Don’t let Medicare terminology surprise you. Consider Bev, a 66-year-old retiree who opted out of Medicare Parts C and D due to good health and minimal care needs. Although many vaccines are covered under Medicare Parts A and B, she was surprised to find out her annual shingles vaccine, recommended for adults over the age of 50, was not included in her coverage and is only offered under Part D.
This story, shared by Katie Spitler Bull, a New York-based nurse educator, speaker and founder of The Bullish Nurse, is just one of many examples of how not understanding Medicare coverage can lead to frustration later on.
“This can be very disruptive for some older Americans, particularly on fixed incomes,” she notes. “Investing time in understanding your coverage and the terminology is key.”
There’s a lot to know about Medicare, including many terms associated with this insurance program that you’ll need to understand when signing up for and using your Medicare benefits. Here is a glossary of some of Medicare’s most common terms.
Medicare
Medicare is the federal health insurance program for people age 65 and older. It also covers people younger than 65 who have end-stage renal disease, requiring dialysis or a kidney transplant, or amyotrophic lateral sclerosis (also known as ALS or Lou Gehrig’s disease). Individuals with disabilities who meet the Social Security Administration criteria may also qualify for Medicare. Visit SSA.gov for a full list of disabilities and how to qualify.
Medicare does not deny coverage based on preexisting conditions, meaning you’re still eligible for Medicare coverage regardless of any previous medical condition, like cancer or diabetes. Even if you already have medication or treatment needs from previous conditions, Medicare cannot refuse your coverage or charge you more for your current conditions.
Original Medicare or Traditional Medicare
Original Medicare is the insurance program managed by the federal government. This type of coverage generally includes Medicare Part A and Part B. Under original Medicare, the government pays hospitals and doctors directly, and you can visit any doctor or hospital that accepts Medicare.
[READ The Parts of Medicare Explained: What They Cover and What They Don’t]
Medicare Part A
Medicare Part A is essentially hospital insurance. It covers different types of inpatient care, including inpatient hospital stays, care received in skilled nursing facilities, hospice care and some intermittent home health care.
[READ: What Medicare Does Not Cover.]
Medicare Part B (Medical Insurance)
Medicare Part B covers outpatient services, including doctors’ visits, laboratory and imaging tests, medical supplies and preventive services.
[Does Medicare Cover the RSV Vaccine?]
Medicare Advantage Plan (Part C)
Medicare Advantage plans, also called Medicare Part C, include coverage for both Medicare Parts A and B through a private health insurer that’s been approved by Medicare. These plans cover hospitalization, outpatient care and often prescription drug coverage bundled under one policy.
Depending on the insurer, Medicare Advantage plans may include additional benefits not covered by original Medicare, such as dental, vision and hearing benefits. Medicare Advantage plans also have a smaller coverage network, so you may have fewer providers to choose from who accept your Medicare Advantage benefits.
You cannot enroll in original Medicare and a Medicare Advantage plan simultaneously. About half of Medicare beneficiaries are enrolled in Medicare Advantage plans.
Medicare Prescription Drug Plan (Part D)
Medicare Part D plans are private insurance policies that add prescription drug coverage to original Medicare, some Medicare cost plans or Medicare Advantage plans like Medicare private-fee-for-service plans or Medicare medical savings account plans.
There are four coverage phases in Medicare Part D:
— Deductible phase, where you need to spend enough — or meet your deductible — before you receive drug benefits
— Initial coverage phase, after you’ve met your deductible and receive coverage until you and your plan have spent a certain amount on covered drugs.
— Coverage gap (“donut hole”) phase, where you pay a higher percentage for your medications after reaching a spending limit (more on that below)
— Catastrophic phase, once you’ve spent over a specified out-of-pocket limit ($8,000 in 2024), and your drugs are covered for the remainder of the calendar year
Medigap Policy
is supplemental insurance sold by private insurance companies to fill “gaps” in original Medicare coverage. These policies help pay for copayments, deductibles and health care when traveling outside the U.S. that original Medicare does not.
You cannot combine Medicare Advantage plans with Medigap policies, and you need to be enrolled in original Medicare Part A and Part B to qualify.
Medigap Open Enrollment Period
The open enrollment period for Medigap plans is a six-month window that starts the first month you turn age 65 (or are older) and are enrolled in Medicare Part B. Coverage is guaranteed during this period. In addition, you cannot be denied coverage or charged higher premiums because of current or past health problems.
If you want Medigap coverage and missed the initial Medigap open enrollment period, you’ll have to undergo medical underwriting. Based on your preexisting conditions and current health, your insurer could deny you from enrolling in Medigap or charge higher premiums.
Additional Terms to Know
Advance coverage decision
A notice you get from a Medicare Advantage Plan letting you know in advance whether it will cover a particular service.
Annual enrollment period
Each year between October 15 and December 7, you can change your Medicare Advantage or Part D prescription drug plans for the following year. You can also switch from original Medicare to Medicare Advantage or from Medicare Advantage back to original Medicare.
Annual Notice of Change
A notice your Medicare plan sends each fall to alert you to any changes in coverage, costs or service areas that will take effect in January.
Benefit period
A benefit period is the way original Medicare measures your use of hospital and skilled nursing facility, or SNF, services. A benefit period starts the day you’re admitted as an inpatient in a hospital or SNF. It ends after 60 consecutive days without a beneficiary receiving care or up to a maximum of 100 days.
Medicare’s inpatient hospital deductible is paid at the start of each benefit period. A new benefit period begins when you are admitted to a hospital or SNF after one benefit period has ended. There is no limit to the number of benefit periods.
