Helpful Medicare Insurance Terms
Here is a list of helpful and common Medicare and health insurance terms as defined by Medicare.gov (link to medicare.gov) and more.
Advance coverage decision - A notice you get from a Medicare Advantage Plan letting you know in advance whether it will cover a particular service.
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.
ALS - Amyotrophic lateral sclerosis, also known as Lou Gehrig's disease.
Ambulatory surgical center - A facility where certain surgeries may be performed for patients who aren’t expected to need more than 24 hours of 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.
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.
CHAMPVA - A health care program and benefit for dependents of qualifying veterans.
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.
COBRA - This is a federal law that may allow you to temporarily keep employer or union health coverage after the employment ends or after you lose coverage as a dependent of the covered employee.
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 determination (Part D) - The first decision made by your Medicare drug plan (not the pharmacy) about your drug benefits, including:
Whether a particular drug is covered
Whether you have met all the requirements for getting a requested drug
How much you’re required to pay for a drug
Whether to make an exception to a plan rule when you request it
The drug plan must give you a prompt decision (72 hours for standard requests, 24 hours for expedited requests). If you disagree with the plan’s coverage determination, the next step is an appeal.
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.
Creditable coverage (Medigap) - Previous health insurance coverage that can be used to shorten a pre-existing condition waiting period under a Medigap policy.
Creditable prescription drug coverage - Prescription drug coverage (for example, from an employer or union) that’s expected to pay, on average, at least as much as Medicare’s standard prescription drug coverage. People who have this kind of coverage when they become eligible for Medicare can generally keep that coverage without paying a penalty, if they decide to enroll in Medicare prescription drug coverage later.
Critical access hospital - A small facility that provides outpatient services, as well as inpatient services on a limited basis, to people in rural areas.
Custodial care - Non-skilled personal care, like help with activities of daily living like bathing, dressing, eating, getting in or out of a bed or chair, moving around, and using the bathroom. It may also include the kind of health-related care that most people do themselves, like using eye drops. In most cases, Medicare doesn’t pay for custodial care.
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.
Demonstrations - Special projects, sometimes called “pilot programs” or “research studies,” that test improvements in Medicare coverage, payment, and quality of care. They usually operate only for a limited time, for a specific group of people, and in specific areas.
Drug Management Programs - Some Medicare drug plans have a program in place to help you use these opioids and benzodiazepines safely. If you get opioids from multiple doctors or pharmacies, your plan will contact the doctors who prescribed these drugs to make sure they are medically necessary and that you’re using them appropriately.
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.
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.
Extra Help (also called ‘LIS’ - Low-Income Subsidy) - A Medicare program to help people with limited income and resources pay Medicare prescription drug program costs, like premiums, deductibles, and coinsurance.
Federal Employee Health Benefits (FEHB) Program - This is health coverage for current and retired federal employees and covered family members.
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.
Generic drugs: These drugs are copies of brand-name drugs. The Food and Drug Administration (FDA) ensures that generic drugs have the exact same: active ingredient, dosage form, safety, strength, route of administration, quality, performance characteristics and intended use as their brand-name counterparts.
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 issue rights (also called "Medigap protections") - Rights you have in certain situations when insurance companies are required by law to sell or offer you a Medigap policy. In these situations, an insurance company can't deny you a Medigap policy, or place conditions on a Medigap policy, like exclusions for pre-existing conditions, and can't charge you more for a Medigap policy because of a past or present health problem.
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.
Health care provider - A person or organization that's licensed to give health care. Doctors, nurses, and hospitals are examples of health care providers.
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.
Indian Health Service (IHS) - The IHS is the primary health care provider to the American Indian/Alaska Native Medicare population. The Indian health care system, consisting of tribal, urban, and federally operated IHS health programs, delivers a spectrum of clinical and preventive health services through a network of hospitals, clinics, and other entities.
Inpatient rehabilitation facility - A hospital, or part of a hospital, that provides an intensive rehabilitation program to inpatients.
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.
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.
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 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-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 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 coverage (Part D) - Optional benefits for prescription drugs available to all people with Medicare for an additional charge. This coverage is offered by insurance companies and other private companies approved by Medicare.
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 Private Fee-For-Service (PFFS) Plan - A type of Medicare Advantage Plan (Part C) in which you can generally go to any doctor or hospital you could go to if you had Original Medicare, if the doctor or hospital agrees to treat you. The plan determines how much it will pay doctors and hospitals, and how much you must pay when you get care.
A Private Fee-For-Service Plan is very different than Original Medicare, and you must follow the plan rules carefully when you go for health care services. When you're in a Private Fee-For-Service Plan, you may pay more or less for Medicare-covered benefits than in Original Medicare.
