Medicare Glossary
Medicare can be confusing. Our glossary explains common terms in plain English so you can make informed decisions about your coverage.
A
Annual Enrollment Period (AEP)
The Annual Enrollment Period runs from October 15 to December 7 each year. During this time, you can switch Medicare Advantage plans, switch to Original Medicare, or change Part D plans.
Annual Notice of Change (ANOC)
The Annual Notice of Change is a document your Medicare Advantage or Part D plan sends each fall describing changes to costs, benefits, and coverage for the coming year. Review it before the Annual Enrollment Period to decide whether to keep or change your plan.
B
Birthday Rule (Medigap)
In some states, the birthday rule gives Medigap policyholders a yearly window around their birthday to switch to an equal or lesser plan without medical underwriting. The exact rules and timing vary by state.
C
Copayment
A copayment (copay) is a fixed amount you pay for a covered service, like $20 for a doctor visit. Different services may have different copayments.
Coinsurance
Coinsurance is the percentage of costs you pay for covered services after you've met your deductible. For example, if your coinsurance is 20%, you pay 20% and Medicare pays 80%.
Creditable Coverage
Creditable coverage is prescription drug coverage that's at least as good as Medicare Part D. If you have it, you can delay Part D enrollment without penalty.
Chronic Condition Special Needs Plan (C-SNP)
A C-SNP is a Special Needs Plan limited to people with a specific chronic condition, such as diabetes, chronic heart failure, or COPD. It tailors its provider network, drug formulary, and care coordination to that condition.
D
Donut Hole
The donut hole (coverage gap) is a temporary limit on what the drug plan will cover. Once you reach this limit, you pay a higher percentage of drug costs until you reach catastrophic coverage.
Deductible
A deductible is the amount you pay for covered services before your insurance starts to pay. Medicare has separate deductibles for Part A, Part B, and Part D.
Dual Eligible Special Needs Plan (D-SNP)
A D-SNP is a Special Needs Plan for people who have both Medicare and Medicaid. It coordinates benefits across both programs and often includes extra benefits and care coordination for dual-eligible members.
F
Formulary
A formulary is a list of prescription drugs covered by a Medicare drug plan. Drugs are organized into tiers, with different cost-sharing for each tier.
Formulary Tier
A formulary tier is the cost level a drug plan assigns to each covered medication. Lower tiers (preferred generics) have the lowest copays, while higher tiers (brand-name and specialty drugs) cost more.
G
General Enrollment Period (GEP)
The General Enrollment Period runs January 1 to March 31 for people who missed their Initial Enrollment Period. Coverage begins the month after you enroll, and late-enrollment penalties may apply.
Guaranteed Issue Rights
Guaranteed issue rights are situations where an insurer must sell you a Medigap policy without medical underwriting — it cannot deny you or charge more for health reasons. These rights apply during your Medigap open enrollment window and certain special circumstances.
Guaranteed Renewable
Guaranteed renewable means an insurer cannot cancel your Medigap policy as long as you pay the premium, even if your health changes. The insurer can raise premiums for a whole class of policyholders but cannot single you out.
H
Health Maintenance Organization (HMO)
An HMO is a Medicare Advantage plan type that generally requires you to use in-network providers and choose a primary care doctor, with referrals to see specialists. Out-of-network care is usually covered only in emergencies.
I
Initial Enrollment Period (IEP)
The Initial Enrollment Period is the 7-month window when you first become eligible for Medicare, usually around your 65th birthday. It includes 3 months before, the month of, and 3 months after your birthday.
Institutional Special Needs Plan (I-SNP)
An I-SNP is a Special Needs Plan for people who live in an institution such as a nursing home, or who need a similar level of care at home. It focuses on coordinated care for that setting.
Income-Related Monthly Adjustment Amount (IRMAA)
IRMAA is a surcharge added to your Part B and Part D premiums when your income is above set thresholds. It is based on your tax return from two years earlier and is recalculated each year.
