Medicare is confusing! Every now and then, it’s good to revisit the basics so you stay informed about your health care insurance. This Medicare glossary includes the most common Medicare terms that you should know as you research Medicare
A supplemental or supportive healthcare service provided in addition to primary care, including:
These services may be covered under Part A or Part D, but are often covered under Part B.
The time of year where current Medicare beneficiaries can change their Medicare coverage. It occurs every year from Oct. 15 – Dec. 7.
A formal request to review a coverage decision or payment. Appeals are often made when an individual believes their Medicare plan should cover a health care service, supply, item, or drug that wasn’t approved.
The amount or fee that Medicare agrees to pay for a service or item.
The maximum annual payment amount set by the Centers for Medicare & Medicaid Services. Medicare Advantage plans bid against this amount based on their own estimates for providing Part A and B coverage. Providers can bid higher or lower than the benchmark, which corresponds with higher or lower monthly payments for beneficiaries.
A healthcare provider or facility that demonstrates a quality performance, serving as a model for other providers to emulate. Benchmark providers are used as a standard for evaluating the performance, cost, and quality of care of other providers and facilities.
A set number of days when a beneficiary can receive benefits for covered medical services. This often refers to the number of days allowed for inpatient hospital and skilled nursing facility (SNF) stays.
A private organization (like an insurance company) that has a contract with the Centers for Medicare and Medicaid Services to process claims.
Acronym for the U.S. Centers for Medicare and Medicaid Services, part of the Department of Health and Human Services. This is the presiding body over Medicare that ensures that coverage is consistent and patients come first.
A document required by Medicare to validate that certain medical equipment, supplies, or services are necessary for an individual’s treatment or care. The certificate typically includes patient information, physician details and signature, a description of the item or service, an explanation of why it’s necessary, and a timeframe for treatment.
A long-lasting health condition that requires ongoing medical care or changes in daily routines. Common chronic conditions include diabetes, heart disease, and arthritis.
The amount of medical costs not covered by a health insurance plan. You must pay this amount even after your deductible is met. Medicare’s coinsurance is roughly 20% of your incurred health care costs.
The process that determines the order in which plans pay for covered services if you have more than one plan.
A flat amount that is paid to the health care provider at the time of service. You’ve probably encountered a copay during visits to the doctor or dentist.
A type of Medicare plan that’s only available in certain states. Cost plans combine features of Part A, Part B, and Medicare Advantage, allowing beneficiaries to have Original Medicare coverage, as well as access to out-of-network providers. Some Medicare Cost plans also offer Part D coverage.
The amount, or share, of healthcare expenses that beneficiaries pay out of their own pocket. This includes deductibles, copayments, and coinsurance.
Limitations that a health plan puts on certain covered services to manage costs and ensure services are being used appropriately. Restrictions might include prior authorization (needing approval from Medicare), quantity limits (limiting certain medications or services over a specific period), and step therapy (requiring a trial of a lower-cost medication before covering a more expensive option).
The amount you must pay out-of-pocket each year before your coverage for health care begins. The lower the annual deductible, the higher the monthly premium. Many plans have high-deductible options in order to offer low monthly premiums.
A medical condition that qualifies an individual for Social Security and/or Medicare. Conditions must meet certain criteria, like having a significant impact on physical and mental abilities for an extended period of time.
The process of ending your current Medicare plan. Beneficiaries may disenroll from their current plan to switch to a new plan during specific enrollment periods, like the Annual Enrollment Period.
Medical devices and supplies that are used in the home, designed for repeated use, and serve a medical purpose. Typically, DME will need to be prescribed as medically necessary by your doctor or healthcare provider. Common examples include walkers, wheelchairs, blood glucose monitors, and oxygen equipment.
The form/process for individuals to apply for a Medicare Advantage plan. The application typically requires your Medicare number and information about your current coverage.
A document sent by your Medicare plan that outlines coverage details, how much you can expect to pay, and how to access service. Evidence of Coverage is typically sent every year.
The list of prescription drugs that are covered by a Medicare Part D plan. Each drug will fall into a tier that dictates how much of the cost will be paid by insurance. You receive a new formulary each year.
Rights that you have in some situations when an insurance company must offer you certain Medigap plans. In these situations, insurance carriers must sell you a plan that covers your pre-existing conditions and does not charge more for certain coverages.
A type of Medicare Advantage plan that offers coverage through a private insurance agency. Individuals with an HMO usually must receive care from providers in the plan’s network, although exceptions may be made for emergency care and out-of-area urgent care. Prescription drugs are also covered in many HMOs.
A questionnaire or survey that assesses your overall health and any risk factors. Information gathered can be used to create personalized care plans and detect health issues early. Questions cover things like:
The 7-month Initial Enrollment Period around your 65th birthday when you first become eligible for Medicare coverage. This period allows you to choose and enroll in Medicare coverage starting 3 months before your birthday month.
An additional amount that Medicare beneficiaries may have to pay if they don’t sign up for a Medicare drug plan within 63 or more days after their Initial Enrollment Period ends. The exact amount is calculated by multiplying 1% of the national base beneficiary premium times the number of full months without qualifying coverage. The penalty is then added to your monthly Part D premium.
A Medicare Program designed to help people with limited income and resources pay for Medicare Part D coverage and prescription drug costs. To qualify, individuals must meet certain criteria set by the Social Security Administration.
A metric used to gauge how effectively Medicare Advantage (Part C) and Medicare Part D spent their premium revenue on healthcare claims versus administrative costs. The Affordable Care Act requires insurance companies to spend at least 80% or 85% on health care, depending on certain factors.
Healthcare services or supplies that are needed to diagnose or treat medical conditions, diseases, illnesses, injuries, or other symptoms. Medicare uses this system to decide whether a particular service or item will be covered. Typically, your doctor or other healthcare provider will provide a Certificate of Medical Necessity that can be submitted for coverage.
