Medicare definitions
A glossary of common Medicare terms
A
Assignment
A doctor’s agreement with Medicare to accept the Medicare-approved amount as full payment for a service. If your doctor accepts assignment, your share is limited to your coinsurance payment.
Annual Enrollment Period (AEP)
The period from October 15 to December 7 each year when you can change your Medicare coverage. During this time you can join or switch Medicare Advantage or Part D plans, or return to Original Medicare. If you return to Original Medicare, you may also apply for a Medigap plan. Learn more about the Annual Enrollment Period
Annual Notice of Change (ANOC)
A document that private Medicare plans send to plan members each fall, usually in September. An ANOC includes details of any changes in plan coverage, costs or service areas that will go into effect the following January 1. Learn more about the Annual Notice of Change
Balance billing
The difference between the Medicare-approved amount and the billed amount, charged by doctors who do not accept assignment for services covered by Medicare Part B. Also known as excess charges.
Benefit period
For Medicare Part A, a length of time that begins the day you are admitted as an inpatient in a hospital or skilled nursing facility. The benefit period ends when you have not received any inpatient hospital care (or skilled care in a skilled nursing facility) for 60 days in a row.
Brand name drug
A prescription drug sold under a trademarked brand name.
Catastrophic Coverage
The final stage in prescription drug plans, after the Deductible and Initial Coverage stages. Once your out-of-pocket costs reach $2,100 in 2026, you will enter the Catastrophic Coverage stage. You won’t pay anything for Medicare-covered Part D drugs for the rest of the plan year.
Centers for Medicare & Medicaid Services (CMS)
The federal government agency that runs the Medicare program and works with the states to manage their Medicaid programs.
Claim
A request for reimbursement for a health care service that the provider typically sends directly to Medicare. You may also submit a claim if the provider does not.
Consolidated Omnibus Budget Reconciliation Act (COBRA)
Coverage available for you and your family if you lose employer-sponsored health benefits. If you qualify for COBRA coverage, you have the option of continuing your employer-sponsored health plan for a limited period.
Coinsurance
Your share of the total cost of a covered service or prescription, calculated as a percentage of the cost. For example, if your coinsurance is 25% and the total cost for the service or prescription is $100, you would pay $25. Your insurance would pay the remaining $75.
Comprehensive Outpatient Rehabilitation Facility (CORF)
A facility that provides rehabilitation services after an illness or injury. May include physician’s services, physical therapy, social or psychological services and outpatient rehabilitation.
Coordinated care
A kind of health care plan that links providers and services to deliver efficient, cost-effective patient care. Plan members usually need to use doctors and hospitals that are within the plan’s network. Also called managed care plans.
Copayment
A preset, fixed amount you pay for a service when you receive it. In a Medicare Part D plan, for example, you might have a $15 copayment for each prescription. Also called copay.
Cost-sharing
The way Medicare divides health care services costs between plans and members. The most common types of cost sharing are deductibles, copays and coinsurance.
Creditable drug coverage
Prescription drug coverage that is expected to pay, on average, at least as much as Medicare drug coverage. Learn more about creditable drug coverage
Custodial care
Help with daily living activities like eating, bathing or getting dressed. Most long-term care is considered custodial care.
Deductible
A preset, fixed amount you pay for your medical care and services first, before Medicare or other insurance starts to pay.
Drug list
A list of prescription drugs covered by a plan. Also called a formulary.
Dual-eligible
Eligible for both Medicare and Medicaid coverage. Learn more about dual eligibility
Durable medical equipment (DME)
Certain medical equipment ordered by a doctor for use in the home, such as a walker, wheelchair or hospital bed. Both Medicare Part B and Part A cover DME for home health services.
End Stage Renal Disease (ESRD)
Permanent kidney failure requiring dialysis or a kidney transplant. Learn more about enrolling in Medicare due to ESRD
Excess charges
The amount a provider who does not accept Medicare assignment may charge you beyond the Medicare-approved amount. Also called balance billing.
Extra Help
A Medicare program that helps people with limited income and resources pay for Medicare Part D prescription drug plan costs, such as premiums, deductibles and coinsurance. Learn more about Extra Help
G
General Enrollment Period
A fixed time when you can enroll in Original Medicare if you did not sign up during your Initial Enrollment Period. (You may need to pay a penalty for late enrollment.) Begins January 1 and ends March 31 each year. Coverage takes effect on July 1.
