Medicare Glossary

Annual Election Period

The Annual Election Period (AEP) is the period that runs from October 15 – December 7 each year. Medicare beneficiaries can enroll in, change, or disenroll from a Medicare Advantage plan or Part D drug plan.

Annual Notice of Change

The Annual Notice of Change (ANOC) letter is a notice that Medicare Advantage and Part D plan carriers must send to their members each September that outlines the changes to their plan for the coming year. It may include increases or decreases to copays, benefits, premiums and more.

Ambulatory Surgical Center

A healthcare facility that may perform certain surgeries on patients expected to require 24 hours of care or less.


A request to reconsider a payment decision or coverage made by Medicare or your health care plan (health care or prescription drug). You can appeal if there has been a denial of your request.


An agreement with your healthcare provider (a doctor or otherwise) to be paid by Medicare for services. Part of the agreement is that they will not charge you any more than a Medicare deductible and coinsurance.


The person receiving health insurance benefits.

Benefit Period

The method Original Medicare uses to measure your hospital and skilled nursing facility services. The period runs from when you are admitted to an inpatient facility to 60 days after you stop receiving care. You must pay the inpatient hospital deductible for each benefit period. There’s no limit to the number of benefit periods.


The services or health care items that are covered by your insurance plan.

Centers for Medicare & Medicaid Services (CMS)

A federal agency that manages Medicare, Medicaid, Children’s Health Insurance Program (CHIP), and the federally facilitated Marketplace.


The payment request you make for received services or other benefits.


The potential amount you pay for your share of service costs. This is calculated after you pay any necessary deductibles. Usually portrayed as a percentage.


The amount you may be required to pay for a medical service or item. This is usually a specific amount, depending on your plan.


The amount you may have to pay for a medical service or item. This includes copayments, coinsurance, and/or deductibles.

Coverage Gap

Prior to qualifying for catastrophic coverage, the period of time that you pay higher cost-sharing for prescription drugs. The period starts when you and your plan pay a set amount for prescription drugs during the year.

Creditable Coverage

Creditable coverage is when you’ve had previous health insurance coverage that can be used to decrease a pre-existing condition waiting period under a Medicare Supplement policy.


The amount you pay for health care services or prescription drugs before your insurance plan begins to cover a claim.

Dental Coverage

An insurance plan that helps to pay for dentist office trips. The plans can sometimes cover preventative services including teeth cleaning, fillings, etc. Dental coverage is not part of Medicare benefits.

Drug List

The list of prescription drugs that are covered by your Part D plan or other insurance plan that offers drug coverage.

Drug Tier

Part D drug formularies are grouped into tiers that determine your portion of the drug costs.

Dual Eligible

To be eligible for both Medicare and Medicaid.

Durable Medical Equipment

Medical equipment that is ordered by your doctor to be used in your home. This can include a walker, wheelchair, or hospital bed.

End-Stage Renal Disease (ESRD)

Permanent kidney failure, requiring dialysis or a transplant. Those with ESRD automatically qualify for Medicare.


A type of prescription drug coverage determination for Medicare.
The types are:

  • Formulary Exception: A drug plan’s decision to cover a drug not on the drug list or to waive a coverage rule.
  • Tiering Exception: A drug plan’s decision to charge a lower amount for a drug on its non-preferred drug-tier.
    You or your doctor must request the exception.

Your doctor or the prescriber must provide a supporting statement for why you require the exception.

Excess Charge

The difference between the amount a health care provider is legally permitted to charge and the Medicare-approved cost.

Explanation of Benefits (EoB)

In a Medicare Part C or D plan, a description of your coverage after you receive medical services or equipment. It explains what the plan billed Medicare, Medicare’s approved amount, what Medicare paid, and what is expected to be covered by the beneficiary. The EoB is not a bill, but a description of what was paid and by whom.

Extra Help

A program that helps those with limited income/resources afford Medicare Part D plans.


