Medicare Glossary
Understand Medicare and Medicare Supplement insurance with our comprehensive glossary. Clear definitions, real-world examples, and related terms help you navigate Medicare with confidence.
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A
Attained Age Rating
A Medicare Supplement insurance pricing method where premiums increase as you get older. Premiums start lower when you're younger but rise each year based on your current age.
Example:
If you buy a policy at age 65 for $150/month, it might cost $165/month when you turn 66.
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Assignment
When healthcare providers agree to accept Medicare's approved amount as full payment for covered services. Providers who "accept assignment" cannot charge you more than Medicare's approved amount.
Example:
Dr. Smith accepts assignment, so if Medicare approves $100 for your visit, that's all Dr. Smith can charge (plus your deductible and coinsurance).
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Annual Open Enrollment Period (AEP)
The yearly period (October 15 - December 7) when people with Medicare can make changes to their Medicare Advantage and Medicare prescription drug coverage.
Example:
During AEP, you can switch from a Medicare Advantage plan back to Original Medicare and add a Medicare Supplement policy.
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B
Birthday Rule
A state law in California and Oregon that allows Medicare Supplement policyholders to change to any plan with equal or lesser benefits within 30 days of their birthday each year, without medical underwriting.
Example:
In California, you can switch from Plan F to Plan G on your birthday without health questions.
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Benefit Period
The way Medicare measures your use of hospital and skilled nursing facility services. A benefit period begins the day you're admitted and ends when you haven't received inpatient care for 60 consecutive days.
Example:
If you're hospitalized for 5 days, discharged, and readmitted 30 days later, both stays are in the same benefit period.
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C
Community Rating
A Medicare Supplement insurance pricing method where everyone pays the same premium regardless of age or health status. Premiums may still increase due to inflation or other factors affecting all policyholders.
Example:
Whether you buy the policy at age 65 or 75, you pay the same monthly premium ($150).
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Coinsurance
Your share of the costs of a Medicare-covered healthcare service, calculated as a percentage of the Medicare-approved amount.
Example:
Medicare Part B has 20% coinsurance, so you pay 20% of the Medicare-approved amount after meeting your deductible.
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Copayment (Copay)
A fixed dollar amount you pay for a Medicare-covered service, usually when you receive the service.
Example:
Plan N has a copay of up to $20 for office visits and up to $50 for emergency room visits.
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Creditable Coverage
Health insurance coverage that's at least as good as Medicare's standard prescription drug coverage. Having creditable coverage helps you avoid a late enrollment penalty.
Example:
If your employer's retiree health plan includes prescription drug coverage that's creditable, you won't pay a penalty when you later enroll in Medicare Part D.
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D
Deductible
The amount you must pay for healthcare services before Medicare or your Medicare Supplement plan begins to pay.
Example:
The Medicare Part B deductible is $240 in 2024. You must pay this amount before Medicare pays its share.
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Donut Hole
The coverage gap in Medicare Part D prescription drug plans where you pay a higher percentage of drug costs until you reach catastrophic coverage.
Example:
In 2024, the donut hole begins when your total drug costs reach $5,030 and ends at $8,000 in out-of-pocket costs.
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E
Excess Charges
The additional amount that non-participating Medicare providers can charge above Medicare's approved amount (up to 15% more).
Example:
If Medicare approves $100 for a service and the doctor doesn't accept assignment, they can charge up to $115 (the extra $15 is an excess charge).
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Explanation of Benefits (EOB)
A statement from Medicare or your insurance company explaining what medical treatments and services were paid for on your behalf.
Example:
Your Medicare Summary Notice (MSN) is Medicare's version of an EOB, showing what Medicare paid and what you owe.
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F
Federal Poverty Level (FPL)
Income guidelines updated annually by the Department of Health and Human Services, used to determine eligibility for various Medicare programs and assistance.
Example:
In 2024, 100% FPL for a single person is $14,580. Some Medicare programs provide extra help for people at 135% FPL ($19,683).
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G
Guaranteed Issue Rights
Special situations where you can buy a Medicare Supplement policy without medical underwriting, even outside your open enrollment period.
Example:
If you lose employer coverage after age 65, you have guaranteed issue rights to buy any Medicare Supplement plan.
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Guaranteed Renewable
A policy feature that means the insurance company cannot cancel your Medicare Supplement policy as long as you pay your premiums.
Example:
All Medicare Supplement policies are guaranteed renewable, so you can't lose coverage due to health changes.
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H
Health Savings Account (HSA)
A tax-advantaged account that can be used to pay for qualified medical expenses. You can contribute to an HSA if you have a high-deductible health plan and aren't enrolled in Medicare.
Example:
Once you enroll in Medicare Part A, you can no longer contribute to an HSA, but you can still use existing funds.
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I
Issue Age Rating
A Medicare Supplement insurance pricing method where your premium is based on your age when you first buy the policy. Your rate stays the same age-wise but may increase for other reasons.
Example:
If you buy a policy at age 65, your premium will always be based on age 65 pricing, regardless of how old you get.
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Initial Enrollment Period (IEP)
The 7-month period when you first become eligible for Medicare, usually around your 65th birthday.
Example:
Your IEP includes the 3 months before your 65th birthday, your birthday month, and the 3 months after.
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L
Late Enrollment Penalty
A permanent increase in your Medicare Part B or Part D premium if you don't sign up when first eligible and don't have other creditable coverage.
