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Medicare Definitions
A glossary of common Medicare terms.
A
Accept assignment
Term used to indicate a doctor's agreement with Medicare to take the Medicare-approved amount for a service as full payment. If your doctor accepts assignment, your share is limited to your coinsurance payment, usually 20% of the Medicare-approved amount.
Annual Notice of Change (ANOC)
A document that private Medicare plans send to plan members each fall. The ANOC includes the details of any changes in plan coverage, costs, or service areas that will go into effect the following January 1.
B
Balance billing
For Medicare Part B, doctors who do not accept assignment can bill for the difference between the billed amount and the Medicare approved amount. Balance billing is also known as "excess charges."
Benefit period
For Medicare Part A, a benefit period begins the day you're admitted as an inpatient in a hospital or skilled nursing facility. The benefit period ends when you haven't gotten any inpatient hospital care (or skilled care in a skilled nursing facility) for 60 days in a row. If you go into a hospital or skilled nursing facility after one benefit period has ended, a new benefit period begins. You must pay the Part A deductible for each benefit period. There's no limit to the number of benefit periods.
Brand name drug
A prescription drug that is sold under a trademarked brand name.
C
Catastrophic coverage
A cost-sharing stage in Medicare Part D during which you pay only a small copay or coinsurance for a covered drug and your plan pays the rest of the cost.
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.
COBRA
COBRA stand for Consolidated Omnibus Budget Reconciliation Act. It's a law that protects you and your family if you lose your employer-sponsored health benefits. If you qualify for COBRA coverage, then you have the option of continuing your employer-sponsored health plan for a limited period of time.
Coinsurance
A percentage of the cost for a service, which you split with your plan. For example, Medicare Part B might pay 80% of the cost of a medical service and you would pay 20%.
Coordinated care
In Medicare Advantage (Part C), this refers to 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. These plans are also referred to as "managed care plans."
Copayment
A pre-set, fixed amount that you pay for a service at the time you receive it. In a Medicare Part D plan, for example, you might pay a $15 copayment for each prescription you fill. Also called a "copay."
Cost-sharing
A term for the way Medicare shares your health care costs with you. The most common types of cost-sharing are deductibles, copays and coinsurance.
Coverage gap
This is the cost-sharing stage of a Medicare Part D plan in which you pay most of the plan's discounted price for your covered medications. You enter the coverage gap when you, others on your behalf, and the plan together have paid a pre-set amount for your drugs. This amount is determined by the plan, but Medicare establishes a maximum. You remain in the coverage gap stage until you have spent your plan's out-of-pocket limit in a single year. Deductibles, copays, coinsurance and other payments count toward the out-of-pocket limit, but premiums do not.
Creditable drug coverage
Prescription drug coverage from a health plan other than a Medicare Part D standalone plan or a Medicare Advantage plan that includes prescription drug coverage and is at least as good as Medicare Part D.
Custodial care
Care that provides help with the activities of daily living, like eating, bathing or getting dressed. Most long-term care is considered custodial care.
D
Deductible
A pre-set, fixed amount that you pay for your medical care and services first, before Medicare or other insurance starts to pay.
Dual-eligible
A person who is eligible for both Medicare and Medicaid. Learn more about Medicare, Medicaid and Dual Eligibility.
E
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 over and above the Medicare-approved amount.
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.
G
General Enrollment Period
This is when you can enroll in Medicare if you didn't sign up during your Initial Enrollment Period. The General Enrollment Period (GEP) is January 1 – March 31 every year. You may have to pay a penalty for late enrollment. Coverage takes effect on July 1.
Generic drug
Generic prescription drugs are lower-cost alternatives to brand name drugs. They use the same active ingredients as their brand name counterparts and work the same way. According to the FDA, generic drugs are the same as brand name drugs in safety, strength, quality, the way they work, how they're taken, and the way they should be used.
Guaranteed renewable
A feature of Medicare supplement insurance (Medigap) plans that coverage will be automatically renewed each year, as long as you pay premiums when due and you do not make any material misrepresentation when you apply for the plan.
H
Health Maintenance Organization (HMO) plan
A type of Medicare Advantage plan in which you must use doctors and hospitals in the plan's network for your care. If you go outside the network for services other than emergency care, urgent care or out-of-area renal dialysis, you are responsible for paying for your own care.
