Medicare glossary: Definitions of common terms

Medical News Today

4 days ago

When a person first signs up for Medicare, they may come across many terms and abbreviations. Learning the definitions of these terms can help make it easier to understand and navigate Medicare.
Medicare information can be confusing. This A to Z glossary can help individuals understand some common terms, acronyms, and abbreviations.
It can also help them better understand certain medical conditions that may qualify them for Medicare before they turn 65 years old.
Accepting the assignment: This means a doctor, another healthcare professional, facility, or supplier agrees to accept the Medicare-approved amount as full payment.
This means a doctor, another healthcare professional, facility, or supplier agrees to accept the Medicare-approved amount as full payment. Accountable Care Organization (ACO): ACOs are groups of doctors, hospitals, and other healthcare providers who come together voluntarily to give high quality coordinated care to Medicare beneficiaries.
ACOs are groups of doctors, hospitals, and other healthcare providers who come together voluntarily to give high quality coordinated care to Medicare beneficiaries. Affordable Care Act (ACA): President Barack Obama signed the ACA in 2010. It included provisions to expand health coverage to all eligible people in the United States, improve healthcare delivery systems, and control healthcare costs. For Medicare, this meant expanding preventive care services, making strides to eliminate the coverage gap (donut hole), and providing an annual free wellness visit for beneficiaries.
Amyotrophic lateral sclerosis (ALS): Amyotrophic lateral sclerosis (ALS) is a progressive neurological condition. People with ALS who receive Social Security disability benefits are eligible for Original Medicare (parts A and B).
Amyotrophic lateral sclerosis (ALS) is a progressive neurological condition. People with ALS who receive Social Security disability benefits are eligible for Original Medicare (parts A and B). Annual cap: This is a yearly limit on out-of-pocket expenses.
This is a yearly limit on out-of-pocket expenses. Annual Notice of Change (ANOC): The ANOC is a yearly notice that beneficiaries receive from their Medicare plan. It includes any changes to costs, coverage, and other information that would become effective in January. Medicre typically sends ANOC notices in September.
Benefit period: A benefit period begins the day a person is admitted to the hospital. It ends when they have not received any inpatient care for 60 consecutive days. Each new benefit period requires the individual to pay the Part A hospital deductible.
Catastrophic coverage: This is the Part D stage a person enters when they reach the annual out-of-pocket cap. When they enter catastrophic coverage, they pay nothing for prescription drugs for the rest of the year.
This is the Part D stage a person enters when they reach the annual out-of-pocket cap. When they enter catastrophic coverage, they pay nothing for prescription drugs for the rest of the year. Claim: This is a request for reimbursement for a healthcare service that the healthcare professional typically sends directly to Medicare. An individual may also submit a claim if the healthcare professional does not.
This is a request for reimbursement for a healthcare service that the healthcare professional typically sends directly to Medicare. An individual may also submit a claim if the healthcare professional does not. CMS: This is the acronym for the Centers for Medicare & Medicaid Services. It is a federal agency that administers Medicare and Medicaid.
This is the acronym for the Centers for Medicare & Medicaid Services. It is a federal agency that administers Medicare and Medicaid. COBRA: COBRA is short for the Consolidated Omnibus Budget Reconciliation Act. This 1985 law allows some employees to keep their health coverage after leaving employment.
Coinsurance: Coinsurance is the percentage cost that a person pays toward a healthcare service.
Coinsurance is the percentage cost that a person pays toward a healthcare service. Copayment : Also called copay, this is a fixed dollar amount that an insured person pays toward certain healthcare services.
Also called copay, this is a fixed dollar amount that an insured person pays toward certain healthcare services. Cost sharing: This refers to the portion of healthcare expenses that an individual pays out of pocket. These include deductibles, coinsurance, and copayments.
