Essential Medicare terms

Glossary & definitions

See our breakdown of common Medicare terminology and their definitions. This brief Medicare glossary will help explain various terms that show up in Medicare discussions.

Basics

  • Medicare Part A

    Hospital Insurance – Part of Original Medicare, this is used for inpatient hospital stays, home health, hospice, and skilled nursing facility care.

  • Medicare Part B

    Doctors Insurance – Part of Original Medicare, this covers outpatient expenses at the doctor’s office as well as services like x-rays, diagnostic testing, and some vaccinations.

  • Medicare Part C

    Medicare Advantage – These programs facilitate your Medicare Part A and Part B benefits within their selected network of doctors and hospitals. Each individual insurance carrier determines which services will be covered by their plan. They oftentimes offer additional coverage for things like prescription drugs.

  • Medicare Part D

    Prescription Drug Plans – Formed in 2006, these plans that are sold by private insurance companies cover outpatient prescription drugs. The main variance between plans beyond their premiums and other costs is how drugs are tiered within the program.

  • Medicare Supplement/Medigap

    Sold by private insurance carriers but standardized by the Federal Government, these plans are designed to fill the gaps left by Medicare. All plans are associated with a letter of the alphabet A, B, C, D, F, G, K, L, M, N, and Hi-F.

  • Medicaid

    A government-funded program that helps pay for hospitalization and medical care for low-income individuals of all ages.

Special Features

  • Annual Enrollment Period

    Every year from October 15th-December 7th. During this time, a Medicare recipient can enroll in a new drug plan and leave a Medicare Advantage program (for another Advantage plan or a Medicare Supplement plan).

  • Coinsurance

    A percentage you pay after the insurance carrier has paid. (Example: Carrier pays 80% and you pay 20%)

  • Copay

    The amount you pay for a health care service. Oftentimes this is an amount you pay for each doctor’s office visit. It also occurs in prescription drug coverage as an amount you pay when you get your prescriptions refilled.

  • Deductible

    An amount you pay first before the insurance plan kicks in. Deductibles are typically on an annual basis.

  • Donut Hole

    In Part D prescription drug plans, a coverage gap that is reached once the plan and the client have paid a certain amount. Once in the donut hole, you pay a very large percentage of the cost for your drugs. See a more detailed description of how this works.

  • Guaranteed Renewable

    In Medicare Supplement, once you are enrolled in a plan a carrier can never kick you out. You can maintain the policy for the rest of your life.

  • Medical Loss Ratios

    The percent of premium an insurer spends on claims and expenses that improve health care quality. This is used to control Medigap premiums and premium increases.

  • Medical Underwriting

    The process of qualifying an applicant via a set of health questions. Some insurance carriers will also require current prescription information.

  • Medigap Open Enrollment Period

    Six month period that allows a Medicare beneficiary to enroll in any Medicare Supplement plan of their choosing without going through health questions and underwriting. This period cannot be restarted and repeated and begins when you are at age 65 AND have started Medicare Part B.

  • Premium

    An amount you pay to the insurance carrier on a monthly, quarterly, semiannual, or annual basis to remain enrolled in the plan.

  • Provider Network

    A group of doctors and hospitals that will accept your insurance policy. In Medicare, these are typically associated with Medicare Advantage and Medicare Select Programs.

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