Generic drug
Lower-cost alternatives to brand name drugs that use the same active ingredients. According to the FDA, generic drugs are equal to brand name drugs in safety, strength, quality, how they work, how they are taken, and how they should be used.
Group health plan
A health insurance plan that provides coverage to employees, former employees, and their families, and is supported by an employer or employee organization.
Guaranteed issue rights
The rights that allow Medicare beneficiaries to buy certain Medigap plans without medical underwriting, which means insurers cannot deny coverage or charge higher premiums due to health conditions.
Guaranteed renewable
A feature of Medicare Supplement insurance (Medigap) plans. Ensures that coverage will be automatically renewed each year as long as you pay premiums when due and do not make any material misrepresentation when you apply for the plan.
H
Health Insurance Portability and Accountability Act (HIPAA)
A federal law enacted in 1996 that, among other things, establishes national standards for protecting sensitive health information.
Health Maintenance Organization (HMO) plan
A Medicare Advantage plan that requires members to use doctors and hospitals in the plan’s network. Members who go outside the network for services other than emergency care, urgent care or out-of-area renal dialysis are responsible for paying for their own care.
High-deductible Medicare Advantage plan
A health insurance plan for which members pay a significant deductible (usually more than $1,000) before the plan begins to help with costs.
Home health care
Under Original Medicare (Part A and Part B), part-time or intermittent skilled nursing care and therapy, such as speech therapy or physical therapy, provided to those who cannot leave home.
Hospice care
Care for people who are terminally ill. Typically focuses on controlling symptoms and managing pain. Under Medicare Part A, hospice care also includes support services for patients and caregivers. Part A covers hospice care received at home and care received in a hospice outside the home. Learn more about hospice care
I
Initial Enrollment Period (IEP)
The seven-month period when you first become eligible for Medicare. For most people this is around age 65. Your IEP starts 3 months before the month you turn 65, includes the month you turn 65, and ends 3 months after the month you turn 65. Learn more about the Initial Enrollment Period
Those who qualify for Medicare due to disability have a seven-month IEP that starts 3 months before their 25th month of receiving Social Security or Railroad Retirement Board (RRB) disability benefits and ends 3 months after the 25th month they receive disability benefits. Learn more about becoming eligible due to disability
Inpatient care
Care you receive in a hospital when admitted by doctor’s order. You can be in the hospital, even overnight, and not be an inpatient. For example, you may be in for observation. Ask your doctor or a hospital staff member if you have been admitted as an inpatient.
Inpatient rehabilitation facility
A hospital or part of a hospital that provides intensive rehabilitation services for inpatients.
Institution
A facility that provides short-term or long-term care, such as a nursing home, skilled nursing facility (SNF) or rehabilitation hospital. Private residences, such as an assisted living facility or group home, are not considered institutions for this purpose.
L
Late enrollment penalty
A penalty that Medicare may add to your monthly premium if you do not enroll when you first become eligible. You may be able to avoid these penalties. Learn more about late enrollment penalties
Lifetime reserve days
A set number of hospital days you can draw on if you are covered by Medicare Part A and in the hospital for longer than 90 days in a benefit period. You have 60 lifetime reserve days. A lifetime reserve day cannot be replaced. When it is used up, it is gone.
Long-term care
Care that helps with the activities of daily life, like eating, dressing and bathing, over a long period of time.
Long-term care hospital
An acute-care hospital that provides treatment for patients who stay more than 25 days on average. 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
Maximum out-of-pocket (MOOP)
The upper limit of how much you have to pay out of pocket for Medicare Advantage and Medigap plans. Each plan sets its own MOOP each year, and Medicare sets the highest amount any MOOP can be.
Medicaid
A medical assistance program for certain people and families with limited incomes and resources. Medicaid is funded by the federal and state governments and managed by the states. It includes programs that help pay Medicare premiums and cost sharing.
Medically necessary care
Services or supplies that are needed for the diagnosis or treatment of a medical condition according to accepted standards of medical practice.
Medicare Advantage
A type of Medicare plan offered by a private company that includes Medicare Part A and Part B; many plans include Part D prescription drug coverage and may offer other benefits such as dental or vision. Learn more about Medicare Advantage plans
Medicare Advantage open enrollment period (MA OEP)
A period from January 1 to March 31 every year when someone enrolled in a Medicare Advantage plan can switch to Original Medicare or a different Medicare Advantage plan.
Medicare Advantage Prescription Drug plan (MAPD)
A Medicare Advantage plan that offers Medicare Part A, Part B and Part D prescription drug coverage and benefits.
