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Common Medicare Terms

Advance coverage decision
A notice you get from a Medicare Advantage Plan letting you know in advance whether it will cover a particular service.

Advance directive
A written document stating how you want medical decisions to be made if you lose the ability to make them for yourself. It may include a living will and a durable power of attorney for health care.

ALS
Amyotrophic lateral sclerosis, also known as Lou Gehrig’s disease.

Ambulatory surgical center
A facility where certain surgeries may be performed for patients who aren’t expected to need more than 24 hours of care.

Appeal
An appeal is the action you can take if you disagree with a coverage or payment decision made by Medicare, your Medicare health plan, or your Medicare Prescription Drug Plan. You can appeal if Medicare or your plan denies one of these: • Your request for a health care service, supply, item, or prescription drug that you think you should be able to get • Your request for payment for a health care service, supply, item, or prescription drug you already got • Your request to change the amount you must pay for a health care service, supply, item or prescription drug. You can also appeal if Medicare or your plan stops providing or paying for all or part of a service, supply, item, or prescription drug you think you still need.

Assignment
An agreement by your doctor, provider, or supplier to be paid directly by Medicare, to accept the payment amount Medicare approves for the service, and not to bill you for any more than the Medicare deductible and coinsurance.

Benefit period
The way that Original Medicare measures your use of hospital and skilled nursing facility (SNF) services. A benefit period begins the day you’re admitted as an inpatient in a hospital or SNF. The benefit period ends when you haven’t gotten any inpatient hospital care (or skilled care in a SNF) for 60 days in a row. If you go into a hospital or a SNF after one benefit period has ended, a new benefit period begins. You must pay the inpatient hospital deductible for each benefit period. There’s no limit to the number of benefit periods.

Certified (certification)
See “Medicare-certified provider.”

CHAMPVA
A health care benefit for dependents of qualifying veterans.

Claim
A request for payment that you submit to Medicare or other health insurance when you get items and services that you think are covered.

Coinsurance
An amount you may be required to pay as your share of the cost for services after you pay any deductibles. Coinsurance is usually a percentage (for example, 20%).

Co-payment
An amount you may be required to pay as your share of the cost for a medical service or supply, like a doctor’s visit, hospital outpatient visit, or prescription drug. A co-payment is usually a set amount, rather than a percentage. For example, you might pay $10 or $20 for a doctor’s visit or prescription drug.

Coverage determination (Part D)
The first decision made by your Medicare drug plan (not the pharmacy) about your drug benefits, including:
• Whether a particular drug is covered
• Whether you have met all the requirements for getting a requested drug
• How much you’re required to pay for a drug
• Whether to make an exception to a plan rule when you request it
• The drug plan must give you a prompt decision (72 hours for standard requests, 24 hours for expedited requests). If you disagree with the plan’s coverage determination, the next step is an appeal.

Coverage gap
A period of time in which you pay higher cost sharing for prescription drugs until you spend enough to qualify for catastrophic coverage. The coverage gap (also called the “donut hole”) starts when you and your plan have paid a set dollar amount for prescription drugs during that year.

Creditable coverage (Medigap)
Previous health insurance coverage that can be used to shorten a pre-existing condition waiting period under a Medigap policy.

Creditable prescription drug coverage
Prescription drug coverage (for example, from an employer or union) that’s expected to pay, on average, at least as much as Medicare’s standard prescription drug coverage. People who have this kind of coverage when they become eligible for Medicare can generally keep that coverage without paying a penalty, if they decide to enroll in Medicare prescription drug coverage later.

Custodial care
Non-skilled personal care, like help with activities of daily living like bathing, dressing, eating, getting in or out of a bed or chair, moving around, and using the bathroom. It may also include the kind of health-related care that most people do themselves, like using eye drops. In most cases, Medicare doesn’t pay for custodial care.

Deductible
The amount you must pay for health care or prescriptions before Original Medicare, your Medicare Advantage Plan, your Medicare drug plan, or your other insurance begins to pay.

Durable Medical Equipment (DME)
Certain medical equipment, like a walker, wheelchair, or hospital bed, that’s ordered by your doctor for use in the home.

Durable power of attorney
A legal document that names someone else to make health care decisions for you. This is helpful if you become unable to make your own decisions.

End-Stage Renal Disease (ESRD)
Permanent kidney failure that requires a regular course of dialysis or a kidney transplant.

