How to Empower Yourself and Become a Savvy Medicare Member by Understanding the Lingo
Oh, the fun of understanding health insurance. If you’re like most people, you’re confused by the jargon. Even if you’ve had insurance for years, you may not understand all the Medicare terminology!
Deductibles. MOOPs. Coinsurance. Assignment. What?! You’re likely developing a headache just thinking about this.
The truth is, some insurance companies and agents may actually prefer that you’re a little confused, so they can enroll you in a plan that may best serve them but may not be in your best interests. And that’s just not OK!
We feel it is of paramount importance to empower you through education. We speak with you in easy to understand terminology, eliminating confusion and reducing frustration.
We’ve put together this Ultimate Cheat Sheet that you can quickly refer to any time you have questions about fancy insurance industry jargon. We recommend keeping this handy when shopping around for Medicare insurance, and then keeping it with your other important Medicare documents to refer back to.
Let’s dive in and translate these terms into easy to understand definitions, so you’ll be more knowledgeable than most insurance agents out there!
Activities of Daily Living
A term to describe the basic tasks of everyday life. These are used by doctors, providers, and insurance companies to determine a person’s physical and mental ability to take care of themselves. Basic ADLs include the ability to bathe, feed, groom, toilet, transfer (move from place plan to another), and dress oneself. Some additional ADLs that may be used to assess a person’s ability to live independently, for example, but are not critical for basic functioning, are the ability to perform housework, prepare meals, manage a budget, communicate using the phone or computer, and transportation.
A licensed insurance professional who has the ability to sell insurance products. Some agents may represent one of more insurance carrier (known as independent agents), while other agents are contracted to only sell one insurance company’s products (also known as captive agents). It is important to determine if an agent represents all the top-rated carriers to ensure that they can offer the most flexibility and best choices to their clients. My Medicare Partners’ Agents are independent and are able to present you with quotes from several of the top-rated insurance carriers.
Annual Election Period (AEP)
During October 15 through December 7 each year, a Medicare recipient may sign up for or switch their Medicare Advantage or Prescription Drug Plan. This is sometimes called the Medicare Open Enrollment Period. These plans become effective on January 1.
Annual Notice of Changes (ANOC)
Sent by insurance companies in mid- to late-September, this notice outlines the changes in Part D prescription drug plans and Medicare Advantage plans from one coverage period (calendar year) to the next. The main changes that can occur are the plan’s premium, deductibles, tiers and lists of covered drugs. It is important to reevaluate your Prescription Drug Plan (Part D) and your medical needs each and every year by getting a FREE Rx Checkup!
The amount, under Original Medicare Part A and Part B, that a doctor or provider can be paid, if they have agreed to accept Medicare Assignment. Generally, Medicare Part B covers 80% of the approved amount, and you pay the other 20% (this is your coinsurance out of pocket amount).
If a doctor or provider chooses to accept Medicare patients, they agree to accept the amount Medicare approves for the service provided. In accepting Medicare assignment, or the amount Medicare agrees to pay them, the doctor or provider also agrees not to bill the patient any portion of the bill not paid by Medicare. In other words, the provider agrees to absorb the excess costs Medicare did not reimburse them for (you do not have to pay the excess charges).
The set amount of time during which Medicare Part A will pay for hospitalization and skilled nursing facilities (SNF). The Period begins upon admission to a hospital or SNF. It ends once you have been discharged and remain out of the hospital or SNF for at least 60 days. If readmitted within the 60 day period, you are considered to be in the same Benefit Period. If you are again admitted, but it’s more than 60 days since you last hospital discharge, a new Benefit Period is begun, and you are subject to the Part A deductible and co-pays. Medicare supplements greatly reduce, and oftentimes eliminate, these co-pays and deductibles.
A fancy term for “insurance company”. Medicare Supplement plans are offered by insurance companies and are the secondary payors for services provided.
Centers for Medicare & Medicaid Services (CMS)
A government branch that oversees all plans and benefits under Medicaid and Medicare plans. They also regulate private insurance carriers’ plans offered as Medicare Supplements, Medicare Advantage, and Part D drug plans. CMS is overseen by the Department of Health and Human Services.
Typically submitted to Medicare by a Doctor or hospital, this is a request, or a bill, to get paid for the services provided. A claim may be denied if the individual’s plan does not cover a specific service.
When an employee loses their insurance coverage (for example, due to termination from a job), they have the option of continuing their group coverage, at a higher rate, for a period of 18 months. Consolidated Omnibus Budget Reconciliation Act (COBRA) coverage is not considered creditable coverage under Medicare’s rules. If an individual is eligible for Medicare but instead chooses only to have COBRA coverage, they may face penalties and will not be eligible for a Special Enrollment Period when their COBRA ends.