A list of prescription drugs covered by a prescription drug (Part D) plan. Another name for a drug list.

Formulary Exception

A request made by a plan member and his or her doctor, to ask the plan to cover a drug that is not on the formulary.

Generic Drug

A prescription drug that has identical active ingredients to a name-brand drug, often costing less.

Group Health Plan

A health plan offered by an employer or organization that covers employees and families.

Guaranteed Issue Rights

The rights a beneficiary has in situations where an insurance company is required by law to sell or offer a Medigap policy. When this happens, a beneficiary cannot be denied a policy, and an insurance company cannot place conditions on a plan. The beneficiary also cannot be charged extra for the Medigap policy because of past or current health concerns. Sometimes called Medigap Protections.

Guaranteed Renewable

A guaranteed renewable policy is one that can’t be terminated by the insurance carrier, unless you don’t pay your premiums or provide untrue statements to the insurance company.

Health Care Provider

An individual or group that is licensed to provide health care. This may include doctors, nurses, or hospitals.

Health Coverage

The legal entitlement to payment/reimbursement for your health care costs. This is usually through a contract with a health insurance company, an employer-offered plan, or a government program like Medicare.

Health Maintenance Organization (HMO)

A type of health insurance plan that usually limits coverage to care from doctors who work for or contract with the HMO. It generally won’t cover out-of-network care except in an emergency.

High-Deductible Medigap Policy

A Medigap policy that has a high deductible, but also offers a lower premium.

Home Health Care

Health care services that are provided at your home under a plan from your doctor. This plan must be ordered by your doctor in order to be covered by Medicare.


A team-oriented service that addresses the many needs of terminally ill patients. This can include the medical, psychological, or even spiritual needs of the patient. Hospice care can also aid the patient’s family or caregivers.

Household Discount

A household discount is a discount on your monthly premiums for meeting certain criteria, such as being married to someone who also has insurance with the same insurance company.

Initial Enrollment period

The Initial Enrollment Period (IEP) is a 7 month window during which individuals newly eligible to Medicare, can now sign up for Part A, B, C, or D. Your IEP begins 3 months before your 65th birthday months and ends three months afterwards.

Initial Coverage Limit

The maximum out-of-pocket limit that is reached by paying your yearly deductible, copayment, or coinsurance for each drug covered by your prescription drug plan. You then enter the plan’s coverage gap.


The group of health care providers — including pharmacies, hospitals, and doctors — that have agreed to provide services to beneficiaries of certain insurance plans at a discounted rate. Some insurance plans only cover in-network providers.

Inpatient Care

The health care services that you receive when you are admitted to a health care facility.

Inpatient Hospital Care

The services and treatment that a beneficiary receives at a hospital, including your bed, medical procedures, or nursing.


The Income Related Monthly Adjustment Amount (IRMAA) is an additional monthly charge to people with higher income levels. This charge is added on top of their Medicare Part B and Part D premiums.

Late Enrollment Penalty

A late enrollment penalty is a fee that is added to your monthly Medicare premium for failing to enroll in Medicare when you were first eligible.

Lifetime Reserve Days

The additional days that Medicare covers for hospital care after 90 days. This covers all regular costs except a daily coinsurance. The total is 60 days over the course of your lifetime, and is offered through Original Medicare.

Limiting Charge

A part of Original Medicare, the highest amount you can be charged for a service offered by a health care supplier who hasn’t accepted an assignment. The charge will be 15 percent over Medicare’s approved amount. This will only apply to certain services.

Long-Term Care

Services provided for people who are unable to perform the basics of everyday life. This can include dressing, bathing, or eating. These services can be offered in special communities, assisted living, nursing homes. Long-term care is often not covered by Medicare.

Maximum Out of Pocket (MOOP)

Maximum dollar amount a member is required to pay out of pocket during a plan year.

Medical Emergency

An injury or illness you believe needs immediate medical attention due to the threat of disability or death.

