless your Medicare Supplement pays this, or it is included in your Medicare Advantage plan.

Medicare Part B excess charges

Excess charges occur when a Medicare provider chooses to charge more for a service than Medicare’s assigned rate. This may be up to 15% more than Medicare’s assigned rate, which can be a substantial amount for some diagnostic imaging and surgery. Some Medigap plans provide excess charge coverage.

Medicare Part C

Part Cis more commonly called Medicare Advantage. It is a bundled package that includes Part A, Part B, and usually Part D. Medicare Advantage plans generally have lower premiums than Medigap plans, and may have lower out-of-pocket costs. However, they can be more restrictive about which doctors and facilities are available to you, and the copays may add up when usage is high.

Medicare Part D

Part D is coverage for retail prescription drugs, and it works with Part A and/or Part B. It covers the costs of your prescription medications, usually with varying co-pays or percentage fees. Part D often comes bundled as part of a Medicare Advantage plan (MAPD) or can be purchased separately (PDP).

Medicare Savings Program

This is a State program that assists individuals who have limited income with their Medicare costs. The names of these programs may vary by state. The state can help individuals paying for Medicare premiums. In some cases, Medicare Savings Programs also may pay Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) deductibles, coinsurance, and copayments if you meet certain conditions.

Medicare Supplement Plan (Medigap)

This is health insurance sold by private insurance companies to help fill gaps in Medicare Parts A and B coverage. Medicare Supplement policies can help pay your share (like coinsurance, copayments, or deductibles) of the costs of Medicare-covered services. Some Medicare Supplement policies also cover certain benefits Medicare doesn’t cover like emergency foreign travel expenses. These policies don’t cover your share of the costs under other types of health coverage, including Medicare Advantage plans, stand-alone Medicare prescription drug plans, employer/union group health coverage, Medicaid, Department of Veterans Affairs (VA) benefits, or TRICARE. Insurance companies generally can’t sell you a Medicare Supplement policy if you have coverage through Medicaid or a Medicare Advantage plan.

OEP (Medicare Advantage Open Enrollment Period)

This is an annual period, January 1 to March 31 if you are enrolled in a Medicare Advantage plan as of January 1. If you are a new Medicare beneficiary who enrolled in a Medicare Advantage plan during your Initial Enrollment Election Period, your MA OEP is the month of entitlement to Part A and Part B through the last day of the 3rd month of the entitlement.

During OEP, you may make a one-time election to disenroll from your Medicare Advantage plan and return to Original Medicare or enroll in another Medicare Advantage plan, as well as add or drop Part D (prescription drug) coverage.

If you are enrolled in an MAPD plan or MA plan, you may switch to an MA or MAPD plan,
or Original Medicare, with or without a Part D plan.

You may change plans only one time during this period, and the effective date for an OEP election is the first of the month following receipt of the enrollment request.

Original Medicare

This is healthcare insurance administered by the Centers for Medicare and Medicaid Services (CMS), an agency of the US Government. It is also known as “fee for service” Medicare. The program provides eligible individuals with coverage for care by physicians, hospitals, and other qualified healthcare providers who agree to accept Medicare payment. Original Medicare is comprised of Part A (hospital insurance) and Part B (medical insurance). Medicare pays its share of the costs of approved care, and you are responsible for the balance.

PDP

A PDP is a prescription plan offered by private insurance companies to help with prescription drug costs. It is needed to work alongside a Medigap policy, but coverage may be included in a Medicare Advantage plan.

Primary Care Physician (PCP)

This is the doctor you generally see first for most health concerns. They may consult other healthcare providers, and may refer you to them. With some plans, such as HMOs, you must see your PCP, who must be in network, to obtain referrals for other care.

Retiring after age 65

If you plan to retire after 65, the time to sign up for Part A and/or Part B is during the 8 month period that begins the month after your employer’s or union group’s health plan coverage ends, or when your employment ends (whichever comes first).

Service Area

This is the specific location (State, county and zipcode) where a member of a Medicare Advantage plan actually resides, and is the basis for being accepted by a plan as a member. If you move out of that area, you must contact the plan immediately.

Skilled nursing care

This is any treatment that must be given or supervised by a registered nurse (RN). This includes such treatments as intravenous injections or tube feedings.

Skilled Nursing Facility coinsurance

This is for care in a skilled nursing facility (SNF). It is nursing care needed after you have been in a hospital and are recovering.  Medicare allows for 100 days, but only pays for the first 20 days. A policy with SNF coverage will pay for the other 80 days.

Special Enrollment Period (SEP)

There are circumstances that allow you to sign up for a Medicare Advantage or Medicare Cost plan—both with prescription drug coverage—or for a Medicare Part D plan (for prescription drug coverage) at various times of the year, outside of regularly scheduled enrollment periods.

Some circumstances may include determinations by CMS that a natural disaster, or extreme weather in an area, as determined by FEMA, warrants special consideration.
Also, there are “life events” that may trigger a SEP.

Here are some of the qualifying circumstances:

  • You were enrolled in another organization’s plan, but you recently moved to a different service area.
  • You are eligible for both Medicare and Medicaid, which may allow you to enroll in an available Special Needs Plan at any time.
  • You were enrolled ina Special needs plan, but recently lost eligibility for it.
  • You have become Medicare and Medicaid eligible, or you recently you’re your eligibility.
  • You qualify for Extra Help to pay for your prescription drug costs, or you recently lost eligibility for Extra Help.
  • You will soon be enrolling in; are currently enrolled in; or recently you’re your employer’s Group Health plan.
  • You recently lost creditable prescription drug coverage.
  • You currently live in; or have recently left; a nursing home.

Special Needs Plan (SNP)

Several companies offer Medicare Advantage plans for people who are institutionalized, or entitled to both Medicare and state Medicaid benefits or have certain chronic conditions.

Star Ratings

CMS rates all Medicare Advantage and prescription drug plans annually, on a scale of 1 to 5 stars, depending on the quality of health care and services provided to its members. The ratings are published, and help in making informed decisions when selecting a plan. Beneficiaries who live in an area where there is a five-star plan may be able to switch to that plan outside of regular enrollment periods.

Summary of Benefits (SB)

This is a brief outline of your coverage, which includes which services are available, as well as any limitations or exclusions.  The summary includes the amounts or percentages you are expected to pay for those services.

TTY

A teletypewriter (TTY) is a communication device used by people who are deaf, hard-of-hearing, or have a severe speech impairment.

Urgently Needed Care

This is care you receive for a sudden injury or illness that is not life-threatening, but needs immediate medical care. Generally, this is provided by your PCP or an urgent care center. If you are out of your service area, you may receive urgent care anywhere. If you are a member of a Medicare Advantage plan, you can check your Summary of Benefits to see if there are any out-of-pocket costs for receiving care out of your area.

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