A Glossary of Medicare Terms

Medicare terms and definitions

When it comes to enrolling in Medicare and understanding how the health insurance coverage for senior citizens works, it can sometimes be difficult to navigate the language. A few words can make a difference in your interpretation of how Medicare works, thus hindering your decisions about the type of coverage you seek.

It’s not just about understanding the differences among Medicare Part A and Medicare Part B, or determining whether to have Medicare Advantage or Medigap as your supplemental health insurance plan. Just a single word such as premiums or tiers may make sense in one context, yet they become complicated as you attempt to interpret specific aspects of Medicare that affect you.

Then there are phrases that are simple to read, like out-of-pocket costs or guaranteed issue rights, but fuzzy to comprehend. And that’s not even counting the proper names of certain programs, such as Inpatient Prospective Payment Systems or Medicare Health Maintenance Organization Plan.  It can be a stormy word cloud that further complicates the already complex system that is Original Medicare and supplemental Medicare insurance policies.

That is why we created this list of terms and phrases that relate to Medicare. Consider this as a resource to refer to as you explore your options for health insurance coverage.

Medicare terms to know

  • Advance Beneficiary Notice (ABN) – In Original Medicare, a notice that a doctor, supplier or provider gives a person with Medicare before furnishing an item or service if the doctor, supplier, or provider believes that Medicare may deny payment. In this situation, if you aren’t given an ABN before you get the item or service, and Medicare denies payment, then you may not have to pay for it. If you are given an ABN, and you sign it, you’ll probably have to pay for the item or service if Medicare denies payment.
  • Advantage Coverage Decision – A notice you get from a Medicare Advantage Plan letting you know in advance if it will cover a particular service.
  • Advance Directive – A document stating how you want medical decisions to be made if you lose the ability to make them for yourself.
  • Amyotropic Lateral Sclerosis (ALS) – Also known as Lou Gehrig’s disease.
  • Ambulatory Surgical Center – A facility where certain surgeries are performed for patients that aren’t expected to need more than 24 hours of care.
  • Appeal – An 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, 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.
  • Claim – A payment request that you submit to Medicare or another health insurance when you get services or items that you think are covered.
  • Clinical Breast Exam – An exam by your doctor to check for breast cancer by feeling and looking at your breasts.
  • 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.
  • Comprehensive Outpatient Rehabilitation Facility – A facility that provides a variety of services on an outpatient basis, including physicians’ services, physical therapy, social or psychological services, and rehabilitation.
  • Coordination of Benefits – A way to figure out who pays when more than one health insurance plan covers the same medical claim.
  • Copayment – An amount you might be required to pay as your share of costs for a medical service or supply. A copayment is usually a set amount.
  • Cost Sharing – An amount you may be required to pay as your share of the cost for a medical service or supply. This amount can include copayments, coinsurance, and/or deductibles.
  • Coverage Determination (Part D) – The first decision made by your Medicare drug plan about your drug benefits.
  • Coverage Gap – A period of time that you pay higher cost sharing for prescription drugs until you spend enough to qualify for catastrophic coverage. (aka the donut hole)
  • Credible Coverage (Medigap) – Previous health insurance coverage that can be used to shorten a pre-existing condition waiting period under a Medigap policy.
  • Credible Prescription Drug CoveragePrescription drug coverage that’s expected to pay at least as much as Medicare’s standard prescription coverage.
  • Critical Access Hospital (CAH) – 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. 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.
  • Dental Coverage – Benefits that help pay for the costs of basic dental care at the dentist office.
  • Department of Health and Human Services (HHS) – This federal agency oversees CMS. CMS administers programs for protecting the health of all Americans.
  • Diethylstilbestrol (DES) – A drug given to a pregnant woman from the early 1940s until 1971 to help with common problems during pregnancy. The drug has been linked to cancer of the cervix or vagina in women whose mother took the drug while pregnant.
  • Drug List – A list of prescription drugs covered by a prescription drug plan. The list is also called formulary.
  • Durable Power of Attorney – A legal document that names someone else to make health care decisions for you.
  • End-Stage Renal Disease (ESRD) – Permanent kidney failure that requires a regular course of dialysis of a kidney transplant.
  • Exception – A type of Medicare prescription drug coverage determination. A formulary exception is a drug plan’s decision to cover a drug that’s not on its drug list or to waive a coverage rule. A tiering exception is a drug plan’s decision to charge a lower amount for a drug that’s on its non-preferred drug tier. You or your prescriber must request an exception, and your doctor or other prescriber must provide a supporting statement explaining the medical reason for the exception.
  • 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 – A Medicare program to help people with limited income and recourses pay Medicare prescription drug program costs, like premiums, deductibles and coinsurance.