Medically Necessary

Any health care services or supplies that are needed to diagnose or treat an illness, injury, condition, disease, or its symptoms. These must meet the accepted standards of medicine.

Medical Underwriting

The process through which an insurance company decides whether to accept your application. It will also decide whether to add a waiting period for pre-existing conditions (if your state allows it) or how much to charge for the insurance. This decision is primarily based on your medical history.


The federal health insurance program for people over the age of 65 or younger people in certain situations.

Medicare Advantage

Another name for Medicare Part C.

Medicare Advantage Prescription Drug (MAPD) Plan

A Medicare Part C plan that offers coverage for both Original Medicare and prescription drug coverage.

Medicare Cost Plan

A type of Medicare health plan that is available in certain areas. In this plan, if you receive services outside of the plan’s network without a referral, the Medicare-covered services are paid by Original Medicare. The Cost Plan covers emergency services or urgent care services.

Medicare Health Maintenance Organization (HMO) Plan

A type of Medicare Part C plan that is offered in certain parts of the United States. The plan only covers health care providers that are on a list provided by the HMO. Many plans also require you to choose a primary care physician. This physician will provide required referrals for any specialist visits.

Medicare Health Plan

A privately-offered plan that contracts with Medicare to provide Part A and B services to Medicare beneficiaries who enroll in the plan. This includes Medicare Part C, Medicare Cost Plans, Demonstration/Pilot Programs, and PACE plans.

Medicare Medical Savings Account (MSA) Plan

A combination of a high-deductible Medicare Part C plan and a bank account. Medicare deposits money into the account, which can be used to pay for health care costs. Only Medicare-covered expenses count toward your deductible. Generally, the deposited amount is less than the deductible, so there will be out-of-pocket costs.

Medicare Part A

The part of Original Medicare that covers your stay at a health care facility, including hospitals, skilled nursing facilities, or nursing homes, among others.

Medicare Part B

The part of Original Medicare that covers medically necessary services, including doctor visits, ambulance services, and physical therapy. Part B covers many preventive and screening services, as well.

Medicare Part C

A comprehensive alternative to Original Medicare offered by private insurance companies. Plans can include drug, routine dental, and vision coverage.

Medicare Part D

Medicare Part D is an optional plan that covers your prescription drugs offered by private insurance companies. This can be paired with Original Medicare.

Medicare Preferred Provider Organization (PPO) Plan

A type of Medicare Part C plan where beneficiaries pay less if they use doctors, hospitals, or other health care providers within the plan’s network. Health care providers outside of the network may be used at an additional charge. These plans are only available in certain areas.

Medicare Savings Program

A program designed to aid beneficiaries with limited income or resources pay some or all the Medicare premiums, deductibles, or coinsurance. This program is offered through Medicaid.

Medicare SELECT

A type of Medicare Supplement Plan that may require you to use hospitals and, in some cases, health care providers within its network to be eligible for full benefits.

Medicare Special Needs Plan (SNP)

A type of Medicare Part C plan that provides specialized care for specific groups of beneficiaries.

Examples: Beneficiaries who have both Medicare and Medicaid; Beneficiaries who live in nursing homes; Beneficiaries who have chronic medical conditions.

Medicare Summary Notice (MSN)

A notice given every three months to a beneficiary after a health care provider or supplier files a claim for Original Medicare services. The notice explains services provided, the amount Medicare pays, and how much the beneficiary must pay.

Medicare Supplement Plan

Plans offered by private insurance companies to cover the “gaps” in Original Medicare coverage. Also known as Medigap Coverage.


Medigap Plan (also known as Medicare Supplement Plan) is a private insurance policy that you can purchase to help you pay for the deductibles, copays, and coinsurance not covered by traditional Medicare.

Monthly Premium

The dollar amount paid for insurance coverage on a recurring monthly basis.


The health care facilities, providers, and suppliers that have contracted with your insurer to provide services.

