Glossary of Terms

Actual charge – Dollar amount that a healthcare provider will charge for medical services or supplies. The “actual charge” is frequently higher than the amount Medicare will approve.

Annual election period (AEP) – Annual timeframe during which Medicare enrollees opt in or opt out from the Medicare Advantage plan. The AEP runs from November 15 through December 31 every year. The plan coverage becomes effective on January 1 of the new year.

Appeal – A complaint that is made when a Medicare enrollee disagrees with a decision to deny a request for health care services or payment for services received. An appeal can also be made if a Medicare recipient disagrees with a decision to cease services being receiving. An enrollee may also make an appeal if Medicare does not cover an item or service they feel they should get.

Approved amount or charge – Also referred to as the allowable, eligible, or accepted charge, this is the upper limits fee set by Medicare that will be approved for a need service, treatment or procedure, that Medicare will reimburse 80% of the cost of.

Assignment – When a doctor or healthcare practitioner agrees to accept Medicare’s fee as full payment. Accepting assignment means that the physician agrees to bill no more than the Medicare approved charge for service rendered. This is another way of saying that a doctor will not charge the patient more than the amount Medicare approves.

Attained age – A Medigap rating system where as the policyholder ages, his premiums increase accordingly with each additional year of age.

Beneficiary – Title given to a person who receives healthcare coverage through the Medicare program.

Benefit appeal – A written request submitted by a Medicare beneficiary to be reviewed by the insurance   to approve of a claim that has already been denied by the insurer.

Benefit determination – A decision from Medicare to offer coverage under the provisions of the policy.

Benefit period – The time period designated by Medicare during and after a hospitalization for which Medicare Part A will pay benefits.

Carrier – A private insurance company under contract with Medicare to process Medicare Part B bills.

Centers for Medicare & Medicaid Services (CMS) – Federal agency running the Medicare program.

Coinsurance – The percent of Medicare approved amount that the enrollee will have to pay after paying the deductible for Part A and/or Part B. If the enrollee also has supplemental insurance coverage, this is the balance of a healthcare cost covered by Medicare that the enrollee must pay after Medigap insurance has covered the remainder.

Coordinated care plan – A type of Medicare Advantage plan relying on a provider network to offer healthcare to enrollees, including HMOs and similar managed care plans.

Copayment – A fee that policyholders must pay for each medical service received. A copayment is an established percentage of healthcare cost that a patient must pay for health services. For example, this could be $10 or $20 for a doctor’s visit that costs $75 in total, the remainder of which is paid by Medicare and/or private insurance coverage.

Coverage – Healthcare services that meet the Medicare and/or private insurance plan requirements for reimbursement.

Creditable coverage – Drug coverage requirement by the Medicare Modernization Act (MMA), which imposes a penalty for those who enroll past the deadline on those who do not obtain drug coverage that is at least as good as Part D.

Custodial care – Personal care including assistance with ADL (activities of daily living). Custodial care is not covered by Medicare.

Deductible – The percentage of costs and fees for healthcare treatment that a recipient is responsible to pay before Medicare contributes for the designated benefit period for Part A, or every year for Part B.

Disenrollment – The process of exiting a Medicare managed care plan to go to another healthcare plan. Guidelines are established that must be followed in order to leave the plan officially. Disenrollment becomes effective the 1st of the month following the submission of the disenrollment form.

Drug Formulary – The list of generic and brand name prescription medications that are covered by an insurance policy or Medicare plan.

Durable Medical Equipment (DME) – Reusable medical equipment ordered by a healthcare provider for use by the patient in the home, i.e. wheelchairs, walkers, oxygen tanks or hospital beds.

Emergency Services – Urgent services necessary to diagnose and stabilize an emergency health trauma or condition.

Enrollment period – The 6-month timeframe after turning age 65 when a person can enroll in a Medicare supplement insurance plan or policy if you have enrolled in Medicare Part B. During this period, you cannot be denied coverage based on any preexisting medical condition.

Excess charge – The difference between the Medicare-approved payment amount the health care provider’s actual charges to the patient.

Explanation of Medicare benefits (EOMB) – A letter that is sent to a patient after the physician files a claim for Part B services. The EOMB explains what was billed, the amount that was approved by Medicare, how much Medicare actually paid, and the remaining portion that must be paid by the patient.

Free look period – A 30-day review period during which a Medicare supplement policy can be evaluated; refunds are given if the policy is declined during this period.

Guaranteed issue rights – When an insurance company cannot deny insurance coverage or put restrictions on a policy, must cover all preexisting conditions, and cannot charge more for a policy because of current or past health issues.

Guaranteed renewable – When a policy or plan is mandated to automatically be renewed or continued Medicare supplement policy, except in cases of fraud or unpaid premiums.

Issue age – Premiums are set at the age you are when you buy the policy and will not increase because you get older. Premiums may increase for other reasons.

