Medicare Glossary

Below is a list of the terms that you need to know related to Medicare and Senior health insurance.  Additional terms will be added to this “Medicare glossary” over time.

A

Accreditation

A process where un-biased third party organizations (or “accrediting bodies”) evaluate health care facilities’ policies, procedures, and performance to make sure they are meeting a predetermined set of criteria.

Actuarial Value

An estimate of average costs for covered benefits that your plan will cover. For example, if a health plan has an actuarial value of 70%, on average, a consumer would be responsible for paying out of pocket for 30% of the total costs of all covered benefits provided by the health plan and the health insurance company would pay the remainign 70%. Your own costs may be more or less, depending on how much care you need over the benefot period

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.

Assignment

An agreement by your doctor, or other provider 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 (a practice called balance billing).

B

Beneficiary

As it relates to Medicare. A beneficiary is the person who has health care insurance through the Medicare programs.

Benefit period

The way that Medicare measures your use of hospital and skilled nursing facility services. A benefit period begins the day you’re admitted as an inpatient. The benefit period ends when you haven’t received any inpatient care  for 60 days in a row.

Benefits

The health care items or services covered under a health plan. Covered benefits and excluded services are defined in the plan’s coverage documents.

C

Centers for Medicare & Medicaid Services (CMS)

The federal agency that runs the Medicare, Medicaid, and Children’s Health Insurance Programs (CHIP), and the federally facilitated Marketplace (FFM).

Claim

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

CMS

see Centers for Medicare & Medicaid Services above

Co-insurance

Your share of the costs of a covered health care service, calculated as a percent of the allowed amount for the service. (For example 20%)

Coordination of benefits

A way to figure out who pays first when two or more private health insurance plans are responsible for paying the same medical claim.

Co-payment

The 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 generally a set amount, rather than a percentage. For example, you might pay $10 or $20 for a doctor’s visit or prescription.

Coverage gap (Medicare prescription drug coverage)

Also called, the “Donut Hole“.  The coverage gap is 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 starts when you and your plan have paid a set dollar amount for prescription drugs during that year.

Creditable coverage

Previous health insurance coverage that can be used to shorten a pre-existing condition waiting period under a Medicare Supplement (or Medigap) policy.

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.  In most cases, Medicare does not pay for custodial care.

D

Deductible

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

Dental coverage

Health care benefits that help pay for the cost of visits to a dentist for basic or preventive dental services, like teeth cleaning, X-rays, and fillings.

Department of Health and Human Services (HHS)

The federal agency that oversees CMS (see above), which administers programs for protecting the health of all Americans, including Medicare, the Federally Facilitated Marketplace, Medicaid, and the Children’s Health Insurance Program (CHIP).

DME

Acronym for Durable Medical Equipment, such as a wheelchair, or infusion pump.

DME Medicare Administrative Contractor (MAC)

A private company that contracts with Medicare to pay bills for durable medical equipment (DME)

Donut Hole

(See Coverage Gap, Medicare prescription drug coverage above)

Drug list

Sometimes called a “formulary”.  It is a list of prescription drugs covered by a prescription drug plan or another private health insurance plan offering prescription drug benefits.

Dual Eligible

An individual who is eligible to receive benefits from both Medicare and Medicaid.

E

Employer Sponsored Health Coverage

Health coverage an individual or family gets through his or her (or a spouse’s) job.  This coverage can be as either an active or retired employee.

End-Stage Renal Disease (ESRD)

Permanent kidney failure that requires a regular course of dialysis or a kidney transplant.

Excess charge

The difference between what a doctor or other health care provider is legally permitted to charge (if higher) and the Medicare-approved amount.

F

Federal Poverty Level (FPL)

A measure of household income issued annually by the U.S. Department of Health and Human Services. As it relates to Obamacare, Federal poverty level is used to determine a health insurance shoppers eligibility for and magnitude of income based subsidies. It is also used to determine eligibility for free or low cost heallthcare programs such as Medicaid or CHIP

Formulary

see drug list above

G

Generic drug

A prescription drug that has the same active-ingredient formula as a brand-name drug. Generic drugs generally cost substantially less than brand-name drugs. The Food and Drug Administration rates these drugs to be as safe and effective as brand-name drugs.