  • Formulary – A list of prescription drugs covered by a prescription drug plan or another insurance plan offering prescription drug benefits.
  • Grievance – A complaint about the way your Medicare plan or Medicare drug plan is giving care.
  • Group Health Plan – A health plan offered by an employer or employee organization that provides health coverage to employees and their families.
  • Guaranteed Issue Rights – Rights you have in certain situations when insurance companies are required by law to sell or offer you a Medigap policy.
  • 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.
  • Health Care Provider – A person or organization that is licensed to give health care.
  • Health Coverage – Legal entitlement to payment or reimbursement for your health care costs, generally under a contract with a health insurance company, a group health plan offered in connection with employment, or a government program.
  • Health Insurance Marketplace – A service that helps people shop for and enroll in affordable health insurance.
  • Health Insurance Portability and Accountability Act of 1996 (HIPAA) – The “Standard for Privacy of Individually Identifiable Health Information” of HIPPA assures your health information is properly protected while allowing the flow of health information needed to provide and promote high quality health care and to protect the public’s health and wellbeing.
  • Home Health Agency – An organization that provides home health care.
  • Home Health Care – Health care services and supplies a doctor decides you may receive in your home under a plan of care established by your doctor.
  • Hospice – A special way of caring for people who are terminally ill. Team-oriented approach that addresses medical, physical, social and spiritual needs of the patient.
  • Independent Reviewer – An organization that has no connection to your Medicare health plan or Medicare Prescription Drug Plan.
  • Inpatient Hospital Services – Services you get when you’re admitted to the hospital.
  • Inpatient Prospective Payment System (IPPS) – Hospitals that have contracted with Medicare to provide acute inpatient care and accept a predetermined rate as payment in full.
  • Inpatient Rehabilitation Facility – A hospital that provides an intensive rehabilitation program to inpatients.
  • Large Group Health Plan – A group health plan that covers employees of either an employer or employee organization that has 100 or more employees.
  • Lifetime Reserve Days – In Original Medicare, these are additional days that Medicare will pay for when you’re in the hospital for more than 90 days. You have a total of 60 reserve days that can be used during your lifetime.
  • Limiting Charge – In Original Medicare, the highest amount of money you can be charged for a covered service by doctors and other care supplies who don’t accept assignment.
  • 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.
  • 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.
  • 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.
  • Long-term Care Ombudsman – An independent advocate for nursing home and assisted living facility residents who works to solve problems of residents of nursing homes, assisted living facilities, or similar facilities.
  • Medicaid – A joint federal and state program that helps with medical costs for some people with limited income and resources.
  • Medicaid-certified Provider – A health care provider that’s been approved by Medicaid. Providers are approved or “certified” if they’ve passed an inspection conducted by a state government agency.
  • 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.
  • 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.
  • Medicare – Medicare is the federal health insurance program for people who are 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease.
  • Medicare Advantage Plan (Part C) – A type of Medicare health plan offered by a private company that contracts with Medicare to provide you with all 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, and Medicare Medical Savings Account Plans.
  • Medicare-approved Amount – The amount a doctor or supplier accepts assignment can be paid. It may be less than the actual amount a doctor or supplier charges.
  • Medicare-approved Supplier – A company, person, or agency that’s been certified by Medicare to give you a medical item or service, except when you’re an inpatient in a hospital or skilled nursing facility.
  • Medicare-approved Provider – A health care provider 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.
  • Medicare Health Maintenance Organization (HMO) Plan – A type of Medicare Advantage Plan (Part C) available in some areas of the country.
  • Medicare Health Plan – 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.
  • Medicare Medical Savings Account (MSA) Plan – MSA Plans combine a high deductible Medicare Advantage Plan and a bank account. The plan deposits money from Medicare into the account. You can use the money in this account to pay for your health care costs, but only Medicare-covered expenses count toward your deductible
  • 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.
  • Medicare Prescription Drug Coverage – 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, and 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.
  • Medicare Summary Notice (MSN) – A notice you get after the doctor, other health care provider or supplier files a claim for Part A or Part B services in Original Medicare. It explains what the doctor, other health care provider, or supplier billed for, the Medicare-approved amount, how much Medicare paid, and what you must pay.
  • 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.