Long-term care – Also known as “Custodial Care.” Not covered by Medicare if this is the only type of care required.

Managed care – A healthcare plan that utilizes a specific network of providers that members must choose from.

Managed care plan – Healthcare plans that must cover Medicare Part A and Part B healthcare in its entirety. Costs may be lower than those of Original Medicare.

Medicaid – A joint federal and state healthcare program that assists recipients with coverage of costs for medical and health services for low-income individuals.

Medically necessary – Health services and equipment needed for diagnosis or treatment of a medical condition that are deemed absolutely necessary for the life and wellness of a patient.

Medicare Advantage eligible individual – Anyone meeting the criteria to be approved to receive Medicare Part A and enroll in Medicare Part B who does not receive end stage renal disease (ESRD) coverage.

Medicare Advantage Plan (also referred to as Medicare Part C) – A private healthcare plan offered that covers all benefits of Medicare Part A and Medicare Part B combined, as well as other optional coverage.

Medicare-approved amount – The Medicare payment amount for an item or service under Original Medicare. This is the amount a physician or healthcare supplier is paid by Medicare and patient a services or supplies.

Medicare Part A – Also referred to as hospitalization insurance. Part A covers hospital bills and established skilled nursing facility costs, as well as limited coverage for skilled nursing care after hospitalization, rehabilitation, home healthcare services, and hospice services. It does not pay for custodial care and/or ADL assistance.

Medicare Part B – Also known as medical insurance. Part B helps contributes to payment of doctors’ bills and specific additional charges including surgical services, diagnostic tests and procedures, some hospital outpatient services, laboratory services, occupational therapy, physical therapy, and durable medical equipment.

Medicare Part D – Also known as Medicare outpatient prescription drug plan, requiring a monthly fee to be paid by participants. Pays for outpatient prescription drug costs after coinsurance and deductibles have been paid.

Medicare Supplement – Insurance policies sold by private insurance companies to cover “gaps” in Medicare coverage. Medigap policies can only be sold to enrollees of Original Medicare.

Medigap – Medicare supplement and Medicare select policies designed to fill “gaps” in Original Medicare plan that leaves enrollees exposed to deductibles, copayments and coinsurance costs.
Network – Doctors, hospitals, pharmacies, and other healthcare service providers that have chosen to participate in a health plan to care for its members.

Nonparticipating physician – A healthcare supplier that does not accept Medicare claims or has a network agreement to work with a managed care plan.

Open enrollment period (OEP) – An annual timeframe during which Medicare enrollees can change coverage to Medicare Advantage plans or disenroll from Medicare Advantage to go rejoin Original Medicare. OEP is January 1 through March 31 every year.

Original Medicare Plan – Consisting of Part A (hospital insurance) and Part B (medical insurance), Original Medicare is the federal-state coordinated healthcare plan for low-income people, primarily senior citizens, to receive healthcare treatment from any doctor, hospital, or other healthcare supplier who accepts Medicare.

Out-of-pocket costs – Fees and expenses for which Medicare enrollees are responsible, including the following:
Deductible: Fixed contributions to be paid by enrollees for services covered by Medicare, usually required to be paid on an annual basis.
Copayment: Required payment by policyholder/enrollee of a fixed amount for drug prescriptions.
Coinsurance: An established percentage of the total healthcare service costs to be paid by the policyholder to be paid service are rendered.

Outpatient Care – Medical or surgical services not requiring overnight hospital stay.

Point-of-Service (POS) –  Medicare Managed Care Plan option allowing participants to see doctors and hospitals outside the plan at an additional cost.

Preexisting condition – A medical condition that has existed, been treated or diagnosed up to six months before purchase of an insurance policy.

Premium – The periodic payment to Medicare or a private insurance company for healthcare coverage.

Prescription drug plan (PDP) – Coverage of costs for prescription medications. Medicare Part D is a PDP.

Primary care doctor – The doctor who is the main source for a patient’s healthcare, subsequently recommending treatment and/or referral to specialists.

Primary payer – The insurance policy or plan that initially pays on a medical care claim.

Referral – A recommendation from a primary care physician and/or healthcare plan for a patient to be evaluated by a specialist or receive other recommended services.

Secondary payer – Insurance policy or healthcare plan that pays after the primary payer pays its percentage of a claim for medical care.

Skilled nursing facility care – Custodial care including help with ADLs, such as assistance with bathing, dressing and hygiene.

Urgent care – Services deemed medically necessary to stabilize health, resulting from accidents or acute illness or injury when a patient is geographically outside the network area.

Waiting period – Time frame between when one purchases a Medicare supplement insurance plan or Medicare health plan and when the coverage actually begins for a particular plan in order for you to be able to see that doctor.

Let's Work Together

To find the best Medicare Supplement Plan for your needs.