This refers to the portion of healthcare expenses that an individual pays out of pocket. These include deductibles, coinsurance, and copayments. Creditable coverage: Creditable coverage means that an eligible policyholder's prescription drug coverage will pay as much, on average, as the standard Medicare prescription drug coverage. » Learn more: Copayment vs. coinsurance
End stage renal disease (ESRD): ESRD is the last stage of kidney disease, when a person needs dialysis or a kidney transplant. People with this condition who also receive Social Security disability benefits are eligible for Medicare.
ESRD is the last stage of kidney disease, when a person needs dialysis or a kidney transplant. People with this condition who also receive Social Security disability benefits are eligible for Medicare. Excess charge: The Medicare Part B excess charge is the amount above the Medicare-approved amount that a person must pay.
The Medicare Part B excess charge is the amount above the Medicare-approved amount that a person must pay. Extra Help: Extra Help is an assistance program for prescription drug (Part D) plans. It helps those with a low income pay for their medications.
Formulary: A formulary is a list of prescription drugs that a prescription drug plan covers. A formulary includes at least two of the most commonly prescribed drugs within each drug class. Formularies must also include most medications in certain protected classes, such as:
A formulary is a list of prescription drugs that a prescription drug plan covers. A formulary includes at least two of the most commonly prescribed drugs within each drug class. Formularies must also include most medications in certain protected classes, such as: FPL: FPL is short for 'federal poverty level.' It is an income measurement that experts use to determine qualification for and the level of additional support a person may be entitled to.
General enrollment period: This is the period of time to sign up for Original Medicare (parts A and B). It runs from January 1 to March 31 each year. A person can use this signup period if they miss the initial enrollment period.
This is the period of time to sign up for Original Medicare (parts A and B). It runs from January 1 to March 31 each year. A person can use this signup period if they miss the initial enrollment period. Generic drugs : Generic drugs are copies of brand-name medications approved by the Food and Drug Administration (FDA) . Manufacturers can produce these drugs once the patent for the original brand-name medication expires.
Generic drugs are copies of brand-name medications approved by the . Manufacturers can produce these drugs once the patent for the original brand-name medication expires. Guaranteed issue: Guaranteed issue means a company has the duty to offer health insurance to all. This protects some Medicare beneficiaries from discrimination by insurance companies that offer Medigap policies. » Learn more: Brand-name vs. generic drugs
Health Maintenance Organization (HMO): An HMO is one of four types of Medicare Advantage plans. An HMO generally requires someone to use in-network professionals and facilities.
An HMO is one of four types of Medicare Advantage plans. An HMO generally requires someone to use in-network professionals and facilities. Home healthcare: This is home-based medical and supportive care. Medicare covers part-time or intermittent skilled nursing care or home health aide services if a person is homebound.
This is home-based medical and supportive care. Medicare covers part-time or intermittent skilled nursing care or home health aide services if a person is homebound. Hospice care: Hospice care offers a team-oriented approach to care that addresses the needs of individuals and their caregivers at the end of life. Medicare offers comprehensive hospice coverage. » Learn more: Medicare coverage for home health services
Initial enrollment period (IEP): The IEP is the 7-month period during which a person can initially sign up for Original Medicare (parts A and B). It begins 3 months before a person turns 65 years of age, includes the month of their birthday, and ends 3 months later.
The IEP is the 7-month period during which a person can initially sign up for Original Medicare (parts A and B). It begins 3 months before a person turns 65 years of age, includes the month of their birthday, and ends 3 months later. In network: In network describes a list of healthcare professionals that a person may need to use as part of their plan's rules.
In network describes a list of healthcare professionals that a person may need to use as part of their plan's rules. Inpatient care: Inpatient care describes healthcare that a person receives in the hospital or skilled nursing facility. For an individual to receive inpatient care, they must be admitted to the facility at least overnight.
Inpatient care describes healthcare that a person receives in the hospital or skilled nursing facility. For an individual to receive inpatient care, they must be admitted to the facility at least overnight. IRMAA: IRMAA stands for 'income-related monthly adjustment amount.' This means that the amount by which a person's premiums will change depends on their income. » Learn more: What is IRMAA?