Example:
The Part B penalty is 10% of the premium for each 12-month period you were eligible but didn't enroll.
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Lifetime Reserve Days
The 60 extra days of inpatient hospital care that Medicare Part A provides. You can use these only once in your lifetime.
Example:
If you're hospitalized for more than 90 days in a benefit period, you can use lifetime reserve days for days 91-150.
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Low Income Subsidy (LIS)
Also called "Extra Help," this Medicare program helps pay Medicare prescription drug costs for people with limited income and resources.
Example:
If you qualify for full LIS, you pay no more than $4.50 for generic drugs and $11.20 for brand-name drugs.
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M
Medicare Advantage
Medicare Part C plans offered by private companies that include Medicare Part A and Part B benefits, and often Part D. These plans replace Original Medicare.
Example:
Instead of Original Medicare plus a Medicare Supplement, you could choose a Medicare Advantage plan that includes all Medicare benefits.
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Medicare-Approved Amount
The amount Medicare determines is reasonable for a medical service or supply. This is the basis for calculating Medicare's payment and your coinsurance.
Example:
If the Medicare-approved amount for a service is $100, Medicare typically pays 80% ($80) and you pay 20% ($20).
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Medicare Supplement (Medigap)
Private insurance policies that help pay costs not covered by Original Medicare, such as deductibles, coinsurance, and copayments.
Example:
Plan G is a Medicare Supplement policy that covers most costs except the Medicare Part B deductible.
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Medical Underwriting
The process insurance companies use to review your health history to decide whether to accept your application and what premium to charge.
Example:
If you apply for Medicare Supplement outside your open enrollment period, the insurance company may ask health questions.
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N
Non-Participating Provider
A healthcare provider who doesn't have a contract with Medicare to accept assignment on all Medicare-covered services.
Example:
A non-participating provider can charge up to 15% more than Medicare's approved amount.
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O
Open Enrollment Period
The 6-month period when you first enroll in Medicare Part B, during which you can buy any Medicare Supplement policy without medical underwriting.
Example:
If you enroll in Medicare Part B at age 65, your Medicare Supplement open enrollment period lasts until you turn 65½.
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Original Medicare
Traditional fee-for-service Medicare coverage that includes Medicare Part A (hospital insurance) and Medicare Part B (medical insurance).
Example:
With Original Medicare, you can see any provider that accepts Medicare, but you'll pay deductibles and coinsurance.
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Out-of-Pocket Costs
Healthcare costs you must pay yourself, including deductibles, coinsurance, copayments, and services not covered by Medicare.
Example:
With Original Medicare alone, your out-of-pocket costs could be unlimited, which is why many people buy Medicare Supplement insurance.
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P
Participating Provider
A healthcare provider who has signed an agreement with Medicare to accept assignment on all Medicare-covered services.
Example:
Participating providers can only charge you the Medicare deductible and coinsurance amounts.
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Plan G
A Medicare Supplement insurance plan that covers all Medicare-approved costs except the Medicare Part B deductible.
Example:
With Plan G, after you pay the $240 Part B deductible, you have no other out-of-pocket costs for Medicare-covered services.
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Plan N
A Medicare Supplement insurance plan that covers most Medicare costs but requires copayments for some doctor visits and emergency room visits.
Example:
Plan N has copays of up to $20 for office visits and up to $50 for emergency room visits (waived if admitted).
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Pre-existing Condition
A health problem you had before the date your new health coverage starts.
Example:
If you have diabetes when you apply for Medicare Supplement coverage, it's considered a pre-existing condition.
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Premium
The amount you pay monthly for your Medicare Supplement insurance policy.
Example:
You might pay a $150 monthly premium for your Plan G Medicare Supplement policy.
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Q
Qualifying Event
A life change that allows you to make changes to your Medicare coverage outside the normal enrollment periods.
Example:
Moving to a new state, losing employer coverage, or your current plan leaving Medicare are qualifying events.
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R
Rating Methods
The different ways insurance companies price Medicare Supplement policies: community rating, issue-age rating, and attained-age rating.
Example:
Some companies use attained-age rating where premiums increase as you age, while others use community rating with the same price for everyone.
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S
Special Enrollment Period (SEP)
A time outside the normal enrollment period when you can make changes to your Medicare coverage due to certain qualifying events.
Example:
If you move to a new state, you have a special enrollment period to change your Medicare Advantage or Part D plan.
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Skilled Nursing Facility (SNF)
A facility that provides skilled nursing care and rehabilitation services on an inpatient basis.
Example:
Medicare Part A covers skilled nursing facility care for days 1-20 at 100%, and days 21-100 with coinsurance.
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T
Trial Right
A special enrollment period that allows you to try a Medicare Advantage plan for up to 12 months and then return to Original Medicare with guaranteed rights to buy a Medicare Supplement policy.
Example:
If you switch from Original Medicare to Medicare Advantage when you first get Medicare, you can switch back within 12 months.
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U
Underwriting
The process insurance companies use to evaluate your health and determine your eligibility and premium for coverage.
Example:
Outside your open enrollment period, Medicare Supplement companies may use medical underwriting to decide whether to accept your application.
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W
Waiting Period
A period of time you must wait before coverage begins for pre-existing conditions.
Example:
Medicare Supplement policies can have up to a 6-month waiting period for pre-existing conditions if you don't have creditable coverage.
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