Whether you are choosing your first Medicare plan, or you're a new or long-term member, knowing and understanding your plan is important to getting the health care you need and saving costs where you can. Most plans will have a regular fee to purchase the plan (premium), cost-sharing to utilize benefits or services (coinsurance, copayments), and generally a network of providers to provide health care to its members. Some plans will also have deductibles.
These are frequently used terms that you will find helpful to understand. Though plans may differ in their coverage and costs, these terms are generally used across plans and are important to know.
Benefits: the health care services, prescription drugs, supplies and equipment covered by the plan.
Co–insurance: a fee, usually a percentage that you pay after your deductible for each of the health care services, prescription drugs, and supplies/equipment you receive. This is a percentage of a service such as 20% of your surgeon's fee.
Co–payment (Co–pay): the fee that you pay as your share for each of the health care services, prescription drugs, and supplies/equipment you receive. This is usually a set fee such as $20 for a doctor's visit.
Cost–sharing: the amount you will pay as your share of your health care services and prescriptions including copays, coinsurance and deductibles.
Creditable prescription drug coverage: a prescription drug plan that covers and pays at least as much as the standard Medicare plan for prescription drugs.
Deductible: the cost you will pay for your health care before your plan begins to pay its share. For instance, if your plan has a $1,000 deductible, you will pay $1,000 for your health care services before the plan begins to pay.
Extra Help: Medicare program to help people with low-income and resources pay for prescription drug costs including premiums, deductibles and co–insurance.
Generic drug: prescription drugs that have the same active ingredients as brand name prescription drugs, but generally cost less.
Formulary: the list of prescription drugs that are covered by your Medicare plan.
Insurance card: a card that serves as proof of your Medicare plan, any supplemental policy, Medicare Advantage plan, or prescription drug plan that you may have. It provides your name, claim number, the effective date and type of Medicare plan you have. This will be your identification card that you need to present to your health care providers at the time of service.
Late enrollment penalty: the fee added to the regular Medicare premium if you don't join a Part D Medicare plan when first eligible or if you have a break in coverage for a specific period of time.
Medicaid: a public/private partnership between the federal government and states to provide low– to no–cost health care and long-term care to people with low incomes including pregnant women, children, parents, seniors who are also covered by Medicare and people with disabilities.
Medicare: federal health insurance for seniors who are 65 and older (regardless of income or medical history), people with permanent disabilities at any age, or people who have certain diseases such as end-stage renal disease or amyotrophic lateral sclerosis (ALS or Lou Gehrig's disease). Medicare consists of four parts:
Part A: known as "hospital insurance" covers inpatient hospital care, skilled nursing facilities, hospice and some home health visits.
Part B: known as "medical insurance" covers doctors and other health care providers, medical equipment, many preventive services and home health visits.
Part C: private insurance alternative called "Medicare Advantage" that provides the minimum Medicare requirements from Parts A-B and may include additional coverage such as Part D prescription drug coverage.
Part D: plan that provides prescription drug coverage.
Medicare Advantage Plan: a private insurance alternative that combines the coverage of Medicare Parts A and B and may also provide additional coverage such as preventive services and Part D prescription drug coverage.
Medicare Supplement Plan: also known as a "Medigap" insurance plan that provides additional or supplemental coverage beyond your Medicare Parts A-B plans to help with copays, coinsurance and deductibles. This plan would pay after your Medicare plan has paid to help with your share of the costs.
Network: the health care providers that are under contract with your plan to provide your health care services. Note: Some plans require that you only use their network of providers. In other plans, you can go outside of the network to other providers, but you may be required to pay a larger share of your health service cost.
Network pharmacies: the pharmacies that are under contract with your plan to provide your prescription drugs and services at a discounted price.
Original Medicare: a federal health insurance plan for seniors and others that is a fee-for-service health plan with two parts: Part A (hospital insurance) and Part B (medical insurance).
Out- of- network provider: a health care provider who is not a part of the health insurance plan's approved network of providers that have contracted to provide health care services at a reduced price to plan members. Some plans require that you only use their network of providers and will not pay their share of your costs if you go out-of-network. While other plans may allow out-of-network providers, you may pay more for your share of costs of the health care service.
Out-of-pocket maximum: the most that you pay during a policy period for copays and coinsurance—does not include premiums.
Precertification or pre-authorization: some plans may require that you receive prior approval before receiving certain health care services. If the service is received without precertification and it is required, the plan may not cover their share of the cost of the service.
Preferred pharmacy: a pharmacy that has contracted with a Medicare plan to accept the plan's payment for prescription drugs and provide them at a discounted price to plan members.
Premium: the cost of your Medicare insurance plan that you will pay periodically.
Prescription drug plan: a plan to provide prescription drug coverage.
Preventive services: health care to prevent illness before it starts or in the early stages when treatment is likely to work best; some preventive health care is provided free of charge without copays or coinsurance and regardless of deductible under Medicare Part B.