GLOSSARY OF MEDICAL TERMS
Annual Election Period (AEP)
Period of time when you can make changes to your current plan. During the AEP, you can enroll in a Medicare Advantage Plan, for the following calendar year. For example, October 15 through December 7, 2013, is the AEP for Medicare benefits that go into effect January 1, 2014.
Brand-name drug
A prescription drug that’s marketed by the company that was first to receive FDA approval to sell it. The FDA allows this company to exclusively sell the drug for a number of years before allowing other companies to sell generic versions of it.
Coinsurance
The percentage of the costs you pay for medical services or prescription drugs.
Copayment
The fixed dollar amount you pay when you receive medical services or have a prescription filled.
Coverage gap
The point in a prescription drug plan where the plan “takes a break” in coverage and you pay the full cost of your prescription drugs. The coverage gap applies only after you’ve paid a certain amount out of your pocket for prescription drugs. After the coverage gap, prescription drug coverage starts
again. At that point, you pay 5 percent of the prescription drug cost and your plan pays 95 percent.
Creditable coverage
Prescription drug coverage, generally from an employer or union, that’s been determined to be, on average, at least as good as the Medicare standard prescription drug coverage.
Deductible
The amount you pay for medical services or prescription drugs before your plan starts paying benefits.
Formulary
A list of drugs your Medicare Advantage or prescription drug plan covers.
Generic drug
A prescription drug that usually costs less than a brand-name drug but has the same active ingredients and is prescribed for the same reason.
Health Maintenance Organization (HMO)
A type of Medicare Advantage plan that requires you to choose a primary care physician from a network of approved healthcare providers. If you need to see a specialist, you must have a referral from your primary care physician.
Late-enrollment penalty
A higher premium charge based on the number of months a Medicare Part D-eligible person does not have creditable coverage. The premium that would otherwise apply is increased by at least 1 percent of the national benchmark beneficiary premium, which is set by CMS and published each year, for each month without creditable coverage.
Medically necessary
A service your doctor and you agree that your medical condition requires in order to detect, manage, or cure an illness that you’ve been diagnosed with or that you’re at risk for.
Medicare Advantage (MA) plan
Also called “Medicare Part C.” A Medicare-approved health plan from a private insurance company that provides medical coverage only. It doesn’t include prescription drug coverage.
Medicare Advantage Prescription Drug (MAPD) plan
Also called “Medicare Part C.” A Medicare-approved health plan from a private insurance company that provides medical coverage as well as prescription drug coverage.
Medical Savings Account (MSA) plan
An insurance plan for people with Medicare that combines a high deductible health plan and a bank account.
Medicare supplement plan
An insurance plan from a private insurer that helps pay the portion of the cost for Medicare-approved services not paid by Medicare. Also called a “Medigap plan.” A Medicare supplement plan isn’t a managed-care plan.
Open Enrollment Period (OEP)
January 1 through March 31 of each year. During this time, you’re allowed to make one of the following changes to your health plan coverage:
If you have a Medicare Advantage plan with prescription drug coverage (MAPD), you can change to a new plan or choose Original Medicare and a stand-alone prescription drug plan.
If you have a stand-alone prescription drug plan, you can enroll in an MAP plan.
If your Medicare Advantage plan doesn’t cover prescription drugs, you can switch to another plan that doesn’t include drug coverage or go back to Original Medicare.
Original Medicare
Also known as “traditional Medicare.” A government-sponsored Medicare plan administered by the Centers for Medicare & Medicaid Services (CMS).
Out-of-pocket costs
Any amounts you pay out of your pocket for medical care, prescription drugs, and other healthcare supplies, services, and equipment. Out-of-pocket costs include copayments, deductibles, and coinsurance.
Preferred Provider Organization (PPO)
A type of Medicare Advantage plan that allows you to see in-network or out-of-network doctors and other healthcare providers – but you save money by using providers who are in the plan’s network.
Prescription Drug Plan (PDP) An insurance plan that helps pay for medications a doctor prescribes. You can purchase a PDP from a Medicare-approved private insurer.
Premium The monthly payment you make to Medicare, an insurance company, or a healthcare plan.
Private-Fee-for-Service (PFFS) plan
A type of Medicare Advantage plan in which you may go to any doctor or hospital that accepts Medicare and agrees to accept the plan’s terms and conditions. A PFFS plan has no provider network, and you don’t need a referral for any medical care or services. This type of plan generally provides more benefits than Original Medicare. A PFFS plan is not a Medicare supplement.
Special Needs Plan (SNP)
Medicare Advantage coordinated care plan designed with benefits and value-added services for individuals with special needs, such as those who are institutionalized, qualify for medical financial assistance, or have a chronic illness.
Total drug costs
The total amount you and your prescription drug plan pay for prescription drugs.