Network Pharmacies

Pharmacies that have contracted with certain Medicare plans to provide services and supplies at a discounted rate. In certain plans, your prescriptions are only covered if you get them filled by these pharmacies.

Non-Preferred Pharmacy

A pharmacy that is part of a Medicare plan’s network, but isn’t defined as a preferred pharmacy. In these cases, you may pay higher out-of-pocket costs for prescription drugs.

Occupational Therapy

Treatment assisting beneficiaries to return to usual activities after an illness or injury. These activities can be bathing, preparing meals, housekeeping, etc. Original Medicare coverage is limited annually, although coverage is allowed for medically necessary therapy over the cap.

Open Enrollment Period

The Medicare Open Enrollment Period (also known as the Annual Election Period) runs from October 15th to December 7th.

Original Medicare

Another name that refers to Medicare Parts A and B.


A benefit that may be offered by a Medicare Part C plan. This benefit gives beneficiaries the choice to get a plan’s services from outside of the network of health care providers. In some instances, the out-of-pocket costs may be higher.

Out-of-Pocket Costs

Health or prescription drug costs that a beneficiary must pay on their own since these aren’t covered by Medicare or other insurances.


An amount added to a monthly premium for Medicare Part B or Part D plans if the beneficiary doesn’t join when they are first eligible. This higher amount is paid as long as the beneficiary has Medicare. There are some exceptions to this.

Pharmacy Network

A pharmacy that has agreed to provide beneficiaries of certain Medicare plans with services and supplies at an agreed-upon rate. Some Medicare plans will only cover your prescription costs if they are filled at network pharmacies.

Pre-Existing Condition

An injury, sickness, or health issue that was diagnosed or treated before the date health care coverage begins.

Preferred Pharmacy

A pharmacy that is part of Medicare’s drug plan network. You will typically pay lower out-of-pocket costs for prescriptions than at a non-preferred pharmacy.


The payment made to Medicare, an insurance company, or a health care plan for health coverage or prescription drug coverage.

Prescription drug

A prescription drug is a medication prescribed by a doctor and is not available for purchase over the counter.

Preventive Services

Health care aimed at averting or detecting illness at an early stage, when treatment is most effective.

Primary Care Physician (PCP)

The physician who acts as a patient’s first point of contact and provides any continuing care of certain medical conditions. Some Medicare Advantage plans require selection of a PCP.


A written order from your primary care physician directing you to see a specialist or receive certain medical services. Many Health Maintenance Organizations require a referral before covering certain services

Secondary Payer

An insurance policy, plan, or program that pays second on a medical care claim. This can include Medicare, Medicaid, or another insurance.

Service Area

A service area is the area in which a Medicare Advantage plan offers its network coverage. You must live in a Medicare Advantage’s plan service area to be eligible to enroll.

Skilled Nursing Facility

A healthcare facility with the staff and equipment to provide skilled nursing care.

Star Rating

The Medicare overall plan rating as determined by the Centers for Medicare & Medicaid Services (CMS) determines how well those plans perform. The rating combines scores for the types of services each plan offers.


The costs of different groups of drugs. Usually, a drug in a lower tier will be less expensive than one in a higher tier.


A combination of medical services and prescription drugs that are used to treat a patient’s illness or injuries.


The process that an insurer uses to decide, based on an applicant’s medical history, whether the insurance company will offer a policy, whether to add a waiting period for a pre-existing health condition and how much the premium will cost for coverage.

Unassigned Claim

A claim that has been submitted for a service or item by a health care provider that does not accept assignment.

Urgently Needed Care

Care received outside of a Medicare plan’s service area for sudden illness or injury that requires immediate medical care, but isn’t considered life threatening

Waiting Period

The timespan between when you sign up for a Medicare Part C or Medigap plan and when coverage begins. Days in the waiting period do not count toward creditable coverage or in determining a significant break in coverage. Waiting periods for Medicare plans are most often imposed on plans of beneficiaries with pre-existing conditions.

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