Jurisdiction:This is a geographical area that Medicare assigns to private health insurance providers to process Medicare claims for certain plans.
Late enrollment penalty: The late enrollment penalty may be a lifelong higher premium that Medicare can charge a person who does not enroll when they first become eligible. However, Medicare may make exceptions if the person is insured under another plan.
The late enrollment penalty may be a lifelong higher premium that Medicare can charge a person who does not enroll when they first become eligible. However, Medicare may make exceptions if the person is insured under another plan. Lifetime reserve days: Reserve days are extra days in the hospital that Medicare will cover beyond the initial 90 days. An individual is still responsible for any coinsurance payments. Each person has 60 reserve days for their lifetime, but they do not have to use them in the same hospital stay. » Learn more: Lifetime reserve days
Maximum out-of-pocket (MOOP) limit: The maximum out-of-pocket (MOOP) limit is the maximum amount you have to pay out of pocket for Medicare Advantage and Medigap plans. Medicare sets the highest amount the MOOP can be. However, each plan sets its own MOOP each year. In 2025, the MOOP is $9,350.
The maximum out-of-pocket (MOOP) limit is the maximum amount you have to pay out of pocket for Medicare Advantage and Medigap plans. Medicare sets the highest amount the MOOP can be. However, each plan sets its own MOOP each year. In 2025, the MOOP is $9,350. Medicaid: Medicaid is a state-federal assistance program that serves people of any age with low income. People with Medicaid have few, if any, out-of-pocket costs.
Medicaid is a state-federal assistance program that serves people of any age with low income. People with Medicaid have few, if any, out-of-pocket costs. Medical Savings Account (MSA): MSAs are a type of Medicare Advantage plan. They include a high deductible health plan and a bank account. Medicare deposits a certain amount each year for your healthcare, and then the plan deposits a portion of the money into an account. The amount deposited is often less than the deductible, so out-of-pocket costs are possible.
MSAs are a type of Medicare Advantage plan. They include a high deductible health plan and a bank account. Medicare deposits a certain amount each year for your healthcare, and then the plan deposits a portion of the money into an account. The amount deposited is often less than the deductible, so out-of-pocket costs are possible. Medically necessary: This refers to procedures, equipment, or services that are necessary for the diagnosis and treatment of medical conditions and that meet the accepted medical standards.
This refers to procedures, equipment, or services that are necessary for the diagnosis and treatment of medical conditions and that meet the accepted medical standards. Medicare: Medicare is a federal health insurance program that mainly serves people over the age of 65 years old regardless of their income. It also serves younger people with specific health conditions.
Medicare is a federal health insurance program that mainly serves people over the age of 65 years old regardless of their income. It also serves younger people with specific health conditions. Medicare Advantage: Medicare Advantage is also known as Medicare Part C. At a minimum, the plan combines the coverage from parts A and B, though it usually offers additional benefits. Medicare-approved private health insurance companies administer these plans.
Medicare Advantage is also known as Medicare Part C. At a minimum, the plan combines the coverage from parts A and B, though it usually offers additional benefits. Medicare-approved private health insurance companies administer these plans. Medicare Advantage open enrollment period (OEP): The Medicare Advantage OEP is an additional opportunity to sign up for Part C or Part D. This period runs from January 1 to March 31 every year.
The Medicare Advantage OEP is an additional opportunity to sign up for Part C or Part D. This period runs from January 1 to March 31 every year. Medicare-approved amount: This is the maximum fee that Medicare sets to pay a healthcare professional for a specific service.
This is the maximum fee that Medicare sets to pay a healthcare professional for a specific service. Medicare savings programs (MSPs): MSP is the collective name for a group of four Medicare plans that help people with limited incomes and resources pay their out-of-pocket Medicare costs.