Medicare-approved amount
The amount Medicare determines to be reasonable for a covered service. Providers who accept assignment agree to accept this amount as payment in full.
Medicare coordinated care plan
A Medicare Advantage HMO or PPO plan.
Medicare Savings Account plan (MSA)
A type of Medicare Advantage plan that combines a high-deductible health plan with a savings account. Members use money from the savings account to pay health care costs.
Medicare Savings Program
A Medicare program that helps eligible people pay some or all of their Medicare premiums. In some cases, the program may also help with deductibles, copayments and coinsurance.
Medicare Summary Notice (MSN)
A notice sent to Original Medicare beneficiaries if the beneficiary received services in the past 4 months. This notice shows all services or supplies that were billed to Medicare Part A and Part B during that period, how much Medicare paid, and how much the person may owe. This notice is not a bill.
Medicare Supplement insurance (Medigap)
Standardized plans provided by private insurance companies that pay for some of the out-of-pocket costs Original Medicare doesn’t cover, such as deductibles and coinsurance.
Each plan is named with a letter of the alphabet, but Medicare Supplement plans A, B, C and D are not the same as Medicare Part A, Part B, Part C and Part D. Learn more about Medicare Supplement plans
Medicare Supplement insurance Open Enrollment Period
A six-month period that begins the first day of the month in which you are age 65 or older and enrolled in Medicare Part B. During this time, you are guaranteed the right to buy any Medicare Supplement insurance plan available where you live. The insurer cannot refuse to sell you a plan or charge a higher premium due to your medical history or current health. Also called Medigap OEP.
Medigap
Another name for Medicare Supplement insurance.
O
Original Medicare
A federal government health program for U.S. citizens or legal residents who have lived in the country for at least five years in a row, and who are:
- Age 65 or older OR
- Under age 65 with a qualifying disability OR
- Any age with end-stage renal disease (ESRD) or amyotrophic lateral sclerosis (ALS, also called Lou Gehrig’s Disease)
Original Medicare includes Part A inpatient hospital insurance and Part B outpatient medical insurance.
Out-of-network provider
A health care provider that is not contracted with a particular health plan. Some plans have higher copays for services from out-of-network providers. Some plans do not cover services from out-of-network providers at all.
Out-of-pocket costs
Costs a plan member has to pay directly for Medicare care and services, including deductibles, copays and coinsurance.
Out-of-pocket limit
A limit that plans set on the amount of money you will have to spend out of your own pocket in a plan year.
Outpatient care
Care a person receives from a clinic, hospital or other health care facility without being admitted to a hospital.
Outpatient medical services and supplies
Medical equipment ordered by a doctor for use in the home, such as a walker, wheelchair or hospital bed. Often called durable medical equipment. Covered under both Medicare Part B and Part A for home health services.
P
Part A
The part of Original Medicare that provides help with the cost of hospital stays, skilled nursing services following a hospital stay, and other kinds of skilled care. Learn more about Original Medicare
Part B
The part of Original Medicare that provides help with the cost of doctor visits and other medical services. Learn more about Original Medicare
Part C
A Medicare plan offered by a private insurance company that includes Part A and Part B coverage. Also called Medicare Advantage. Many Part C plans include Part D prescription drug coverage. Many offer other benefits, such as dental or hearing or vision. Learn more about Medicare Advantage plans
Part D
A Medicare plan offered by a private insurance company that provides coverage for prescription drugs. Available as a standalone plan or as part of a Medicare Advantage plan. Learn more about Medicare Part D plans
Point of Service (POS) plan
A type of Medicare Advantage HMO plan that allows members to visit doctors and hospitals outside their network for some covered services, usually for a higher copayment or coinsurance. Some POS plans do not require referrals for specialty services.
Pre-existing condition
An illness or medical condition for which you already have a diagnosis; this term is used when applying for an insurance plan
Preferred Provider Organization (PPO)
A type of Medicare Advantage plan that allows members to use doctors and hospitals inside or outside its network. Members who use services outside the network generally pay a larger share of the costs of their care.
Premium
A fixed amount you pay to participate in a plan or program, usually as a monthly payment.
Prescription drug plan
An insurance plan that helps with prescription drug costs. Also called Medicare Part D.
Prescription Payment Plan
A payment plan from the federal government that lets members spread their out-of-pocket costs for covered Part D drugs over the course of the calendar year.
Preventive care
Care that is meant to keep people healthy or to find illness early when treatment is most effective. Examples include flu shots, screening mammograms and diabetes screenings.