Exception
A type of Medicare prescription drug coverage determination. A formulary exception is a drug plan’s decision to cover a drug that’s not on its drug list or to waive a coverage rule. A tiering exception is a drug plan’s decision to charge a lower amount for a drug that’s on its non-preferred drug tier. You or your prescriber must request an exception, and your doctor or other prescriber must provide a supporting statement explaining the medical reason for the exception.

Excess charge
If you have Original Medicare, and the amount a doctor or other health care provider is legally permitted to charge is higher than the Medicare-approved amount, the difference is called the excess charge.

Extra Help
A Medicare program to help people with limited income and resources pay Medicare prescription drug program costs, like premiums, deductibles, and coinsurance.

Formulary
A list of prescription drugs covered by a prescription drug plan or another insurance plan offering prescription drug benefits. Also called a drug list.

Grievance
A complaint about the way your Medicare health plan or Medicare drug plan is giving care. For example, you may file a grievance if you have a problem calling the plan or if you’re unhappy with the way a staff person at the plan has behaved towards you. However, if you have a complaint about a plan’s refusal to cover a service, supply, or prescription, you file an appeal.

Group health plan
In general, a health plan offered by an employer or employee organization that provides health coverage to employees and their families.

Guaranteed issue rights (also called “Medigap protections”)
Rights you have in certain situations when insurance companies are required by law to sell or offer you a Medigap policy. In these situations, an insurance company can’t deny you a Medigap policy, or place conditions on a Medigap policy, like exclusions for pre-existing conditions, and can’t charge you more for a Medigap policy because of a past or present health problem.

Guaranteed renewable policy
An insurance policy that can’t be terminated by the insurance company unless you make untrue statements to the insurance company, commit fraud, or don’t pay your premiums. All Medigap policies issued since 1992 are guaranteed renewable.

Health care provider
A person or organization that’s licensed to give health care. Doctors, nurses, and hospitals are examples of health care providers.

Home health agency
An organization that provides home health care.

Home health care
Health care services and supplies a doctor decides you may get in your home under a plan of care established by your doctor. Medicare only covers home health care on a limited basis as ordered by your doctor.

Hospice
A special way of caring for people who are terminally ill. Hospice care involves a team-oriented approach that addresses the medical, physical, social, emotional, and spiritual needs of the patient. Hospice also provides support to the patient’s family or caregiver.

Lifetime reserve days
In Original Medicare, these are additional days that Medicare will pay for when you’re in a hospital for more than 90 days. You have a total of 60 reserve days that can be used during your lifetime. For each lifetime reserve day, Medicare pays all covered costs except for a daily coinsurance.

Limiting charge (Excess Charge)
In Original Medicare, the highest amount of money you can be charged for a covered service by doctors and other health care suppliers who don’t accept assignment. The limiting charge is 15% over Medicare’s approved amount. The limiting charge only applies to certain services and doesn’t apply to supplies or equipment.

Living will
A written legal document, also called a “medical directive” or “advance directive.” It shows what type of treatments you want or don’t want in case you can’t speak for yourself, like whether you want life support. Usually, this document only comes into effect if you’re unconscious.

Long-term care
Services that include medical and non-medical care provided to people who are unable to perform basic activities of daily living, like dressing or bathing. Long-term supports and services can be provided at home, in the community, in assisted living, or in nursing homes. Individuals may need long-term supports and services at any age. Medicare and most health insurance plans don’t pay for long-term care.

Medicaid
A joint federal and state program that helps with medical costs for some people with limited income and resources. Medicaid programs vary from state to state, but most health care costs are covered if you qualify for both Medicare and Medicaid.

Medical underwriting
The process that an insurance company uses to decide, based on your medical history, whether to take your application for insurance, whether to add a waiting period for pre-existing conditions (if your state law allows it), and how much to charge you for that insurance.

Medically necessary
Health care services or supplies needed to diagnose or treat an illness, injury, condition, disease, or its symptoms and that meet accepted standards of medicine.

Medicare
Medicare is the federal health insurance program for: • People who are 65 or older • Certain younger people with disabilities People with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD)

Medicare Advantage Plan (Part C)
A type of Medicare health plan offered by a private company that contracts with Medicare. Medicare Advantage Plans provide all of your Part A and Part B benefits, with a few exclusions, for example, certain aspects of clinical trials which are covered by Original Medicare even though you’re still in the plan.
Medicare Advantage Plans include:
• Health Maintenance Organizations
• Preferred Provider Organizations
• Private Fee-for-Service Plans
• Special Needs Plans
• Medicare Medical Savings Account Plans
If you’re enrolled in a Medicare Advantage Plan:
• Most Medicare services are covered through the plan
• Most Medicare services aren’t paid for by Original Medicare
• Most Medicare Advantage Plans offer prescription drug coverage.