MSP is the collective name for a group of four Medicare plans that help people with limited incomes and resources pay their out-of-pocket Medicare costs. Medigap: Medigap is also known as Medicare supplement insurance, which someone with Original Medicare may choose. Private health insurance companies administer these plans, and they cover 50% to 100% of the out-of-pocket costs for parts A and B.
Medigap is also known as Medicare supplement insurance, which someone with Original Medicare may choose. Private health insurance companies administer these plans, and they cover 50% to 100% of the out-of-pocket costs for parts A and B. Medigap OEP: The Medigap OEP is a 6-month period that starts the month a person turns 65 years old and signs up for Medicare Part B. This is the best time to enroll in a Medigap plan. Plans may not be available outside of this period.
The Medigap OEP is a 6-month period that starts the month a person turns 65 years old and signs up for Medicare Part B. This is the best time to enroll in a Medigap plan. Plans may not be available outside of this period. Medicare Summary Notice (MSN): This is a notice a person gets every 4 mo nths if they have Original Medicare that shows all their Medicare Part A and Part B covered services. It is not a bill, but it shows all services or supplies that were billed during that period, how much Medicare paid, and how much the individual may owe. » Learn more:What is the difference between Medicare and Medicaid?
Open enrollment period (OEP): For Medicare Advantage and prescription drug plans, the annual OEP runs from October 15 to December 7 each year. For Medigap, the OEP is the 6-month period that runs from the month a person turns 65 years old and signs up for Medicare Part B.
For Medicare Advantage and prescription drug plans, the annual OEP runs from October 15 to December 7 each year. For Medigap, the OEP is the 6-month period that runs from the month a person turns 65 years old and signs up for Medicare Part B. Original Medicare: This includes Part A, which is inpatient hospital insurance, and Part B, which is outpatient medical insurance.
This includes Part A, which is inpatient hospital insurance, and Part B, which is outpatient medical insurance. Out of network: This term describes any healthcare professional whom Medicare has not specified as preferred to a particular plan. In some plans, using an out-of-network professional may not be an option, or it may cost a person more.
This term describes any healthcare professional whom Medicare has not specified as preferred to a particular plan. In some plans, using an out-of-network professional may not be an option, or it may cost a person more. Out of pocket: This term describes the amount a person will have to pay, such as deductibles, coinsurance, copayments, and excess charges.
This term describes the amount a person will have to pay, such as deductibles, coinsurance, copayments, and excess charges. Outpatient: This describes care a person receives from a doctor or other healthcare professional without being admitted to the hospital.
Part A: Medicare Part A is one of two parts of Original Medicare. Part A provides a person with inpatient benefits.
Medicare Part A is one of two parts of Original Medicare. Part A provides a person with inpatient benefits. Part B: Medicare Part B is the other of two parts of Original Medicare. Part B covers outpatient services, such as doctor visits.
Medicare Part B is the other of two parts of Original Medicare. Part B covers outpatient services, such as doctor visits. Part C: Medicare Part C is another term for Medicare Advantage.
Medicare Part C is another term for Medicare Advantage. Part D: Medicare Part D provides prescription drug coverage, which a person with Original Medicare may choose. Private health insurance companies administer these plans.
Medicare Part D provides prescription drug coverage, which a person with Original Medicare may choose. Private health insurance companies administer these plans. Part D out-of-pocket savings cap: In 2025, Medicare eliminated the previous Part D coverage gap (donut hole) and replaced it with the savings cap. With this change, all Part D out-of-pocket expenses are capped at $2,000. When a person reaches this cap, they no longer have to pay out-of-pocket for prescription drugs for the rest of the year. This cap is subject to annual changes.
In 2025, Medicare eliminated the previous Part D coverage gap (donut hole) and replaced it with the savings cap. With this change, all Part D out-of-pocket expenses are capped at $2,000. When a person reaches this cap, they no longer have to pay out-of-pocket for prescription drugs for the rest of the year. This cap is subject to annual changes. Preferred Provider Organization (PPO): A PPO is one of four types of Medicare Advantage plans. PPOs allow a person the flexibility of choosing either in-network or out-of-network professionals.