Guaranteed issue

Rights you have in certain situations when private insurance companies are required by law to sell or offer you a Medicare Supplement (Medigap) policy. In these situations, the insurance company can not deny you a Medigap policy, or place conditions on the policy, such as exclusions for pre-existing conditions, and can’t charge you more for the Medigap policy because of these pre-existing health conditions.

Guaranteed renewable policy

A insurance policy offered by a private health insurance company that can not be terminated by the insurance company unless you make false statements to the insurance company, commit fraud, or don’t pay your premiums. All Medicare Supplement policies (Medigap) policies issued since 1992 are guaranteed renewable policies

H

Health Care Law

A general term for the major health policy changes put in place by the Patient Protection and Affordable Care Act which was signed into law in March of 2010. This term is generally synonymous with ACA, Affordable Care Act, PPACA, and Health Care Reform. It puts into law strong consumer protections, requires certain levels of minimum benefits, provides new coverage options and has tools to help you make informed choices about your health coverage.

Health care provider

Any person or organization that’s licensed to give health care. Doctors, nurses, hospitals, and skilled nursing facilities are examples of health care providers.

Health Insurance Portability and Accountability Act of 1996 (HIPAA)

The “Standard for Privacy of Individually Identifiable Health Information of HIPAA assures your health information is properly protected while allowing the flow of health information needed to provide high quality health care and to protect the public’s health and well being.

HIPAA

See Health Insurance Portability and Accountability Act of 1996 above

High-deductible Medigap policy

A type of Medicare Supplement (Medigap) policy that has a high-deductible — and consequently a lower premium. You must pay the deductible before the policy pays anything. The deductible amount may change each year.

Home health agency

An organization that provides home health care services.

Home health care

Health care services that a doctor decides you may receive 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

End of life care.  A way of caring for people who are terminally ill. Hospice care involves a team-oriented approach that addresses the many needs of the patient including their medical, physical, social, emotional, and spiritual needs.

Household Income

Household income refers to the total amount of money or benefits a family receives by all those residing in the household — generally measured on an annual basis.  This income may include wages from a job, investment income, proceeds from a sale, social security benefits etc.  Household income in combination with Household size are used to determine eligibility for income based subsidies.

I

In-network

Health care providers including Doctors, hospitals, pharmacies, and other providers that have agreed to provide members of a certain health insurance plan with services and supplies at a pre-determined discounted price.

Inpatient care

Care that you get when you’re admitted to a hospital, skilled nursing facility, or other health care facility

L

Lawfully Present Immigrant

Non-citizens who are living in the United States legally.  This status can determine an individuals eligibility to purcahse Obamacare health plans on-exchange.

Lifetime reserve days

In 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 subject to a daily co-insurance amount.

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. These services can be provided at home, in the community, in assisted living, or in nursing homes. Medicare and most private health insurance plans don’t pay for long-term care.

M

MA-PD

see Medicare Advantage Prescription Drug Plan Below.

Medicaid

A joint federal and state insurance program that serves low income Americans by providing low cost or in some cases Free health coverage.  Medicaid eligibility varies from state to state, but is generally available to residents at or below 133% of Federal poverty level.

Medicaid-certified provider

A health care provider  that’s been approved by Medicaid. Providers must pass an inspection conducted by a state government agency to be approved.

Medical Loss Ratio

A measure as a percentage of the portion of health insurance premiums get spent on healthcare expenses.  A consumer protection as part of the ACA requires requires that health insurance plans sold to individuals and small business employers must spend at least $0.80 of each dollar taken in by the issuer on health care and just $0.20 on administrative costs (such as marketing, commissions and other overhead costs).

Medically necessary

Health care services needed to diagnose or treat an illness, injury, condition, disease, that meet accepted standards of medicine.

Medicare

Medicare is the federal health insurance program for people who are 65 and over.  In addition, certain younger people with disabilities and people with end-stage renal disease can also qualify to receive Medicare benefits. Medicare has four parts, Medicare Parts A, B, C and D, each covering different sets of healthcare benefits.

Medicare Administrative Contractor (MAC)

A company that processes claims for Medicare.

Medicare Advantage

Also called Medicare Part C, is an alternative to Medicare.  Medicare Advantage plans combine Medicare Parts A and B, and sometimes prescription drug coverage (Medicare Part D) into one comprehensive plan. Medicare Advantage Plans can be Health Maintenance Organizations (HMO), Preferred Provider Organizations (PPO), Private Fee-for-Service Plans, Special Needs Plans, and Medicare Medical Savings Account Plans. More about Medicare Advantage Plans.

