Medicare terminology got you confused? Here we define the most common Medicare terms so you can be clear on what you need to know.
- Medicare premium. This is the monthly fee that you pay for Medicare services. The average premium for Part B in 2018 is $134.
- Medicare deductible. This is the amount of money you pay out of pocket before your insurance plan begins to pay for services. The Part A deductible for 2018 is $1,340 per benefit period. For Part B, there’s an annual deductible of $183.
- Medicare copay. This is the amount you have to pay each time you receive Medicare-covered services, after you have paid enough out of pocket to meet your deductible. For example, you will pay a set copay each time you visit your primary care doctor.
- Medicare coinsurance. Coinsurance is similar to copay in that it’s the amount you have to pay each time you receive a service, but coinsurance is a certain percentage of the cost of the service. Under Medicare Part B, after you have met your deductible, the coinsurance you pay is 20%, while Medicare covers 80% of the cost.
- Initial enrollment period (IEP). This is the window of time when you can sign up for Medicare for the first time. It lasts 7 months: the three months before you turn 65, the month you turn 65, and the three months after. Try to sign up during your IEP so that you can avoid any penalties and cost increases for signing up later.
- Special enrollment period (SEP). There are several special enrollment periods during which you can enroll in Medicare, for example if you are still working and your company has 20 or more employees. Your 8-month special enrollment period will begin the month after you leave your job or the month your coverage ends, whichever happens first.
- Medigap. You may have heard of Medigap plans. A Medigap plan is very helpful to have if you do not have a Medicare Advantage plan. A Medigap plan can cover copays, coinsurance, and more, making healthcare smooth sailing. Medigap plans come with their own premiums and costs, but most people find they are worth it.
- Medicare Part D. Part D plans cover prescription drugs. They are either separate stand-alone plans or part of a Medicare Advantage plan.
- Medicare drug formulary. This is the list of drugs covered under your Medicare Part D plan. It’s important to check the formulary before joining or changing plans, because a plan may not cover what you need.
- Medicare Advantage. As an alternative to Original Medicare, you can choose a Medicare Advantage plan. These plans often include Part D prescription drug coverage, vision, dental, and other benefits. Medicare Advantage plans come with their own monthly premiums, however there is a limit to how much you can spend out of pocket under these plans.
Now you know the basic Medicare terminology to get you started on your Medicare journey. Keep up with Medicare World for the latest updates and everything you need to know about Medicare.