Medicare Cost Plan
A type of Medicare health plan available in some areas. In a Medicare Cost Plan, if you get services outside of the plan’s network without a referral, your Medicare-covered services will be paid for under Original Medicare (your Cost Plan pays for emergency services or urgently needed services).

Medicare Part A (Hospital Insurance)
Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care.

Medicare Part B (Medical Insurance)
Part B covers certain doctors’ services, outpatient care, medical supplies, and preventive services.

Medicare plan
Any way other than Original Medicare that you can get your Medicare health or drug coverage. This term includes all Medicare health plans and Medicare drug plans.

Medicare Preferred Provider Organization (PPO) Plan
A type of Medicare Advantage Plan (Part C) available in some areas of the country in which you pay less if you use doctors, hospitals, and other health care providers that belong to the plan’s network. You can use doctors, hospitals, and providers outside of the network for an additional cost.

Medicare drug coverage (Part D)
Optional benefits for prescription drugs available to all people with Medicare for an additional charge. This coverage is offered by insurance companies and other private companies approved by Medicare.
• Medicare drug plan (Part D)
• Part D adds prescription drug coverage to:
• Original Medicare
• Some Medicare Cost Plans
• Some Medicare Private-Fee-for-Service Plans
• Medicare Medical Savings Account Plans
These plans are offered by insurance companies and other private companies approved by Medicare. Medicare Advantage Plans may also offer prescription drug coverage that follows the same rules as Medicare drug plans.

Medicare Health Maintenance Organization (HMO) Plan
A type of Medicare Advantage Plan (Part C) available in some areas of the country. In most HMOs, you can only go to doctors, specialists, or hospitals on the plan’s list except in an emergency. Most HMOs also require you to get a referral from your primary care physician.

Medicare health plan
Generally, a plan offered by a private company that contracts with Medicare to provide Part A and Part B benefits to people with Medicare who enroll in the plan. Medicare health plans include all Medicare Advantage Plans, Medicare Cost Plans, and Demonstration/Pilot Programs. Program of All-inclusive Care for the Elderly (PACE) organizations are special types of Medicare health plans. PACE plans can be offered by public or private companies and provide Part D and other benefits in addition to Part A and Part B benefits.

Medicare Medical Savings Account (MSA) Plan
MSA Plans combine a high deductible Medicare Advantage Plan and a bank account. The plan deposits money from Medicare into the account. You can use the money in this account to pay for your health care costs, but only Medicare-covered expenses count toward your deductible. The amount deposited is usually less than your deductible amount so you generally will have to pay out-of-pocket before your coverage begins.

Medicare Preferred Provider Organization (PPO) Plan
A type of Medicare Advantage Plan (Part C) available in some areas of the country in which you pay less if you use doctors, hospitals, and other health care providers that belong to the plan’s network. You can use doctors, hospitals, and providers outside of the network for an additional cost.

Medicare Private Fee-For-Service (PFFS) Plan
A type of Medicare Advantage Plan (Part C) in which you can generally go to any doctor or hospital you could go to if you had Original Medicare, if the doctor or hospital agrees to treat you. The plan determines how much it will pay doctors and hospitals, and how much you must pay when you get care.
A Private Fee-For-Service Plan is very different than Original Medicare, and you must follow the plan rules carefully when you go for health care services. When you’re in a Private Fee-For-Service Plan, you may pay more or less for Medicare-covered benefits than in Original Medicare.

Medicare Savings Program
A Medicaid program that helps people with limited income and resources pay some or all of their Medicare premiums, deductibles, and coinsurance.

Medicare SELECT
A type of Medigap policy that may require you to use hospitals and, in some cases, doctors within its network to be eligible for full benefits.

Medicare Special Needs Plan (SNP)
A special type of Medicare Advantage Plan (Part C) that provides more focused and specialized health care for specific groups of people, like those who have both Medicare and Medicaid, who live in a nursing home, or have certain chronic medical conditions.

Medicare Summary Notice (MSN)
A notice you get after the doctor, other health care provider, or supplier files a claim for Part A or Part B services in Original Medicare. It explains what the doctor, other health care provider, or supplier billed for, the Medicare-approved amount, how much Medicare paid, and what you must pay.

