Medicare Glossary

What's What?

Here are some of the most common Medicare terms. Understanding these will help you pick the plan that's right for you.

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%). In a Medicare Prescription Drug Plan or Medicare Health Plan, the coinsurance will vary depending on how much you have spent.

Copayment
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 or prescription. A copayment is usually a set amount, rather than a percentage. For example, you might pay $10 or $20 for a doctor's visit or prescription.

Coverage Gap
Medicare drug plans may have a "coverage gap," which is sometimes called the "donut hole." This means that after you and your plan have spent a certain amount of money for covered drugs, you have to pay all costs out-of-pocket for your drugs (up to a limit). Your yearly deductible, coinsurance or copayments, and what you pay in the coverage gap all count toward this out-of-pocket limit. The limit doesn't include the drug plan's premium.

Note: If you get extra help paying your drug costs, you won't have a coverage gap. However, you will probably have to pay a small copayment or coinsurance amount.

Deductible
The amount you must pay for health care or prescriptions before Original Medicare, your Medicare drug plan, your Medicare Health Plan, or your other insurance begins to pay. For example, in Original Medicare, you pay a new deductible for each benefit period for Part A, and each year for Part B. These amounts can change every year.

Health Maintenance Organization (HMO)
A managed care type of Medicare health plan that is available in most areas of the country and referred to as a Health Maintenance Organization (HMO). HMO plans must cover all Medicare Part A and Part B services. Some HMOs cover extra benefits, like extra days in the hospital. In most HMOs, you can only go to doctors, specialists, or hospitals on the plan's list except in an emergency.

In-network
Doctors, hospitals, pharmacies, and other health care providers that have agreed to provide members of a certain insurance plan with services and supplies at a discounted price. In some insurance plans, your care is only covered if you get it from in-network doctors, hospitals, pharmacies, and other health care providers.

Medicare Part A
This is the part of Medicare that pays for inpatient hospital stays, care in a skilled nursing facility, hospice care and some home health care.

Medicare Part B
This is Medicare medical insurance that helps pay for certain doctors' services, outpatient hospital care, durable medical equipment, and some medical services that aren't covered by Part A.

Medicare Part C
Medicare Part C plans (like an HMO or PPO) are Medicare Advantage health plans run by Medicare-approved private insurance companies. Medicare Advantage plans include Part A, Part B, and may include other types of coverage.

Medicare Part D
This provides coverage for prescription drugs. Medicare Advantage Plans with prescription drug coverage are sometimes called "MA-PDs."

Out-of-network
Generally, an out-of-network benefit provides you with the option to get plan services outside of the plan's contracted network of providers. In some cases, your out-of-pocket costs may be higher for an out-of-network benefit.

Out-of-pocket limit
The most you will have to pay out-of-pocket for your Part A and Part B services during the year. All Medicare Advantage Plans have a limit on what you pay each year and each plan can have a different amount. Original Medicare doesn't have a limit on what you pay each year.

Note: If you get extra help paying your drug costs, you won't have a coverage gap. However, you will probably have to pay a small copayment or coinsurance amount.

Preferred provider plan (PPO)
A type of Medicare Advantage Plan available in a local or regional area in which you pay less if you use doctors, hospitals, and providers that belong to the network. You can use doctors, hospitals, and providers outside of the network for an additional cost.

CMS Review # Y0033_13WEB (Pending CMS Approval)
Page last updated: Oct. 1, 2012