High-deductible Medicare Advantage plan
A health insurance plan for which you pay a significant deductible (usually more than $1,000) before the plan begins to help with your costs.
Home health care
Under Original Medicare (Parts A & B), this is skilled nursing care and therapy, such as speech therapy or physical therapy, which is provided on a part-time or intermittent basis to those who cannot leave the home.
Hospice care
Care for those who are terminally ill. Hospice care typically focuses on controlling symptoms and managing pain. Under Medicare Part A, hospice care also includes support services for both patient and caregivers. Part A covers hospice care received at home and care received in a hospice outside the home.
I
Initial Enrollment Period (IEP)
This is the seven-month period that you get 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. Those who qualify for Medicare due to disability also get a seven-month IEP that starts 3 months before your 25th month of getting Social Security or Railroad Retirement Board (RRB) disability benefits, includes your 25th month of getting disability benefits, and ends 3 months after your 25th month of getting disability benefits.
Inpatient care
Care you receive in a hospital when you are 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. It's important to ask your doctor or a hospital staff member if you have been admitted as an inpatient.
L
Lifetime reserve days
With Medicare Part A, lifetime reserve days are a set number of covered hospital days you can draw on if you are 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.
M
Medicaid
A medical assistance program for certain individuals and families with limited incomes and resources. Medicaid is jointly funded by the federal and state governments and managed by the states. It includes programs that help pay Medicare premiums and cost-sharing.
Medical Savings Account (MSA)
A type of Medicare Advantage plan that combines a special bank savings account with a high-deductible Medicare Advantage plan. The money in the savings account can be used only for medical expenses.
Medically necessary care
Services or supplies that are needed to diagnose or treat a medical condition according to the accepted standards of medical practice.
Medicare
A federal government health program for U.S.citizens or legal residents who’ve lived in the country for at least five years in a row, and who meet one of the below:
- Age 65 or older
- Under age 65 with a qualifying disability
- Any age with End-Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS, also called Lou Gehrig's Disease)
Medicare Advantage
A type of Medicare plan offered by a private company that includes Medicare Part A and Part B, usually includes Part D prescription drug coverage, and may also offer other benefits such as dental or vision. Learn more about Medicare Advantage plans.
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 assignment
Medicare assignment refers to the Medicare-approved amount for payment in full for a medical service. Doctors can choose to accept assignment or not. If they do not accept assignment, then they may charge more than the Medicare-approved amount for a service. This means you may pay more.
Medicare Annual Enrollment Period
The time period each year during which you may make changes to your Medicare coverage. This period is known as the Medicare AEP and runs October 15 through December 7. During this time you can join or switch Medicare Advantage or Part D plans, or you can return to Original Medicare. You can also enroll in Medigap if you choose.
Medicare Savings Account plan (MSA)
A type of Medicare Advantage plan that combines a high-deductible health plan with a savings account. You use money from the savings account to pay your health care costs.
Medicare Savings Program
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 supplement insurance plans (Medigap)
These are standardized plans, provided by private insurance companies, that pay for some of the remaining out-of-pocket costs that Original Medicare doesn't cover, such as deductibles and coinsurance. Each plan is named with a letter of the alphabet. Don't confuse Medicare supplement plans A, B, C and D with Medicare Parts A, B, C and D.
Note: In Massachusetts, Minnesota and Wisconsin there are different plans available.
Medicare Supplement Insurance Open Enrollment Period
The time period during which you are guaranteed the right to buy any Medicare supplement insurance plan available where you live. This six-month period begins the first day of the month in which you are both age 65 or older and enrolled in Medicare Part B. During this time, the insurer cannot refuse to sell you a plan or charge a higher premium due to your medical history or current health.
Medigap
Another name for Medicare supplement insurance.
O
Out-of-pocket costs
The amount you 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 you receive in a clinic, hospital or health care facility when you are not admitted for an inpatient stay.
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.
Part B
The part of Original Medicare that provides help with the cost of doctor visits and other medical services.
Part C
Known as Medicare Advantage, this part of Medicare allows private insurance companies to offer plans that combine help paying for hospital costs (Part A) with coverage for doctor visits and other medical services (Part B) all in one plan. Many Medicare Advantage plans also include prescription drug coverage (Part D).
Part D
This part of Medicare allows private insurance companies to offer plans that help with the cost of prescription drugs. You can get Medicare Part D coverage as a stand-alone prescription drug plan or as part of a Medicare Advantage plan.