Sometimes called “Original Medicare” or “Basic Medicare,” this includes Part A (hospital insurance) and Part B (medical insurance) for eligible beneficiaries. Together, these Parts cover about 80% of health care costs.
An all-in-one Medicare policy that includes Part A and Part B and often includes other coverage (like prescription drugs, dental, vision, and/or hearing). Medicare Advantage plans are offered by private insurance companies, so plan coverage and all out-of-pocket costs are different.
An identification card issued to those enrolled in Medicare by the Centers for Medicare & Medicaid Services. The card is typically red, white, and blue and has your unique Medicare number, as well as coverage information.
The protections and entitlements that an individual with Original Medicare is entitled to. Additional rights are available for those with Medicare Advantage, Medicare Part D, and other Medicare plans outside of Original Medicare. A list of rights can be found on the Medicare.gov website.
State-run programs that help low-income Medicare participants pay for some or all of their out-of-pocket Medicare costs. There are four MSPs available:
You can apply through their state Medicaid office to see if you qualify for any of these programs.
A detailed report that Original Medicare beneficiaries receive every three months. The report outlines medical services and supplies that were billed to Medicare during that period of time, what Medicare paid, and what you might still owe to providers. If you didn’t receive any medical services or supplies during that time, you won’t get an MSN.
Also called “Medigap”, Medicare Supplement Insurance helps fill the “gaps” in Medicare coverage to mitigate costs and offer Medicare beneficiaries peace of mind. This helps you account for the 20% coinsurance that comes with Medicare.
For Medicare Advantage policyholders to make changes to their health insurance. From Jan. 1 – Mar. 31 each year, Medicare Advantage policyholders can make a one-time change in policy or cancel Medicare Advantage in favor of Original Medicare.
Each insurance carrier has its own unique network of providers. While Original Medicare is widely accepted at most providers throughout the country, Medicare Advantage and Part D plans will have their own networks because they are administered by private insurance carriers.
The portion of medical costs that you must pay on your own. Out-of-pocket costs can include copayments, deductibles, and premiums.
The maximum amount that you would have to pay for covered healthcare services in a single year. Once the OOPM is reached, your plan should cover 100% of eligible costs for the remainder of the plan year. Your OOPM resets each year.
Medicare’s hospital insurance. When you apply to Medicare, you are automatically enrolled in the Part A plan. Part A covers about 80% of your inpatient costs.
Medicare Part B covers outpatient care, including doctor visits, routine and emergency medical services, and some forms of preventative care.
A Part B premium reduction benefit offered by select Medicare Part C plans, if you are also enrolled in Part B and pay your own premium. The Medicare Advantage plan carrier will pay some or all of your Part B monthly premium. The availability of this benefit depends on your location.
See the definition for Medicare Advantage (Part C) above.
Medicare’s Prescription Drug Coverage. Part D is optional, but it can greatly reduce your out-of-pocket costs, since Medicare does not cover prescription drugs. These plans are provided by private insurance companies and can differ in each state. Be aware: if you don’t enroll in Part D right away, but choose to do so later, late enrollment penalties will apply.
A type of Medicare Advantage plan offered by private insurance companies. PPOs offer lower prices for in-network providers. You can still go to out-of-network providers, but will typically end up paying more.
Services like screenings, vaccinations, and annual wellness visits that help prevent illnesses, detect health issues early, and manage chronic conditions. Medicare covers a variety of preventive services at little to no cost.
If you have more than one type of health insurance, your primary insurance is the plan that pays for medical expenses first.
The process in which a healthcare provider must get approval from Medicare before granting services or items to a beneficiary. This process helps ensure that requests are medically necessary and meet coverage criteria.
A restriction on the amount of medication or healthcare supplies that Medicare will cover during a certain period, typically for Medicare Part D and Medicare Advantage plans.
The process that takes place when you or another party involved in your initial claim requests a review of the decision made by Medicare or their Medicare health plan. A redetermination is usually requested when you think coverage was wrongly denied.
The geographic area where a Medicare plan provides healthcare services to its members. It’s also where you’ll usually find in-network doctors and healthcare facilities.
A type of care provided by trained medical professionals like registered nurses, licensed practical nurses, and physical/occupational therapists. This type of care can be covered by Medicare Part A for a limited amount of time if you meet certain criteria.
An independent agency of the U.S. federal government that administers a social program including retirement, disability, and survivors’ benefits. Chances are you or people you know are part of the Social Security program.
Social Security Disability Insurance (SSDI)
A federal program that provides financial assistance to individuals who are unable to work due to a qualifying disability. Those who qualify for SSDI are typically also eligible for Medicare, although there is a 24-month waiting period from the time SSDI benefits begin.
Allows you to procure important health care coverage as soon as possible — even outside of Medicare’s designated enrollment periods. When certain situations occur, like loss of employment or a change in marital status, you can qualify for a Special Enrollment Period.
A type of Medicare Advantage plan that provides targeted care and services to people with specific health conditions and needs. Eligibility depends on whether or not you have Medicare Part A and Part B, your location, and if you meet the requirements for one of the three types of SNPs:
Additional service and coverage that goes beyond what Original Medicare would cover, but can usually be covered through Medicare Advantage. Examples include:
A system used by the Centers for Medicare & Medicaid to measure the quality and performance of Medicare Advantage (Part C) and Medicare Prescription Drug (Part D) plans. Plans are rated on a five-star scale, with one being the lowest score and five being the highest.
Disclaimer:
The information provided in this blog post is intended for general informational purposes only and does not constitute medical advice. It is not a substitute for professional medical consultation or treatment. Always consult with a qualified healthcare provider for any questions you may have regarding a medical condition.
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