After the plan’s deductible is met, this is the amount you have to pay out of pocket to cover your share of cost for the services. Coinsurance is typically a percentage. For example, after the Medicare Part B deductible is paid, there is 20% coinsurance, meaning Part pays 80% of the claims’ costs, and you pay the remaining 20% out of your own pocket.
The amount you pay out of pocket for a covered service, before receiving that service. Typically, co-pays are a set dollar amount. For example, your co-pay for a visit to your Primary Care Physician may be $25.
See Donut Hole.
Insurance coverage which meets the minimum requirements under the law. All plans must offer coverage of certain procedures and have other regulations they must follow. All individuals must have creditable coverage, or they may face penalties. See “Penalties” below.
The portion you pay before the insurance begins to cover a majority of expenses. Typically, a higher deductible results in a lower premium, and vice-versa. Deductibles can change annually and it is important to audit your plan each year to see if another plan offers a better value.
A period during which there is a gap in the coverage Medicare Part D provides for prescription drugs. Also known as the Coverage Gap. If you enter the donut hole, your out of pocket costs for medications will temporarily increase until Catastrophic Coverage is reached. One of the requirements of the Affordable Care Act is that the Donut Hole be greatly reduced by the year 2020, and it is decreasing each year until then. See The Dreaded Donut Hole for more information.
Specified times of the year during which a person may sign up for or change their health insurance plan. Under Medicare, there are several enrollment periods, including the Annual Election Period, Special Enrollment Periods, and the General Enrollment Period.
The list of medications covered by a prescription drug plan, also known as Medicare Part D. Medications in the formulary are categorized into “Tiers” which indicate the costs. Also called a “drug list.” Formularies can change and therefore it is important to review your Prescription Drug Plan annually by getting a free Rx Checkup.
Free Look Period
Each new enrollee in a Medicare Supplement plan has a period of 30 days, once their policy becomes effective to use their plan and cancel for a full refund if they are not pleased.
General Enrollment Period (GEP)
The time during which a person may enroll in Original Medicare if they missed their Initial Enrollment Period (IEP). This takes place each year from January 1 through March 31 each year, and coverage becomes effective on July 1. If you miss your IEP, you may be subject to penalties for not having creditable coverage.
Prescription medications that have the same primary ingredients as and are just as safe as Brand Name drugs, but are not branded. Typically, generic medications cost less.
Requirement that an insurance plan accepts you as a patient, regardless of health issues. In other words, this means an insurance company cannot charge you more or outright deny you coverage because of preexisting conditions or your health status. Medicare Supplement plans are guaranteed issue when a person is first eligible to enroll in Original Medicare, typically at age 65.
A type of insurance policy that cannot be canceled by the insurance company, unless you choose to cancel the policy, commit fraud, or miss payments. Enrollees will stay in the policy until they choose to cancel it. All Medicare Supplement policies are guaranteed renewable.
Health Maintenance Organization (HMO)
The most common type of health insurance plan for people under age 65, and the type of insurance plan most Medicare Advantage plans are. HMOs typically only cover providers and hospitals inside of the plan’s network, and will not pay for services obtained out of network. HMOs also focus on preventive care and therefore require enrollees select a Primary Care Provider (PCP) to serve as the centralized gatekeeper for the patient’s health care. Most HMOs require a PCP’s authorization (referral) before a patient can visit a Specialist Doctor (otherwise, the services will not be covered).
Home Health Care
Certified Nurse Assistants who come to your home to help you perform activities of daily living. Original Medicare only covers 80% of part-time costs for home health for people who are approved. Home health care removes the pressure from a family member to provide nursing care, and instead places the responsibility in the hands of a trained professional.
End-of-life care for people who are terminally ill. Ensures those who are ill experience less pain and suffering.
Initial Enrollment Period (IEP)
The 7 month period during which a newly eligible person can sign up for Medicare Part A and Part B, as well as additional coverage like Part D drug plans, a Medicare Supplement plan, or a Medicare Advantage plan. This Period begins three months before the month you turn 65, the month of your 65th birthday, and the three months after your 65th birthday. Enrollment will become effective the first day of the month of your 65th birthday, or if signing up after your birthday, the first day of the next month. Enrollment may be automatic, or may need to be manually done, depending on your situation (see Medicare Enrollment for more information).
Medical and support staff who assist a patient with activities of daily living, such as bathing and eating. Long-term care can take place in a hospital, at the patient’s home, or in assisted living facilities. Medicare and most other health insurance policies do not cover long-term care.