With original Medicare, days 1 through 20 receive full benefit coverage. Days 21-100 cost $204 per day. After day 100, you are responsible for the full cost as each benefit period will only cover a maximum of 100 days.
Centers for Medicare & Medicaid Services
CMS is the government agency that oversees Medicare and Medicaid, providing coverage to the millions of Medicare beneficiaries. CMS also regulates health care quality, equitability and compliance.
If you have a complaint about care you’ve received under Medicare, a violation of your protected health information or a billing complaint, you can file a complaint for CMS to investigate.
Coinsurance
The portion of covered medical services you are responsible for after meeting deductibles, usually paid as a percentage of the total cost. With original Medicare, coinsurance is usually 20%.
Coordination of benefits
A way to determine which health plan pays a medical claim first when you’re covered by more than one insurance policy. For example, if you have insurance through an employer in addition to Medicare.
Copayment
A set dollar amount you’re required to pay for medical services or supplies, such as $10 for a prescription or doctor’s visit.
Coverage gap
Most Medicare prescription drug plans have a gap in coverage, which is also called the “donut hole.” In the coverage gap, you pay 25% of the cost of the drug regardless if it’s brand or generic.
“This is the most expensive stage out of 4 drug stages,” explains Jessica Topolski, a Medicare specialist at AZ Health Insurance Brokers in Phoenix.
It’s a temporary limit on what your drug plan will cover that begins after you and your plan have spent a certain amount on covered drugs ($5,030 in 2024). Once you reach the coverage gap, you qualify for savings on both brand-name and generic drugs.
Creditable prescription drug coverage
A health plan with prescription drug coverage that is likely to pay at least as much as Medicare’s standard prescription drug coverage is considered creditable. To avoid paying a penalty for signing up late for a Part D drug plan, you must have alternate insurance that is considered creditable when you become eligible for Medicare.
Custodial care
Custodial care is non-nursing and non-medical care a person may need to perform their activities of daily living. These include:
— Getting dressed
— Bathing
— Grooming
— Eating
It doesn’t take medical training to assist with these activities, but they are still an essential part of daily life. However, Medicare does not cover custodial care in long-care care facilities or at home.
Durable medical equipment
Medicare covers certain medically necessary equipment for you to rent or buy, such as:
— Blood sugar monitors
— Hospital beds
— Walkers and wheelchairs
DME benefits are covered under Medicare Part B.
Some Medicare Advantage plans may cover equipment not covered by original Medicare, such as:
— Personal emergency alert response systems, like Life Alert
— Incontinence supplies
— Bath seats
Deductible
The amount you must pay for health care services before your Medicare plan begins to pay and help cover your costs.
Extra Help
A Medicare program to help people with limited income and resources pay for the premiums, deductibles
and coinsurance associated with their Medicare prescription drug plan.
Formulary
A list of prescription medications covered by your Part D prescription drug plan or Medicare Advantage prescription drug plan. Original Medicare categorizes drugs into tiers within the formulary, with lower tiers requiring less cost-sharing amounts — such as copayments and coinsurance.
General enrollment period
People who don’t sign up for Medicare Part A and/or Part B when they are first eligible can do so during the general enrollment period. GEP runs each year between January 1 and March 31.
Late enrollment penalty
For Medicare Part D, there is a late enrollment penalty. The penalty is based on how many months you had not elected Part D coverage. You may also have to pay late enrollment penalties for Medicare Part A and Part B, depending on your circumstances.
Medicare Savings Program
This state-administered program helps people with limited income and assets pay some or all of their Medicare premiums, deductibles, coinsurance and copayments. The eligibility requirements for Medicare Savings Programs are largely based on household income and resource availability, like stocks, assets and retirement funds. To apply, contact your state’s Medicaid office for more information.
Medicare Summary Notice
MSNs are notices you receive after your doctor or medical supply vendor submits a claim to Medicare for services you received. The MSN explains what your health care provider or supplier billed Medicare, the Medicare-approved amount, how much Medicare paid and what you must pay.
Network pharmacies
Medicare drug plans contract with pharmacies that agree to provide members with services and supplies at a discounted price. Some Medicare plans will not cover your medicines unless you get them filled at a participating network pharmacy.
Preferred pharmacy
Preferred pharmacies are part of a Medicare drug plan’s network. Your out-of-pocket costs for prescription drugs may be lower if you get them filled at a preferred pharmacy.
Mail-order programs
Some prescription drug plans and Medicare Advantage prescription drug plans offer mail-order programs that allow you to fill a 90-day supply of your covered medications and have them delivered to your home.
Prior authorization
Medicare prescription drug plans require that you get approval before you fill your prescription for certain medications in order for them to be covered by the plan. Many Medicare Advantage plans also require prior authorizations for some medical services.
Respite care
Sometimes, primary caregivers need some time off to rest and recuperate. Respite care provides temporary relief for these caregivers to put their loved one in the hands of a home care agency or senior care facility. Medicare beneficiaries may receive respite care benefits under Part A if they are receiving hospice care.
Skilled nursing care
Skilled nursing care, which is covered under Medicare Part A, includes tasks like:
— Wound dressings
— IV infusions
— Catheter insertions
State Health Insurance Assistance Program (SHIP)
These state programs offer free local health insurance counseling for people with Medicare coverage or caregivers. You can find your SHIP at shiphelp.org
or by calling 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048.
The Bottom Line
Take the time this year to understand Medicare terminology to avoid surprises in your elected coverage.
Understanding Medicare terminology can be challenging, but it is critical to navigate the options, make informed decisions and ultimately avoid unnecessary costs.
“This knowledge can help prevent unexpected bills and avoid care disruptions,” Bull says.
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Medicare Glossary originally appeared on usnews.com
