Medicare Glossary: Get To Know Commonly Used Medicare Terms

There is a lot of Terminology associated with Medicare. We’ve created a useful guide to help you navigate and understand what some of this terminology means in order to help you better understand your options, so you can make the best informed choices in obtaining health coverage. You can find even more terms and their definitions at the link included at the bottom of this page!

A

Advance Beneficiary Notice of Noncoverage (ABN): In Original Medicare, a notice that a doctor, supplier, or provider gives a person with Medicare before furnishing an item or service if the doctor, supplier, or provider believes that Medicare may deny payment. In this situation, if you aren’t given an ABN before you get the item or service, and Medicare denies payment, then you may not have to pay for it. If you are given an ABN, and you sign it, you’ll probably have to pay for the item or service if Medicare denies payment.

Advance Directive: A written document stating how you want medical decisions to be made if you lose the ability to make them for yourself. It may include a living will and a durable power of attorney for health care.

Appeal: An appeal is the action you can take if you disagree with a coverage or payment decision made by Medicare, your Medicare health plan, or your Medicare Prescription Drug Plan. You can appeal if Medicare or your plan denies one of these:

• Your request for a health care service, supply, item, or prescription drug that you think you should be able to get
• Your request for payment for a health care service, supply, item, or prescription drug you already got
• Your request to change the amount you must pay for a health care service, supply, item or prescription drug.

-You can also appeal if Medicare or your plan stops providing or paying for all or part of a service, supply, item, or prescription drug you think you still need. 

Assignment: An agreement by your doctor, provider, or supplier to be paid directly by Medicare, to accept the payment amount Medicare approves for the service, and not to bill you for any more than the Medicare deductible and coinsurance.

B

Beneficiary: A person who derives advantage from something, especially a trust, will, or life insurance policy.

Benefit Period: The way that Original Medicare measures your use of hospital and skilled nursing facility (SNF) services. A benefit period begins the day you’re admitted as an inpatient in a hospital or SNF. The benefit period ends when you haven’t gotten any inpatient hospital care (or skilled care in a SNF) for 60 days in a row. If you go into a hospital or a SNF after one benefit period has ended, a new benefit period begins. You must pay the inpatient hospital deductible for each benefit period. There’s no limit to the number of benefit periods.

C

Claim: A request for payment that you submit to Medicare or other health insurance when you get items and services that you think are covered.

Coinsurance: An amount you may be required to pay as your share of the cost for services after you pay any deductibles. Coinsurance is usually a percentage (for example, 20%).

Copayment: An amount you may be required to pay as your share of the cost for a medical service or supply, like a doctor’s visit, hospital outpatient visit, or prescription drug. A copayment is usually a set amount, rather than a percentage. For example, you might pay $10 or $20 for a doctor’s visit or prescription drug. 

Coverage Gap: A period of time in which you pay higher cost sharing for prescription drugs until you spend enough to qualify for catastrophic coverage. The coverage gap (also called the “donut hole”) starts when you and your plan have paid a set dollar amount for prescription drugs during that year.

D

Deductible: The amount you must pay for health care or prescriptions before Original Medicare, your prescription drug plan, or your other insurance begins to pay.

Drug List: A list of prescription drugs covered by a prescription drug plan or another insurance plan offering prescription drug benefits. This list is also called a formulary.

Durable Medical Equipment (DME): Certain medical equipment, like a walker, wheelchair, or hospital bed, that’s ordered by your doctor for use in the home.
Durable Power of Attorney: A legal document that names someone else to make health care decisions for you. This is helpful if you become unable to make your own decisions.

E

End-Stage Renal Disease (ESRD): Permanent kidney failure that requires a regular course of dialysis or a kidney transplant.

Excess Charge: If you have Original Medicare, and the amount a doctor or other health care provider is legally permitted to charge is higher than the Medicare-approved amount, the difference is called the excess charge. 

F

Formulary: A list of prescription drugs covered by a prescription drug plan or another insurance plan offering prescription drug benefits. Also called a drug list.

G

Grievance: A complaint about the way your Medicare health plan or Medicare drug plan is giving care. For example, you may file a grievance if you have a problem calling the plan or if you’re unhappy with the way a staff person at the plan has behaved towards you. However, if you have a complaint about a plan’s refusal to cover a service, supply, or prescription, you file an appeal.

Group Health Plan: In general, a health plan offered by an employer or employee organization that provides health coverage to employees and their families.

Guaranteed Renewable Policy: An insurance policy that can’t be terminated by the insurance company unless you make untrue statements to the insurance company, commit fraud, or don’t pay your premiums. All Medigap policies issued since 1992 are guaranteed renewable.