Also known as The Exchange, or HealthCare.Gov, this is the federal website for “Obamacare.” Obamacare is the colloquial term for the Affordable Care Act (also known as the ACA), which is the law that changed the health care system. The Marketplace is the website to access and enroll in individual or small-group plans for people under age 65. People who do not qualify for Medicare or Medicaid may also enroll in Marketplace plans. Medicare enrollees should not enroll in plans through the Marketplace! Read here to get more answers on how the Affordable Care Act affects Medicare.
Maximum Out Of Pocket
The limit on out of pocket costs an enrollee has for services, tests, hospitalization, etc. Once the MOOP has been met, the enrollee no longer pays for medical services covered under their plan.
Overseen by the Centers for Medicaid & Medicare Services, this is a program administered by each state that helps people who are indigent (low income) with medical services. A person may qualify for both Medicare and Medicaid. Medicaid eligibility varies by state.
Overseen by the Centers for Medicaid & Medicare Services, this is a program administered by the federal government that provides insurance coverage for people 65 and older who qualify. Others may qualify if they are disabled and have been receiving Disability for at least 24 months, or if they have end-stage renal disease (permanent kidney failure). Medicare has several “Parts”, and may also be accompanied by Medicare Supplement and Prescription Drug Plans to make coverage more comprehensive.
See Medicare Part C.
Medicare Advantage Disenrollment Period
Medicare Part A
The first half of Original Medicare, which covers hospitalization, skilled nursing facilities, home health care, and hospice care. Most people do not have to pay a premium for Part A, because they have paid into it in the form of taxes while working. However, people with Original Medicare only are subject to Part A deductibles and other out of pocket costs. Medicare Part A does not have a maximum out of pocket (MOOP) and may expose you to high financial risks.
Medicare Part B
The second half of Original Medicare, which covers doctors’ services, medication administered by a physician, preventive care, outpatient care, and more. There is a premium for Medicare Part B (which varies based on income), which we all have to pay monthly once enrolled in Medicare. People with Original Medicare only are subject to Part B deductibles and other out of pocket costs. Medicare Part B does not have a maximum out of pocket (MOOP) and may expose you to high financial risks.
Medicare Part C
Also known as Medicare Advantage, these plans are administered by private insurance companies to provide coverage for Part A and Part B. Most Medicare Part C plans also include prescription drug coverage, and oftentimes are referred to as Medicare Advantage with Prescription Drug (MAPD) plans.
Medicare Part D
Also known as Prescription Drug Plans. Part of Medicare, which covers prescription drug medications. Part D does have expenses such as premiums and co-pays which vary from plan to plan. Prescription coverage is an essential part of comprehensive health care and greatly reduces medication costs.
Also known as MediGap, these policies are administered by private insurance companies to cover the “gaps” in the coverage offered by Original Medicare only. Medicare Supplement plans greatly reduce, or eliminate, deductibles, coinsurance, and co-pays of Medicare approved services that you would normally be responsible for paying. Medicare Supplement plans allow enrollees to visit any doctor or facility in the United States that accepts Medicare assignment, and some provide coverage outside of the US. Medicare Supplement plans also allow enrollees to visit Specialist doctors without requiring a referral first.
See Medicare Supplement
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Providers and facilities (doctors, hospitals, testing centers, pharmacies) accepted by an insurance plan. Networks can change constantly. Visiting in network providers results in lower costs for you. If a provider or facility is out of network, the plan will not cover services received. Most Medicare Advantage plans have limited networks, whereas Medicare Supplements’ networks include any providers and facilities who accept Medicare assignment.
Open Enrollment Period
Consists of both Medicare Part A and Part B only, the hospital and medical insurance respectively. Original Medicare pays for many services, but it does not cover all services, does not have a maximum out of pocket, and has some limitations. Many enrollees choose to make their coverage more robust and to limit their financial exposure by adding a Medicare Supplement and Part D plan.
Out Of Pocket Costs
The portion of health care bills that you, the insured/patient, must pay from your own money. Out of pocket costs can include deductibles, co-pays, and coinsurance. If a service is not covered at all under your plan, you also must pay out of pocket, in full, for that service. There are many out of pocket costs applicable to Medicare, which are covered (either in part or in full) by Medicare Supplement plans – therefore reducing (or eliminating) your out of pocket costs!
People who do not have the minimum amount of insurance coverage may have to pay fines, or penalties. Others may face penalties for not enrolling on time. Under Medicare, a person may face fines or penalties if they are not enrolled in Original Medicare or a prescription drug plan. See creditable coverage.
A health problem or illness you have been diagnosed with before health coverage begins. Some plans cover pre-existing conditions, while others impose waiting periods during which the specific conditions may not be covered.