L
Late Enrollment Penalty (LEP)
A late enrollment penalty is a permanent surcharge added to your Part B or Part D premium if you go without coverage after you are first eligible and lack other creditable coverage. The penalty grows the longer you wait.
M
Medicare Advantage
Medicare Advantage (Part C) is an alternative to Original Medicare offered by private insurance companies approved by Medicare. These plans include Part A, Part B, and usually Part D coverage in one plan.
Medigap
Medigap (Medicare Supplement Insurance) is private health insurance that helps pay some of the health care costs that Original Medicare doesn't cover, like copayments, coinsurance, and deductibles.
Maximum Out-of-Pocket (MOOP)
The maximum out-of-pocket is the most you pay in a year for covered services. Once you reach this limit, your plan pays 100% of covered costs for the rest of the year.
Medicare Medical Savings Account (MSA)
A Medicare MSA plan combines a high-deductible Medicare Advantage plan with a savings account that Medicare funds. You use the account to pay for care until you reach the deductible, after which the plan covers Medicare-approved services.
Medicare Advantage Open Enrollment Period (OEP)
The Medicare Advantage Open Enrollment Period runs January 1 to March 31. People already in a Medicare Advantage plan can make one change — switch plans or return to Original Medicare with a Part D plan.
P
Part D
Medicare Part D is prescription drug coverage. You can get it through a standalone Prescription Drug Plan (PDP) or through a Medicare Advantage plan that includes drug coverage.
Premium
A premium is the monthly payment you make for your Medicare coverage. You pay premiums for Part B, Part D, Medicare Advantage, and Medigap plans.
Prior Authorization
Prior authorization is approval you must get from your plan before certain services or drugs will be covered. Without it, the plan may not pay for the service.
Part A (Hospital Insurance)
Medicare Part A is hospital insurance covering inpatient hospital stays, skilled nursing facility care after a qualifying stay, hospice, and some home health care. Most people pay no premium because they paid Medicare taxes while working.
Part B (Medical Insurance)
Medicare Part B is medical insurance covering doctor visits, outpatient care, preventive services, lab tests, and durable medical equipment. It has a monthly premium and an annual deductible, after which you typically pay 20% coinsurance.
Private Fee-for-Service (PFFS)
A PFFS plan is a type of Medicare Advantage plan that sets its own payment rates. You can see any Medicare provider who agrees to the plan’s terms, and the plan determines how much it pays and what you pay.
Program of All-Inclusive Care for the Elderly (PACE)
PACE provides comprehensive medical and social services to certain frail, older adults who still live in the community. It combines Medicare and Medicaid services through one care team to help people avoid nursing-home care.
Provider Network
A provider network is the group of doctors, hospitals, and other providers that contract with a plan. Medicare Advantage plans use networks; staying in-network lowers your costs, while Original Medicare lets you use any provider that accepts Medicare.
Preferred Provider Organization (PPO)
A PPO is a Medicare Advantage plan type that lets you see any provider, with lower costs in-network and higher costs out-of-network. PPOs generally do not require referrals to see specialists.
S
Special Enrollment Period (SEP)
A Special Enrollment Period is a time outside of the normal enrollment periods when you can make changes to your Medicare coverage due to certain life events like moving or losing other coverage.
Special Needs Plan (SNP)
A Special Needs Plan is a type of Medicare Advantage plan that limits membership to people with specific characteristics — a chronic condition, both Medicare and Medicaid, or living in an institution — and tailors its benefits, formulary, and care coordination to that group.
State Health Insurance Assistance Program (SHIP)
SHIP is a free, unbiased counseling program in every state that helps people with Medicare understand their options. SHIP counselors do not sell insurance; they provide education and assistance at no cost.
Step Therapy
Step therapy is a rule requiring you to try a lower-cost drug before the plan will cover a more expensive alternative. If the first drug does not work, your doctor can request approval to move to the next option.
T
True Out-of-Pocket Costs (TrOOP)
TrOOP is the running total of out-of-pocket spending that counts toward your Part D coverage limits. It includes what you and certain others pay for covered drugs and determines when you reach the annual out-of-pocket cap.
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