Medicare-approved amount
In Original Medicare, this is the amount a doctor or supplier that accepts assignment can be paid. It may be less than the actual amount a doctor or supplier charges. Medicare pays part of this amount and you’re responsible for the difference.

Medicare-certified provider
A health care provider (like a home health agency, hospital, nursing home, or dialysis facility) that’s been approved by Medicare. Providers are approved or “certified” by Medicare if they’ve passed an inspection conducted by a state government agency. Medicare only covers care given by providers who are certified.

Medigap
Medicare Supplement Insurance sold by private insurance companies to fill “gaps” in Original Medicare coverage.

Medigap Open Enrollment Period
A one-time only, 6-month period when federal law allows you to buy any Medigap policy you want that’s sold in your state. It starts in the first month that you’re covered under Part B and you’re age 65 or older. During this period, you can’t be denied a Medigap policy or charged more due to past or present health problems. Some states may have additional open enrollment rights under state law.

Medigap policy
Medicare Supplement Insurance sold by private insurance companies to fill “gaps” in Original Medicare coverage.

Original Medicare
Original Medicare is a fee-for-service health plan that has two parts: Part A (Hospital Insurance) and Part B (Medical Insurance). After you pay a deductible, Medicare pays its share of the Medicare-approved amount, and you pay your share (coinsurance and deductibles).

Out-of-pocket costs
Health or prescription drug costs that you must pay on your own because they aren’t covered by Medicare or other insurance.

Penalty
An amount added to your monthly premium for Part B or a Medicare drug plan (Part D) if you don’t join when you’re first eligible. You pay this higher amount as long as you have Medicare. There are some exceptions.

Point-of-service option
In a Health Maintenance Organization (HMO), this option lets you use doctors and hospitals outside the plan for an additional cost.

Power of attorney
A medical power of attorney is a document that lets you appoint someone you trust to make decisions about your medical care. This type of advance directive also may be called a health care proxy, appointment of health care agent, or a durable power of attorney for health care.

Pre-existing condition
A health problem you had before the date that new health coverage starts.

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

Preventive services
Health care to prevent illness or detect illness at an early stage, when treatment is likely to work best (for example, preventive services include Pap tests, flu shots, and screening mammograms).

Primary care doctor
The doctor you see first for most health problems. They make sure you get the care you need to keep you healthy. They also may talk with other doctors and health care providers about your care and refer you to them. In many Medicare Advantage Plans, you must see your primary care doctor before you see any other health care provider.

Prior authorization
Approval that you must get from a Medicare drug plan before you fill your prescription in order for the prescription to be covered by your plan. Your Medicare drug plan may require prior authorization for certain drugs.

Referral
A written order from your primary care doctor for you to see a specialist or get certain medical services. In many Health Maintenance Organizations (HMOs), you need to get a referral before you can get medical care from anyone except your primary care doctor. If you don’t get a referral first, the plan may not pay for the services.

Respite care
Temporary care provided in a nursing home, hospice inpatient facility, or hospital so that a family member or friend who is the patient’s caregiver can rest or take some time off.

Secondary payer
The insurance policy, plan, or program that pays second on a claim for medical care. This could be Medicare, Medicaid, or other insurance depending on the situation.

Service area
A geographic area where the plan accepts members. The plan may limit membership based on where people live. For plans that limit which doctors and hospitals you may use, it’s also generally the area where you can get routine (non-emergency) services. The plan may disenroll you if you move out of the plan’s service area.

Skilled nursing facility (SNF)
A nursing facility with the staff and equipment to give skilled nursing care and, in most cases, skilled rehabilitative services and other related health services.

Step therapy
A coverage rule used by some Medicare Prescription Drug Plans that requires you to try one or more similar, lower cost drugs to treat your condition before the plan will cover the prescribed drug.

Telemedicine
Medical or other health services given to a patient using a communications system (like a computer, phone, or television) by a practitioner in a location different than the patients.

Tiers
Groups of drugs that have a different cost for each group. Generally, a drug in a lower tier will cost you less than a drug in a higher tier.

Urgently needed care
Care that you get outside of your Medicare health plan’s service area for a sudden illness or injury that needs medical care right away but isn’t life threatening. If it’s not safe to wait until you get home to get care from a plan doctor, the health plan must pay for the care. ______________________________________________
Reference: Medicare.gov – Glossary of terms

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