Preferred Provider Organization (PPO)
A type of health insurance plan that, unlike an HMO, allows enrollees to visit both in network and out of network providers and hospitals. Services provided by out of network will be covered, but your out of pocket costs may be higher when using out of network providers. Some Medicare Advantage plans are PPOs (a majority are HMOs).
The price you pay monthly to the insurance carrier/company in order to receive medical coverage through your plan.
Health care screenings, tests, and interventions that help prevent illness. Preventive care is usually “regularly-scheduled” screenings physicians recommend you receive every X years. Preventive care is offered at no-cost to consumers through Medicare, meaning you pay nothing for these services. Including, but not limited to, diabetes screenings, smoking cessation counseling, Welcome to Medicare physical, and mammograms. If a person is already diagnosed with a particular illness or is experiencing symptoms of that illness, the care they receive for that illness is not preventive in nature, and instead, may be considered diagnostic. In this case, they may be subject to out of pocket costs. Read more about how to take advantage of the preventive screenings included under Medicare and Medicare Supplement plans.
Primary Care Physician (PCP)
A doctor that manages and serves as the “gatekeeper” for a patient’s health care. Oftentimes these are Internists, General Practitioners, or Family Doctors. HMO insurance plans require its enrollees select a PCP and require written authorization from the PCP before the enrollee can see a Specialist doctor. Primary Care Physicians typically oversee and double check care being provided by Specialist doctors. PCPs are also able to recommend preventive care.
Red, White, and Blue Card
Your Original Medicare card. Includes the Medicare beneficiary’s name, Medicare claim number, and coverage. The Medicare claim number is oftentimes your or your spouse’s social security number, followed by a letter, and is used by the Social Security Administration to indicate the benefits you are entitled to and/or receiving. The card also indicates if you are enrolled in Medicare Part A and/or B and when your coverage became effective.
Also known as Prior Authorization, some plans (such as most Medicare Advantage plans) require you obtain written approval from your Primary Care Physician (PCP) before you’re allowed to visit a Specialist doctor or receive certain medications. (Your co-pays and coinsurance are not waived for appointments when you are seeking a referral) If you do not receive a referral from your PCP, your services will not be covered. Medicare Supplement plans do not require referrals before you can see Specialists, which saves you time and money.
Therapy by licensed professionals that may assist with improving or maintaining your physical abilities. Often this consists of physical therapy to (re-)learn to walk, or speech therapy to (re-)learn to speak and helps to gain independence.
Skilled Nursing Facility (SNF)
Facilities approved by Medicare Part A which provide care for patients after their discharge from the hospital, typically on a short-term basis. They provide a higher level of care than rehabilitations, but less invasive care than hospitals. Medicare Supplement plans also provide coverage of SNFs.
Special Enrollment Period (SEP)
Certain events in life that allow you to make changes to your Medicare plan, outside of and in addition to the regular enrollment periods. Some SEPs include losing current insurance coverage or moving to a different area.
A doctor or provider who focuses on a particular part or system of the body, its diagnosis, and its care. Examples include Cardiologists, Neurologists, and Gynecologists.
Some Part D prescription medication plans require enrollees try lower cost (typically generic) medications before “stepping up” to higher cost (typically brand name) drugs. If step therapy is required and the Medicare recipient does not abide, the drug may cost more or may not be covered at all. It is important to check Part D plan drug formularies annually to see if changes made result in step therapy requirements. Sign up for a free Rx Checkup to find the best plan for your medication needs!
Numerical classifications and groupings of medications by insurance companies, based mostly on the cost of the drug. Brand name drugs tend to have higher Tiers, whereas Generic drugs tend to have lower Tiers. Higher Tiered drugs cost more than lower Tiered drugs. All Part D prescription plans have different Tiers and co-pays. Request a free Rx Checkup to review your coverage with no obligation!
The questions and parameters insurance companies use to determine if an individual will be accepted into a plan. Underwriting may also determine other factors such as waiting periods or changes in premium. In some situations, a person must complete medical underwriting to apply for a Medicare Supplement policy. In this example, the insurance agent asks the individual health questions, specific to that insurance company’s application.
By better understanding the insurance industry lingo, you will surely feel more confident while shopping for Medicare plans. However, you should always seek help from an experienced Medicare agent who can easily “translate” this terminology for you! Keep in mind that help from an Agent is always no cost. You can even read some great tips on how to find a Medicare Agent here.
Even though an agent’s help enrolling in Medicare makes the process much easier, understanding these terms for yourself is sure to instill confidence! Also keep in mind that oftentimes, insurance companies’ materials have glossary and definitions, should you ever get confused. Or, call your My Medicare Partners Agent at 1-844-305-6169 and we will happily answer your toughest questions about Medicare!