Point of Service (POS) plan
A type of Medicare Advantage HMO plan that allows members the ability 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
When you are applying for an insurance plan, a name for an illness or medical condition that you have already been diagnosed with.
For AARP Medicare Supplement and Select Plans, a pre-existing condition is a condition for which medical advice was given or treatment was recommended by or received from a physician within 3 months prior to the plan's effective date. Expenses incurred during the first 3 months after the effective date of the plan will not be considered if due to a pre-existing condition.
Preferred Provider Organization (PPO)
A type of Medicare Advantage plan in which you can use doctors and hospitals in the plan's network or go to doctors and hospitals outside the network. If you go outside the network, you'll usually pay a larger share of the cost of your care.
Premium
A fixed amount you have to pay to participate in a plan or program, usually as a monthly payment.
Prescription drug plan
A standalone Medicare Part D insurance plan that helps with the cost of prescription drugs.
Preventive care
Care that is meant to keep you healthy or to find illness early when treatment is most effective. Examples of preventive care include flu shots, screening mammograms and diabetes screenings.
Private Fee-For-Service plan (PFFS)
A type of Medicare Advantage plan that allows you 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)
Helps individuals over the age of 55 live independently in their communities for as long as possible by providing them with a combination of medical, social and long-term care services. 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 and products, such as a doctor, hospital, pharmacy, laboratory or outpatient clinic.
S
Service area
In Medicare Advantage, the area in which a plan offers service. A service area is typically a county, state or region.
Skilled nursing care
Nursing care that should be provided only by a licensed nurse.
Special Enrollment Period
Specific times when people who qualify due to special circumstances may enroll in Medicare outside their Initial Enrollment Period or the General Enrollment Period. Usually, you don't pay a late enrollment penalty if you sign up during a Special Enrollment Period.
Special Needs Plan (SNP)
A type of Medicare Advantage plan that serves people with special health care needs, such as people with severe or disabling chronic conditions, those living in an institution (such as a nursing home) or who need nursing care at home, or people who have both Medicare and Medicaid benefits (also known as "dual eligible").
Step therapy
In Medicare Part D, a special procedure you and your doctor must follow before you can use certain drugs. You must first try a less expensive drug to see if it works for you. You may try a more expensive drug that treats the same condition only if you and your doctor can show that the less expensive drug didn't work for you.
T
Tiered formulary
In Medicare Part D, a drug plan formulary that divides drugs into groups. Each group, or tier, has a different level of cost-sharing. For example, a generic version of a drug may have a lower copay than a brand name version of the drug. Cost-sharing details vary from plan to plan.
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AARP® Medicare Supplement Insurance Plans
AARP endorses the AARP Medicare Supplement Insurance Plans, insured by UnitedHealthcare.
Insured by UnitedHealthcare Insurance Company, Horsham, PA or UnitedHealthcare Insurance Company of America, Schaumburg, IL (for ND residents) or UnitedHealthcare Insurance Company of New York, Islandia, NY (for NY residents). Each insurer has sole financial responsibility for its products. Policy form No. GRP 79171 GPS-1 (G-36000-4).
Plan A may be available to persons under age 65 who are eligible for Medicare by reason of disability or End-Stage Renal Disease.
Not connected with or endorsed by the U.S. Government or the federal Medicare program.
This is a solicitation of insurance. A licensed insurance agent/producer may contact you.
You must be an AARP member to enroll in an AARP Medicare Supplement Plan.
THESE PLANS HAVE ELIGIBILITY REQUIREMENTS, EXCLUSIONS AND LIMITATIONS. FOR COSTS AND COMPLETE DETAILS (INCLUDING OUTLINES OF COVERAGE), CALL A LICENSED INSURANCE AGENT/PRODUCER AT THE TOLL-FREE NUMBER ABOVE.
Medicare Advantage plans and Medicare Prescription Drug plans
Plans are insured through UnitedHealthcare Insurance Company or one of its affiliated companies, a Medicare Advantage organization with a Medicare contract and a Medicare-approved Part D sponsor. Enrollment in these plans depends on the plan's contract renewal with Medicare. You do not need to be an AARP member to enroll in a Medicare Advantage plan or Medicare Prescription Drug plan.
This information is not a complete description of benefits. Contact the plan for more information.
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