Glossary: Understanding Your Medicare Plans

Making sense of Medicare terms and phrases

As you read about Medicare plans in various publications or online, you’ll see some of the same words or phrases – over and over. If you’re not sure what those terms mean, this glossary will help. Keep it handy for future reference.

ACTUAL CHARGE
The amount of money a doctor or supplier charges for a specific medical service or supply. Because Medicare and insurance companies usually negotiate lower rates for members, this amount is often greater than the “approved amount” that you and Medicare actually pay.

ANNUAL ELECTION PERIOD
Each November marks the Annual Election Period for Medicare beneficiaries. Usually, this is the only time in which Medicare Advantage health plans are open and accepting new members.

BENEFITS
The services provided by an insurance policy. In a health plan, benefits are the health care services you receive, such as doctor’s office visits, etc.

CATASTROPHIC ILLNESS
A very serious and costly health problem that could be life threatening or cause life-long disability. The cost of medical services for this type of condition could cause you financial hardship if you are not properly insured.

COINSURANCE
The percentage of billed charges that you may have to pay after you pay any plan deductibles. The coinsurance payment is a percentage of the cost of the service. For instance, your health plan might pay 70 percent of billed charges, and your coinsurance payment is the remaining 30 percent.

COPAYMENT
The flat amount you pay to a health care provider or pharmacy at the time of service. Copayments vary depending on your plan and the services you receive. Copayments do not reduce your annual deductible or out-of-pocket maximums.

DEDUCTIBLE
The total amount you must pay for health care before your health plan begins to pay.

DUAL ELIGIBLES
Persons who are entitled to Medicare and also eligible for Medicaid.

EMERGENCY CARE
Care given for a medical emergency when you believe that your health is in serious danger.

END-STAGE RENAL DISEASE (ESRD)
Permanent kidney failure requiring dialysis or a kidney transplant.

EXCLUSIONS
Items or services a health plan doesn’t cover, such as long-term care and custodial care in a nursing or private home.

FORMULARY
A list of prescription medications that are approved for coverage by a health plan and that will be dispensed through participating pharmacies.

GENERIC DRUG
A prescription drug that has the same active-ingredient formula as a brand name drug. Generic drugs usually cost less than brand name drugs and are rated by the Food and Drug Administration (FDA) to be as safe and effective as brand name drugs.

HOSPITAL INSURANCE (PART A)
The part of Medicare that pays for inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care.

INITIAL COVERAGE ELECTION PERIOD
The three months immediately before you are entitled to Medicare Part A and enrolled in Part B. During this time you may choose a Medicare health plan.

LOCK-IN PERIOD
People with a Medicare Advantage plan are “locked-in,” meaning they can only switch Medicare plans during certain times of the year unless they qualify for special circumstances.

MAXIMUM ENROLLEE OUT-OF-POCKET COSTS
The maximum dollar amount you would be required to pay out of your own pocket for health services during a specified period of time.

MAXIMUM PLAN BENEFIT COVERAGE
The maximum dollar amount that a plan will insure per benefit period. Medicare plans have a Maximum Plan Benefit Coverage expenditure limit only for service categories where the plan offers enhanced benefits.

MEDICALLY NECESSARY
Health care services or supplies that are appropriate for a particular sickness or injury. To be considered medically necessary, a health care service or item must be consistent with the symptoms and treatment of the injury or sickness. It also needs to be within the standards of good medical practice in the area, and the most appropriate level of care that can be provided to you safely. Also, medically necessary services cannot be solely for your convenience or the convenience of a doctor or hospital.

MEDICARE
The federal health insurance program available to people 65 years of age or older, certain younger people with disabilities, and people with End-Stage Renal Disease (permanent kidney failure with dialysis or a transplant, sometimes called ESRD).

MEDICARE ADVANTAGE HEALTH MAINTENANCE ORGANIZATION (HMO) PLAN
A Medicare Advantage HMO covers most of your health care needs for minimal copayments. You select a primary care physician from a list of doctors who participate in the plan’s network. Your doctor coordinates your care and refers you to specialists and hospitals if necessary. All of your care must be received "in-network." There is no coverage outside the plan’s network of providers, unless it’s for an emergency.

