Glossary Of Medicare Terms

Catastrophic Coverage Stage - The stage in the Part D Drug Benefit where you pay a low copayment or coinsurance for your drugs after you or other qualified parties on your behalf have spent $4,550 in covered drugs during the covered year.

Coinsurance - A payment you make for your share of the cost of certain covered services you receive. Coinsurance is a percentage of the cost of the service as described in the plan’s Evidence of Coverage.

Copayment - A fee you pay to your health care provider at the time of service as described in the plan’s Evidence of Coverage.

Cost-sharing - Cost-sharing refers to amounts that a member has to pay when drugs or services are received. It includes any combination of the following three types of payments: (1) any deductible amount a plan may impose before drugs or services are covered; (2) any fixed “copayment” amounts that a plan may require be paid when specific drugs or services are received; or (3) any “coinsurance” amount that must be paid as a percentage of the total amount paid for a drug or service.

Deductible - The amount you must pay before our plan begins to pay its share of your covered medical services or drugs.

Exclusion - Items or services that are excluded from coverage and neither Medicare nor your plan cover. You are responsible for paying for excluded items or services along with any applicable cost sharing, co-payments, or coinsurance amounts.

Formulary - A list of covered drugs provided by the Plan.

Late Enrollment Penalty - An amount added to your monthly premium for Medicare drug coverage if you go without creditable coverage (coverage that expects to pay, on average, at least as much as standard Medicare prescription drug coverage) for a continuous period of 63 days or more. You pay this higher amount as long as you have a Medicare drug plan. There are some exceptions.

Low Income Subsidy/Extra Help - A Medicare program to help people with limited income and resources pay Medicare prescription drug program costs, such as premiums, deductibles, and coinsurance.

Medicaid (or Medical Assistance) - A joint Federal and State program that helps with medical costs for some people with low incomes and limited resources. Medicaid programs vary from state to state, but most health care costs are covered if you qualify for both Medicare and Medicaid.

Medicare - The Federal health insurance program for people 65 years of age or older, some people under age 65 with certain disabilities, and people with End-Stage Renal Disease (generally those with permanent kidney failure who need dialysis or a kidney transplant).

Medicare Advantage Organization - Medicare Advantage Organizations are run by private companies and may contract with Medicare to offer a number of different Medicare Advantage (MA) Plans. They give you more options, and sometimes, extra benefits. These plans are still part of the Medicare Program and are also called Medicare “Part C.” They provide all your Part A (Hospital) and Part B (Medical) coverage. Some may also provide Part D (prescription drug) coverage.

Medicare Part A - Hospital Insurance benefits including inpatient hospital care, skilled nursing facility care, home health agency care and hospice care offered through Medicare.

Medicare Part B - Supplementary medical insurance that is optional and requires a monthly premium. Part B covers physician services (in both hospital and non-hospital settings). Other Part B services include doctor services, outpatient care, Durable Medical Equipment, diagnostic tests, ambulance services, some prescription drugs, preventative services and certain other services.

Medicare Part C - Also called Medicare Advantage plans. A plan offered by a private company that contracts with Medicare to provide you with all your Medicare Part A (Hospital) and Part B (Medical) benefits. A Medicare Advantage plan can be an HMO, PPO, a Private Fee-for-Service (PFFS) plan, or a Medicare Medical Savings Account (MSA) plan. In most cases, Medicare Advantage plans also offer Medicare Part D (prescription drug coverage). These plans are called Medicare Advantage Plans with Prescription Drug Coverage. Everyone who has Medicare Part A and Part B is eligible to join any Medicare Health Plan that is offered in their area, except people with End-Stage Renal Disease (unless certain exceptions apply).

Medicare Part D - The voluntary Medicare Prescription Drug Benefit Program. (For ease of reference, we will refer to the prescription drug benefit program as Part D.) Certain categories of drugs were specifically excluded by Congress from being covered as Part D drugs.

Network - A group of health care providers under contract with the plan that is licensed and/or certified by Medicare with the purpose of delivering or furnishing health care services. In most situations, plan members must visit a provider within their plan’s network.

Original Medicare (“Traditional Medicare” or “Fee-for-service” Medicare) - Original Medicare is offered by the government, and not a private health plan like Medicare Advantage plans and prescription drug plans. Under Original Medicare, Medicare services are covered by paying doctors, hospitals and other health care providers payment amounts established by Congress. You can see any doctor, hospital, or other health care provider that accepts Medicare. You must pay the deductible. Medicare pays its share of the Medicare-approved amount, and you pay your share. Original Medicare has two parts: Part A (Hospital Insurance) and Part B (Medical Insurance) and is available everywhere in the United States, but does not work outside the United States.

Out-of-Pocket Maximum - The maximum amount that you pay out-of-pocket during the calendar year, usually at the time services are received, for covered Part A (Hospital Insurance) and Part B (Medical Insurance) services. Plan premiums and Medicare Part A and Part B premiums do not count toward the out-of-pocket maximum.

Primary Care Physician (PCP) - A health care professional you select to coordinate your health care.

Prior Authorization - Approval in advance to get certain services or drugs. Some in-network medical services or drugs are covered only if your doctor or other network provider gets “prior authorization” from your Plan.

Service Area - “Service area” is the geographic area approved by the Centers for Medicare & Medicaid Services (CMS) within which an eligible individual may enroll in a certain plan, and in the case of network plans, where a network must be available to provide services.

Star Ratings - The Medicare Program rates how well Medicare health and drug plans perform in different categories (for example, detecting and preventing illness, ratings from patients, patient safety, drug pricing and customer service). The information is an overall plan rating of each plan's performance and is available for all plans on www.medicare.gov.

Step Therapy - A utilization tool that requires you to first try another drug to treat your medical condition before we will cover the drug your physician may have initially prescribed.

Page Last Updated: June 3, 2011