H

Health Care Provider: A person or organization that’s licensed to give health care. Doctors, nurses, and hospitals are examples of health care providers.

Health Insurance Marketplace: A service that helps people shop for and enroll in affordable health insurance. The federal government operates the Marketplace, available at HealthCare.gov, for most states. Some states run their own Marketplaces. The Health Insurance Marketplace (also known as the “Marketplace” or “exchange”) provides health plan shopping and enrollment services through websites, call centers, and in-person help.

Home Health Agency: An organization that provides home health care.

Home Health Care: Health care services and supplies a doctor decides you may get in your home under a plan of care established by your doctor. Medicare only covers home health care on a limited basis as ordered by your doctor.

Hospice: A special way of caring for people who are terminally ill. Hospice care involves a team-oriented approach that addresses the medical, physical, social, emotional, and spiritual needs of the patient. Hospice also provides support to the patient’s family or caregiver.

Independent Reviewer: An organization (sometimes called an Independent Review Entity or IRE) that has no connection to your Medicare health plan or Medicare Prescription Drug Plan. Medicare contracts with the IRE to review your case if you appeal your plan’s payment or coverage decision or if your plan doesn’t make a timely appeals decision.

I

Inpatient Rehabilitation Facility: A hospital, or part of a hospital, that provides an intensive rehabilitation program to inpatients.

L

Large Group Health Plan: In general, a group health plan that covers employees of either an employer or employee organization that has at least 100 employees.

Lifetime Reserve Days: In Original Medicare, these are additional days that Medicare will pay for when you’re in a hospital for more than 90 days. You have a total of 60 reserve days that can be used during your lifetime. For each lifetime reserve day, Medicare pays all covered costs except for a daily coinsurance.

Living Will: A written legal document, also called a “medical directive” or “advance directive.” It shows what type of treatments you want or don’t want in case you can’t speak for yourself, like whether you want life support. Usually, this document only comes into effect if you’re unconscious.

Long-Term Care: Services that include medical and non-medical care provided to people who are unable to perform basic activities of daily living, like dressing or bathing. Long-term supports and services can be provided at home, in the community, in assisted living, or in nursing homes. Individuals may need long-term supports and services at any age. Medicare and most health insurance plans don’t pay for long-term care.

Long-Term Care Hospital: Acute care hospitals that provide treatment for patients who stay, on average, more than 25 days. Most patients are transferred from an intensive or critical care unit. Services provided include comprehensive rehabilitation, respiratory therapy, head trauma treatment, and pain management.

M

Medicaid: A joint federal and state program that helps with medical costs for some people with limited income and resources. Medicaid programs vary from state to state, but most health care costs are covered if you qualify for both Medicare and Medicaid.

Medicaid-Certified Provider: A health care provider (like a home health agency, hospital, nursing home, or dialysis facility) that’s been approved by Medicaid. Providers are approved or “certified” if they’ve passed an inspection conducted by a state government agency.

Medical Underwriting: The process that an insurance company uses to decide, based on your medical history, whether to take your application for insurance, whether to add a waiting period for pre-existing conditions (if your state law allows it), and how much to charge you for that insurance.

Medically Necessary: Health care services or supplies needed to diagnose or treat an illness, injury, condition, disease, or its symptoms and that meet accepted standards of medicine.

Medicare:  Medicare is the federal health insurance program for:

• People who are 65 or older
• Certain younger people with disabilities
• People with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD)

Medicare Advantage Plan (Part C):  A type of Medicare health plan offered by a private company that contracts with Medicare. Medicare Advantage Plans provide all of your Part A and Part B benefits. Medicare Advantage Plans include:

• Health Maintenance Organizations
• Preferred Provider Organizations
• Private Fee-for-Service Plans
• Special Needs Plans
• Medicare Medical Savings Account Plans

If you’re enrolled in a Medicare Advantage Plan:

• Most Medicare services are covered through the plan
• Medicare services aren’t paid for by Original Medicare

Most Medicare Advantage Plans offer prescription drug coverage.

Medicare-Approved Amount: In Original Medicare, this is the amount a doctor or supplier that accepts assignment can be paid. It may be less than the actual amount a doctor or supplier charges. Medicare pays part of this amount and you’re responsible for the difference.

Medicare-Certified Provider: A health care provider (like a home health agency, hospital, nursing home, or dialysis facility) that’s been approved by Medicare. Providers are approved or “certified” by Medicare if they’ve passed an inspection conducted by a state government agency. Medicare only covers care given by providers who are certified.