MEDICARE ADVANTAGE PRIVATE-FEE-FOR-SERVICE (PFFS) PLAN
Medicare Advantage PFFS plans have no network. You can visit any doctor, specialist, or hospital you like for medical care. You just need to make sure the provider accepts Medicare and Humana’s terms and conditions of payment.

A Medicare Advantage Private Fee-for-Service plan works differently than a Medicare supplement plan. Your doctor or hospital must agree to accept the plan’s terms and conditions prior to providing healthcare services to you, with the exception of emergencies. If your doctor or hospital does not agree to accept our payment terms and conditions, they may not provide healthcare services to you, except in emergencies. Providers can find the plan’s terms and conditions on our website by clicking here.

MEDICARE SAVINGS PROGRAMS
There are programs that help millions of people with Medicare save money each year. States have programs for people with limited incomes and resources that pay Medicare premiums. Some programs may also pay your Medicare deductibles and coinsurance.

MEDICARE SUPPLEMENT INSURANCE (Medicare Supplement Plans)
Medicare supplement insurance is actually a Medicare Supplement policy sold by private insurance companies to supplement Original Medicare coverage. Except in Minnesota, Massachusetts, and Wisconsin, there are 12 standardized policies labeled Plan A through Plan L. Medicare Supplement policies only work with Original Medicare.

NETWORK
A group of health care providers who have agreed to charge a set rate for members of a health benefits plan. Providers on the list of network members are also called participating providers. Your network choices may vary, depending on your plan and where you live.

ORIGINAL MEDICARE PLAN
A pay-per-visit health plan that lets you go to any doctor, hospital, or other health care supplier who accepts Medicare and is accepting new Medicare patients. Medicare pays its share of the Medicare-approved amount, and you pay your share (coinsurance) plus the deductible amount.

OUT-OF-NETWORK BENEFIT
Generally, an out-of-network benefit gives you the option to use a doctor, specialist, or hospital that is not a part of the plan’s contracted network. In some cases, your out-of-pocket costs may be higher for an out-of-network benefit.

OUT-OF-POCKET COSTS
Health care costs that you must pay on your own because they are not covered by Medicare or other insurance.

OUTPATIENT CARE
Medical or surgical care that does not include an overnight hospital stay.

PART A (MEDICARE)
Medicare hospital insurance that pays for inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care.

PART B (MEDICARE)
Medicare medical insurance that helps pay for doctors’ services, outpatient hospital care, durable medical equipment, and some medical services that aren’t covered by Medicare Part A.

PART C (MEDICARE ADVANTAGE PLANS)
Health benefits coverage offered by a Medicare Advantage Organization. You receive a specific set of health benefits at a uniform premium and uniform level of cost-sharing. Part C is available to all Medicare beneficiaries residing in a plan’s service area.

PART D (MEDICARE)
Optional Medicare Prescription Drug Plan that provides prescription drug coverage through private companies and organizations. You may choose any of the Medicare-approved drug plans (or Medicare Advantage HMO, PPO or PFFS plans) that offer drug coverage in your area.

PARTICIPATING PHYSICIAN OR SUPPLIER
A doctor or other provider who agrees to accept all Medicare claims. These providers accept “Medicare assignment.” They may bill you only for the Medicare deductible and/or your coinsurance or copayment amounts.

PRIMARY CARE PHYSICIAN (PCP)
Your primary care physician, or “PCP,” is the doctor you see first for most health problems. He or she makes sure that you get the care that 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 managed care plans, you must see your primary care doctor before you see any other health care provider.

REFERRAL
A written OK from your primary care physician for you to see a specialist or to receive certain services.

SERVICE AREA
The geographic area in which a health plan accepts members. For Medicare plans that require you to use participating doctors and hospitals, it is also the area where services are provided. The plan may disenroll you if you move out of the plan’s service area.

SPECIAL ELECTION PERIOD (Medicare Advantage Plans)
A set time that a beneficiary can change Medicare plans or return to Original Medicare. Examples of special election situations are:

• You move outside the service area
• Your Medicare Advantage Organization violates its contract with you
• The organization does not renew its contract with CMS

Other exceptional conditions may exist, as determined by CMS.