Medicare Advantage Prescription Drug (MA-PD) Plan

A Medicare Advantage plan that offers Medicare prescription drug coverage (Part D), Part A, and Part B benefits in one plan.

Medicare-approved amount

In Medicare, this is the amount a doctor that accepts assignment can be paid for their services.

Medicare-approved supplier

A company, person, or agency that’s been certified by Medicare to give you a medical item or service.

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 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 the case of an emergency.

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 1) Medicare Advantage Plans 2) Medicare Cost Plans, and 3)  Demonstration/Pilot Programs.

Medicare Part A

Hospital Service.  Medicare 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 Part C

See Medicare Advantage above

Medicare Part D

Prescription drug coverage. Optional benefits for prescription drugs available to all people with Medicare for an additional charge. This coverage is offered by private insurance companies approved by Medicare. More about Medicare Drug Plans.

Medicare Preferred Provider Organization (PPO) Plan

A type of Medicare Advantage Plan available in some areas of the country in which you have out of network benefits, but you pay less if you use doctors, hospitals, and other health care providers that belong to the plan’s network.

Medicare Private Fee-For-Service (PFFS) Plan

A type of Medicare Advantage Plan in which you can generally go to any doctor or hospital you could go to if you simply had Medicare. The plan determines how much it will pay doctors and hospitals, and how much you must pay when you get care. When you’re in a PFFS Plan, you may pay more or less for Medicare-covered benefits than in Original Medicare.

Medicare SELECT

A type of Medicare Supplement (Medigap) policy that may require you to use network hospitals and, in some cases, doctors to be eligible for full benefits.

Medicare Special Needs Plan (SNP)

A special type of Medicare Advantage Plan that provides 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 Supplement Plan

A plan sold by private insurance companies to fill in the “gaps” not paid by Medicare. More about Medicare Supplement Plans.

Medigap Open Enrollment Period

A one-time-only, 6-month period when federal law allows you to buy any Medicare Supplement (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 are guaranteed issue, meaning you can’t be denied a Medigap policy or charged more due to pre-existing medical conditions.

Medigap Policy

Medicare Supplement Insurance sold by private insurance companies to fill “gaps” not paid by Medicare. More about Medigap plans.

N

Network

The facilities, providers, and suppliers your private health insurance company has contracted with to provide health care services.

O

Obamacare

One of the many names synonymous with The Patient Protection and Affordable Care Act signed into law in march of 2010.

Open Enrollment

The period of time, each year, set up to allow Medicare Health Plan shoppers to choose from available plans

Original Medicare

See Medicare above. 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-network

A benefit that may be provided by your Medicare Advantage plan which would allow you to utilize plan services from providers outside of the plan’s network. In many cases, your out-of-pocket costs may be higher for utilizing an out-of-network benefit.

Out-of-pocket costs

The portion of your health care or prescription drug costs that you must pay on your own because they aren’t covered by Medicare or other private insurance.

P

Pre-existing Condition

A health problem or condition that you had before the date in which your health plan became effective.

Premium

The periodic payment (typically monthly) to Medicare, a private insurance company, or a health care plan for health insurance or prescription drug coverage.

Preventive services

Health care services designed 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 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.

Q

Qualified Medicare Beneficiary (QMB) Program

A state program that helps pay Part A premiums, Part B premiums, and other out of pocket costs (like deductibles, coinsurance, and copayments) for people enrolled in  Medicare Part A and limited income and resources.

R

Referral

A written order from your primary care physician for you to see a specialist for specific medical care. In Health Maintenance Organizations (HMOs), a referral is typically required before you can get medical care from anyone except your primary care doctor.

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.

S

Service area

A geographic area where a private health insurance plan accepts members if it limits membership based on where people live.

Skilled nursing facility (SNF)

A nursing facility with the staff and equipment to give skilled nursing care.

Specified Low-Income Medicare Beneficiary (SLMB) Program

A state program that helps pay Medicare Part B premiums for people who have Medicare Part A and limited income and resources.

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+. SSI benefits are not the same as Social Security retirement or disability benefits.

T

Telemedicine

Medical or other health services given to a patient using a communications system typically over the phone or video conference by a physician or other practitioner in a location physical different than the patient.