Medicare Savings Program - A Medicaid program that helps people with limited income and resources pay some or all of their Medicare premiums, deductibles, and coinsurance.
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.
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.
‘Non-preferred’ Brand Name Drugs - These are more expensive brand-name drugs than ‘preferred’ because these drugs have recently come on to the market. In most cases a preferred alternative medication is available for this.
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.
Pre-existing condition - A health problem you had before the date that new health coverage starts.
‘Preferred’ Brand-Name Drugs - These are drugs for which no generic is currently available. They have been on the market for a while and are widely used.
Premium - The periodic payment to Medicare, an insurance company, or a health care plan for health or prescription drug coverage.
Preventive services - Health care to prevent illness or detect illness at an early stage, when treatment is likely to work best (for example, preventive services include Pap tests, flu shots, and screening mammograms).
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.
Prior authorization - Approval that you must get from a Medicare drug plan before you fill your prescription in order for the prescription to be covered by your plan. Your Medicare drug plan may require prior authorization for certain drugs.
Primary Payer - The insurance policy, plan, or program that pays first on a claim for medical care. This could be Medicare, or other insurance depending on the situation.
Programs of All-inclusive Care for the Elderly (PACE) - A special type of health plan that provides all the care and services covered by Medicare and Medicaid as well as additional medically necessary care and services based on your needs as determined by an interdisciplinary team. PACE serves frail older adults who need nursing home services but are capable of living in the community. PACE combines medical, social, and long-term care services and prescription drug coverage.
Quantity limits - Limits on how much medication you can get at a time.
Referral - A written order from your primary care doctor for you to see a specialist or get certain medical services. In many Health Maintenance Organizations (HMOs), you need to get a referral before you can get medical care from anyone except your primary care doctor. If you don’t get a referral first, the plan may not pay for the services.
Religious non-medical health care institution - A facility that provides non-medical health care items and services to people who need hospital or skilled nursing facility care, but for whom that care would be inconsistent with their religious beliefs.
Respite care - Temporary care provided in a nursing home, hospice inpatient facility, or hospital so that a family member or friend who is the patient's caregiver can rest or take some time off.
Secondary payer - The insurance policy, plan, or program that pays second on a claim for medical care. This could be Medicare, Medicaid, or other insurance depending on the situation.
Service area - A geographic area where a health insurance plan accepts members if it limits membership based on where people live. For plans that limit which doctors and hospitals you may use, it’s also generally the area where you can get routine (non-emergency) services. The plan may disenroll you if you move out of the plan’s service area.
Skilled nursing care -Care like intravenous injections that can only be given by a registered nurse or doctor.
Skilled nursing facility (SNF) - A nursing facility with the staff and equipment to give skilled nursing care and, in most cases, skilled rehabilitative services and other related health services.
Skilled nursing facility (SNF) care - Skilled nursing care and rehabilitation services provided on a daily basis, in a skilled nursing facility (SNF). Examples of SNF care include physical therapy or intravenous injections that can only be given by a registered nurse or doctor.
‘Specialty’ Drugs - ‘Specialty’ drugs are defined by Medicare as being any drug that costs over $670 per month. These are the most expensive drugs and can result in thousands of dollars per year in out of pocket costs (unless you have prescription drug assistance also known as ‘extra help’). There are over 30 specialty drugs available and not all are covered by Part D plans.
Step therapy - A coverage rule used by some Medicare Prescription Drug Plans that requires you to try one or more similar, lower cost drugs to treat your condition before the plan will cover the prescribed drug.
Supplemental Security Income (SSI) - A monthly benefit paid by Social Security to people with limited income and resources who are disabled, blind, or age 65 or older. SSI benefits aren't the same as Social Security retirement or disability benefits.
Supplier - Generally, any company, person, or agency that gives you a medical item or service, except when you're an inpatient in a hospital or skilled nursing facility.
Telemedicine - Medical or other health services given to a patient using a communications system (like a computer, phone, or television) by a practitioner in a location different than the patient's.
Tiers - Groups of drugs that have a different cost for each group. Generally, a drug in a lower tier will cost you less than a drug in a higher tier.
TRICARE (military health benefits) - This is a health care plan for active-duty service members, military retirees, and their families.
Urgently needed care - Care that you get outside of your Medicare health plan's service area for a sudden illness or injury that needs medical care right away but isn’t life threatening. If it’s not safe to wait until you get home to get care from a plan doctor, the health plan must pay for the care.
Veterans’ benefits - This is health coverage for veterans and people who have served in the U.S. military.
Workers' compensation - An insurance plan that employers are required to have to cover employees who get sick or injured on the job.
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