Primary care physician (PCP)
The doctor you see first for most health problems. May talk with other doctors and health care providers about your care and refer you to them. Some plans require you to see your PCP for a referral before seeing a specialist.
Prior authorization
Permission for a provider to prescribe certain medications. If a plan requires prior approval for a drug, the plan needs more information to make sure the drug is being used and covered correctly by Medicare for a medical condition.
Private Fee-For-Service (PFFS) plan
A type of Medicare Advantage plan that allows members to visit any Medicare-eligible doctor, hospital or other health care service provider who is willing to accept the plan’s payment terms and conditions.
Program of All Inclusive Care for the Elderly (PACE)
A government program that provides medical, social and long-term care services to help people over age 55 live independently in their communities for as long as possible. PACE is available only in states that have chosen to offer it as part of their Medicaid program.
Provider
A person or organization that provides medical services or products, such as a doctor, hospital, pharmacy, laboratory or outpatient clinic.
R
Referral
A written order from your primary care physician to see a specialist or get certain services. Some plans require you to get a referral to see anyone except your primary care physician.
Rehabilitation
Services ordered by a doctor to help a member recover from an illness or injury. These services are provided by nurses, and physical, occupational, and speech therapists.
Retiree health coverage
Group health insurance coverage offered to retired employees through an employer or other plan sponsor.
Service area
The county, state or region where a Medicare Advantage plan offers service.
Skilled nursing care
Nursing care that should be provided only by a licensed nurse.
Skilled nursing facility (SNF)
A licensed facility that has the staff and equipment necessary to provide skilled nursing and rehabilitation. Must also be certified by Medicare to be covered by a Medicare plan.
Social Security Administration (SSA)
The federal agency that administers the Social Security program, determines Medicare eligibility, handles Medicare enrollments, and processes premium payments. (Medicare is administered by CMS.)
Social Security Disability Insurance (SSDI)
Benefits paid to an individual or certain family members if they have an eligible disability.
Special Enrollment Period
A time when people who qualify due to special circumstances may enroll in Medicare outside their Initial Enrollment Period or the General Enrollment Period. Learn more about the Special Enrollment Period
Special Needs Plan (SNP)
A type of Medicare Advantage plan designed to serve people with special health care or financial needs. There are three kinds of Special Needs plans:
- Dual Special Needs plans (D-SNPs) for people who have both Medicare and Medicaid coverage (called “dual eligible”)
- Chronic Special Needs plans (C-SNPs) for people living with severe or disabling chronic conditions
Institutional Special Needs plans (I-SNPs) for people who live in skilled nursing facilities; Institutional-Equivalent Special Needs plans (IE-SNPs) are for people who live in contracted assisted living facilities and need the same level of care
Specialist
A doctor who treats only certain parts of the body, certain health problems, or certain age groups.
State Health Insurance Assistance Program (SHIP)
A state program funded by the federal government to provide unbiased and free counseling to people who qualify for Medicare.
Step therapy
A process designed to reduce costs by having members try less expensive drugs before more expensive drugs are covered. If a doctor shows that the less expensive drug is not effective for a given condition, a more expensive drug will be approved.
Supplemental Security Income (SSI)
A program administered through the Social Security Administration that provides limited financial assistance to older people and those with disabilities who have not worked enough quarters to qualify for SSDI.
T
Tier
The level at which a prescription drug is covered; determines the copay or coinsurance. Lower tier numbers generally mean less expensive drugs and lower costs for the member.
Tiered formulary
A drug list for a Medicare Part D plan organized by cost sharing. Generic drugs are often in the tier with the lowest copay. Brand name and specialized drugs may be in tiers with higher copays or coinsurance.
Tricare
A health care program for active-duty and retired uniformed services members and their families.
Tricare for Life (TFL)
Expanded medical coverage available to retired members of uniformed services who are 65 or older and eligible for Medicare. Also covers their eligible family members and survivors, and certain former spouses.
U
Urgently needed care
Care you receive for a sudden illness or injury that is not life threatening but needs attention right away. If you are in a Medicare plan other than Original Medicare, your primary doctor generally provides this care. If you are out of your plan service area for a short time and cannot wait until you return home, the health plan must pay for urgently needed care.
V
Veterans Administration (VA) medical benefits
A health insurance plan for people who have served in the U.S. military. May overlap with Medicare coverage. If you are a veteran, visit www.va.gov or call 1-800-827-1000 to check your eligibility.
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