As you explore your Medicare choices, you may run across some unfamiliar words or phrases. This glossary helps to explain what they mean.
ANNUAL ENROLLMENT PERIOD (AEP)
This is the national enrollment period, established by Medicare, during which all beneficiaries can make changes in how they receive coverage. The Annual Enrollment Period runs from October 15 to December 7.
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BENEFITS
The services your health plan covers, such as doctor office visits, routine physicals, etc.
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COINSURANCE
The percent of the Medicare-approved amount that you have to pay after you pay any required deductible. With Original Medicare, for example, the coinsurance is 20% of the Medicare-approved amount for doctor/specialist office visits.
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COPAY
A set amount you pay for each medical service, like $20 for a doctor visit.
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DEDUCTIBLE
The amount you must pay for health care or for prescription drugs before your Medicare plan begins to pay.
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DISENROLLMENT PERIOD
The disenrollment period runs from January 1 through February 14. This period offers a single opportunity for an individual enrolled in a Medicare Advantage plan to change to Original Medicare. You cannot drop out of a stand-alone Part D plan or change from one stand-alone Part D plan to another during this time. If you do not have Part D coverage, you will not be able to add it at this time.
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DONUT HOLE
A name for a step in some Part D plans in which you pay a higher copay or coinsurance for eligible drugs until your total out-of-pocket costs reach a designated amount. Also known as the "Coverage Gap".
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FORMULARY
A list of prescription drugs that is approved by a Medicare prescription drug plan. Formulary drugs are dispensed through participating pharmacies.
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GENERIC DRUG
A prescription drug that has the same active-ingredient formula as a Brand-Name drug.
• Generic drugs usually cost less than Brand-Name drugs
• Generic drugs are rated by the Food and Drug Administration (FDA) to be as safe and effective as Brand-Name drugs
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MEDICAID
Medicaid is a joint federal and state program that helps with medical costs for some people who have low incomes and limited resources. Most health care and prescription drug costs are covered if you qualify for both Medicare and Medicaid.
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MEDICARE ADVANTAGE PLAN
Medicare Advantage plans are authorized by "Part C" of the Medicare laws. These plans:
• Are approved by Medicare but are run by private companies
• Provide all your Medicare Part A and Part B coverage and must cover medically necessary services
• May also provide extra benefits, like eyeglasses, routine hearing exams and prescription drugs
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MEDICARE-APPROVED AMOUNT
This is the payment amount that Medicare has agreed a doctor or other provider may charge for a service or supply provided to a Medicare beneficiary. It may be less than the actual amount normally charged by a doctor or provider. Doctors can choose whether or not to agree to
accept the Medicare-approved amount as payment in full for his or her services. If a doctor agrees to accept the approved amount, he or
she is "accepting assignment."
• If the doctor "accepts assignment," the difference between the approved amount and the doctor's fee schedule may not be charged to you
• If the doctor does not accept assignment, the maximum amount you can be charged is an additional 15 percent
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MEDICARE PART A (HOSPITAL INSURANCE – ORIGINAL MEDICARE)
This is Medicare hospital insurance that helps pay for inpatient hospital stays, care in a skilled nursing facility, hospice care and some home health care. Deductible and limitations apply.
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MEDICARE PART B (MEDICAL INSURANCE – ORIGINAL MEDICARE)
This is Medicare medical insurance that helps pay for doctors' services, outpatient hospital care, durable medical equipment and some medical services that are not covered by Part A. Deductible and limitations apply.
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ORIGINAL MEDICARE
The term "Original Medicare" refers to Medicare Part A and Medicare Part B benefits combined, with no additional benefits included. Deductibles and limitations apply.
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MEDICARE PART C
Medicare Advantage plans are sometimes called "Part C." These plans are approved by Medicare but are run by private companies. They provide all your Part A and Part B coverage and must cover medically necessary services. They may also provide extra benefits, like eyeglasses, routine hearing exams and prescription drugs.
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MEDICARE PART D
The optional Medicare Prescription Drug Plan available to all people with Medicare through private companies like health plans and insurance companies. Medicare Part D can be purchased with a Medicare Advantage plan, or as a stand-alone plan with prescription drugs only.
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MEDICARE SUPPLEMENT INSURANCE, OR MEDIGAP
An insurance policy sold by private insurance companies that helps pay some deductibles or coinsurance that Original Medicare does not pay (the "gaps" in Original Medicare). There are 10 standardized policies, labeled Plan A through Plan N. (Medigap policies only work with Original Medicare.)
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OUT-OF-POCKET COSTS
Health care costs that you must pay on your own because they are not covered by Medicare or other insurance.
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PRIOR AUTHORIZATION
To be sure certain drugs or medical services are used correctly and only when truly necessary, your plan may require a "prior authorization." This means you or your doctor need to get approval from your plan before a particular drug or service will be covered.
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SPECIAL ENROLLMENT PERIOD (SEP)
A period during which, because of a specific event, individuals have the opportunity to make an election outside of the Annual or Open Enrollment Periods. Examples include, but are not limited to, change of residence outside of the plan's service area or loss of employer group coverage.
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STEP THERAPY
A type of prior authorization for some prescription medications. With step therapy, in most cases, you must first try using certain less expensive drugs that have been proven effective for most people with your condition before you can get a similar, more expensive Brand-Name drug covered.
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TIERS
A plan places prescription drugs in its formulary into different "tiers." Your drug copay can vary, depending on the tier. For example, one approach to tiers is the following:
Tier 1: Preferred Generic drugs
Tier 2: Non-Preferred Generic drugs
Tier 3: Preferred Brand-Name drugs
Tier 4: Non-Preferred Brand-Name drugs
Tier 5: Specialty drugs
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