Medicare Cost Plan: A type of Medicare health plan available in some areas. In a Medicare Cost Plan, if you get services outside of the plan’s network without a referral, your Medicare-covered services will be paid for under Original Medicare (your Cost Plan pays for emergency services or urgently needed services).

Medicare Health Maintenance Organization (HMO) Plan: A type of Medicare Advantage Plan (Part C) available in some areas of the country. In most HMOs, you can only go to doctors, specialists, or hospitals on the plan’s list except in an emergency. Most HMOs also require you to get a referral from your primary care physician.

Medicare Health Plan: Generally, a plan offered by a private company that contracts with Medicare to provide Part A and Part B benefits to people with Medicare who enroll in the plan. Medicare health plans include all Medicare Advantage Plans, Medicare Cost Plans, and Demonstration/Pilot Programs. Programs of All-inclusive Care for the Elderly (PACE) organizations are special types of Medicare health plans. PACE plans can be offered by public or private companies and provide Part D and other benefits in addition to Part A and Part B benefits.

Medicare Part A (Hospital Insurance): Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care.

Medicare Part B (Medical Insurance): Part B covers certain doctors’ services, outpatient care, medical supplies, and preventive services.

Medicare Plan: Any way other than Original Medicare that you can get your Medicare health or prescription drug coverage. This term includes all Medicare health plans and Medicare Prescription Drug Plans.

Medicare Preferred Provider Organization (PPO) Plan: A type of Medicare Advantage Plan (Part C) available in some areas of the country in which you pay less if you use doctors, hospitals, and other health care providers that belong to the plan’s network. You can use doctors, hospitals, and providers outside of the network for an additional cost.

Medicare Prescription Drug Plan (Part D): Part D adds prescription drug coverage to:

• Original Medicare
• Some Medicare Cost Plans
• Some Medicare Private-Fee-for-Service Plans
• Medicare Medical Savings Account Plans

These plans are offered by insurance companies and other private companies approved by Medicare. Medicare Advantage Plans may also offer prescription drug coverage that follows the same rules as Medicare Prescription Drug Plans.

Medicare Select: A type of Medigap policy that may require you to use hospitals and, in some cases, doctors within its network to be eligible for full benefits.

Medicare Special Needs Plan (SNP): A special type of Medicare Advantage Plan (Part C) that provides more focused and specialized health care for specific groups of people, like those who have both Medicare and Medicaid, who live in a nursing home, or have certain chronic medical conditions.

Medicare Summary Notice (MSN): A notice you get after the doctor, other health care provider, or supplier files a claim for Part A or Part B services in Original Medicare. It explains what the doctor, other health care provider, or supplier billed for, the Medicare-approved amount, how much Medicare paid, and what you must pay.

Medigap Open Enrollment Period: A one-time only, 6-month period when federal law allows you to buy any Medigap policy you want that’s sold in your state. It starts in the first month that you’re covered under Part B and you’re age 65 or older. During this period, you can’t be denied a Medigap policy or charged more due to past or present health problems. Some states may have additional open enrollment rights under state law.

Medigap Policy: Medicare Supplement Insurance sold by private insurance companies to fill “gaps” in Original Medicare coverage.

Multi-Employer Plan: In general, a group health plan that’s sponsored jointly by 2 or more employers.

O

Original Medicare: Original Medicare is a fee-for-service health plan that has two parts: Part A (Hospital Insurance) and Part B (Medical Insurance). After you pay a deductible, Medicare pays its share of the Medicare-approved amount, and you pay your share (coinsurance and deductibles).

Out-of-Pocket Costs: Health or prescription drug costs that you must pay on your own because they aren’t covered by Medicare or other insurance.

P

Penalty: An amount added to your monthly premium for Part B or a Medicare drug plan (Part D) if you don’t join when you’re first eligible. You pay this higher amount as long as you have Medicare. There are some exceptions.

Point-of-Service Option: In a Health Maintenance Organization (HMO), this option lets you use doctors and hospitals outside the plan for an additional cost.

Power of Attorney: A medical power of attorney is a document that lets you appoint someone you trust to make decisions about your medical care. This type of advance directive also may be called a health care proxy, appointment of health care agent, or a durable power of attorney for health care.

Pre-existing Condition: A health problem you had before the date that new health coverage starts.

Premium: The periodic payment to Medicare, an insurance company, or a health care plan for health or prescription drug coverage. 

Preventative Services: Health care to prevent illness or detect illness at an early stage, when treatment is likely to work best. 

Primary Care Doctor: The doctor you see first for most health problems. He or she makes sure you get the care you need to keep you healthy. He or she also may talk with other doctors and health care providers about your care and refer you to them. In many Medicare Advantage Plans, you must see your primary care doctor before you see any other health care provider.

R