  • Medigap Policy – Medicare Supplement Insurance sold by private insurance companies to fill “gaps” in Original Medicare coverage.
  • Multi-Employer Plan – A group health plan that’s sponsored jointly by 2 or more employers.
  • Network Pharmacies – Pharmacies that have a agreed to provide members of certain Medicare plans with services and supplies at a discounted price.
  • Occupational Therapy – Treatment that helps you return to your usual activities (like bathing, preparing meals, and housekeeping) after an illness.
  • Optional Supplemental Benefits – Services that Medicare doesn’t cover, but that a Medicare health plan may choose to offer. If you enroll in a plan with these services, you may choose to buy the services. If you choose to buy these benefits, you’ll pay for them directly, usually as a premium, copayment, and/or coinsurance
  • Original Medicare – Original Medicare is a fee-for-service health plan that has two parts: Part A and Part B. After you pay a deductible, Medicare pays its share of the Medicare-approved amount, and you pay your share.
  • 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.
  • Outpatient Hospital Care – Medical or surgical care you get from a hospital when your doctor hasn’t written an order to admit you to the hospital as an inpatient. Outpatient hospital care may include emergency department services, observation services, outpatient surgery, lab tests, or X-rays.
  • Pap Test – A test to check for cancer of the cervix, the opening to a woman’s uterus. It’s done by removing cells from the cervix. The cells are then prepared so they can be seen under a microscope.
  • Pelvic Exam – An exam to check if internal female organs are normal by feeling their shape and size.
  • Penalty – An amount added to your monthly premium for Part B or a Medicare drug plan (Part D) if you don’t join when you’re first eligible. You pay this higher amount as long as you have Medicare. There are some exceptions.
  • Physical Therapy – Treatment of an injury or a disease by mechanical means, like exercise, massage, heat, and light treatment.
  • Point-of-Service Option – In a Health Maintenance Organization (HMO), this option lets you use doctors and hospitals outside the plan for an additional cost.
  • Power of Attorney – A medical power of attorney is a document that lets you appoint someone you trust to make decisions about your medical care. This type of advance directive also may be called a health care proxy, appointment of health care agent, or a durable power of attorney for health care.
  • Pre-Existing Condition – A health problem you had before the date that new health coverage starts.
  • Preferred Pharmacy – A pharmacy that’s part of a Medicare drug plan’s network. You pay lower out-of-pocket costs if you get your prescription drugs from a preferred pharmacy instead of a non-preferred pharmacy.
  • 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.
  • 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.
  • 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.
  • Protective Sensations – Feeling in the foot or leg that helps warn you that the skin is being injured. Nerve damage caused by diabetes can cause loss of feeling in the foot or leg, also known as “loss of protective sensations (LOPS).” This may result in skin loss, blisters, or ulcers.
  • Qualified Disabled and Working Individuals (QDWI) Program – A state program that helps pay Part A premiums for people who have Part A and limited income and resources.
  • Qualified Individual (QI) Program – A state program that helps pay Part B premiums for people who have Part A and limited income and resources.
  • Qualified Medicare Beneficiary (QMB) Program – A state program that helps pay Part A premiums, Part B premiums, and other cost-sharing  for people who have Part A and limited income and resources.
  • 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.
  • Rehabilitation Services – Health care services that help you keep, get back, or improve skills and functioning for daily living that you’ve lost or have been impaired because you were sick, hurt, or disabled. These services may include physical and occupational therapy, speech-language pathology, and psychiatric rehabilitation services in a variety of inpatient and/or outpatient settings.
  • 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.
  • Specified Low-Income Medicare Beneficiary (SLMB) Program – A state program that helps pay Part B premiums for people who have Part A and limited income and resources.
  • State Health Insurance Assistance Program (SHIP) – A state program that gets money from the federal government to give free local health insurance counseling to people with Medicare.
  • State Survey Agency – A state agency that oversees health care facilities that participate in the Medicare and/or Medicaid programs by, for example, inspecting health care facilities and investigating complaints to ensure that health and safety standards are met.
  • 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.
  • 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 FOR LIFE (TFL) – Expanded medical coverage available to Medicare-eligible uniformed services retirees age 65 or older, their eligible family members and survivors, and certain former spouses.
  • TTY – A TTY (teletypewriter) is a communication device used by people who are deaf, hard-of-hearing, or have severe speech impairment. People who don’t have a TTY can communicate with a TTY user through a message relay center (MRC). An MRC has TTY operators available to send and interpret TTY messages.
  • 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.
  • 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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