A PPO is one of four types of Medicare Advantage plans. PPOs allow a person the flexibility of choosing either in-network or out-of-network professionals. Premiums: This refers to the amount a person pays monthly to Medicare or a private health insurance company to keep their policy.
This refers to the amount a person pays monthly to Medicare or a private health insurance company to keep their policy. Primary care physician (PCP): A PCP is a doctor who provides basic, non-specialized healthcare. Some Medicare Advantage plans require you to see your PCP and obtain a referral before seeing a specialist.
A PCP is a doctor who provides basic, non-specialized healthcare. Some Medicare Advantage plans require you to see your PCP and obtain a referral before seeing a specialist. Private Fee-for-Service (PFFS): A PFFS is one of four types of Medicare Advantage plans. PFFS plans have set fees that Medicare will pay providers and set fees that a person will pay when receiving care.
A PFFS is one of four types of Medicare Advantage plans. PFFS plans have set fees that Medicare will pay providers and set fees that a person will pay when receiving care. Programs of All-Inclusive Care for the Elderly (PACE): PACE is a Medicare and Medicaid program that helps older people meet their healthcare needs in the community instead of going to a nursing home or other care facility.
Qualified Disabled and Working Individuals (QDWI) program: The QDWI program is one of four Medicare savings programs. It helps pay Part A premiums for working people under 65 years old who have a disability.
The QDWI program is one of four Medicare savings programs. It helps pay Part A premiums for working people under 65 years old who have a disability. Qualified Medicare Beneficiary (QMB) program: The QMB program is one of four Medicare savings programs. The QMB program pays parts A and B premiums, along with deductibles, copays, and coinsurance.
The QMB program is one of four Medicare savings programs. The QMB program pays parts A and B premiums, along with deductibles, copays, and coinsurance. Qualifying Individual (QI) program: The QI program is another one of four Medicare savings programs. The QI program helps pay Part B premiums.
Referral: A written order from a primary care doctor for a person to see a specialist. Many Medicare Advantage plans will not pay for care from a specialist if an individual does not obtain a referral first.
A written order from a primary care doctor for a person to see a specialist. Many Medicare Advantage plans will not pay for care from a specialist if an individual does not obtain a referral first. Rehabilitation: These are services that promote recovery from illness or injury or prevent slow deterioration from a condition. Rehabilitation is generally provided by nurses and physical, occupational, and speech therapists.
Secondary payer: This is an insurance plan, policy, or program that pays second on a claim for medical care.
This is an insurance plan, policy, or program that pays second on a claim for medical care. Skilled Nursing Facility (SNF): An SNF is a licensed facility that has the staff and equipment available to provide skilled nursing and rehabilitation. In order to be covered by Medicare, the facility must also be certified by Medicare.
An SNF is a licensed facility that has the staff and equipment available to provide skilled nursing and rehabilitation. In order to be covered by Medicare, the facility must also be certified by Medicare. Social Security Administration (SSA): The SSA is the federal agency that administers the Social Security Program. Medicare is administered by CMS. However, the SSA determines eligibility for Medicare and processes premium payments. A person also enrolls for Medicare through the SSA.
The SSA is the federal agency that administers the Social Security Program. Medicare is administered by CMS. However, the SSA determines eligibility for Medicare and processes premium payments. A person also enrolls for Medicare through the SSA. Social Security Disability Insurance (SSDI): Social Security benefits that are paid to an individual or certain family members if they have an eligible disability.
Social Security benefits that are paid to an individual or certain family members if they have an eligible disability. Special enrollment period: This is an opportunity to sign up for Original Medicare under certain circumstances, such as when a person's employee health insurance coverage comes to an end.
This is an opportunity to sign up for Original Medicare under certain circumstances, such as when a person's employee health insurance coverage comes to an end. Special Needs Plans (SNPs): SNPs are available to people with certain medical conditions, such as end stage renal disease (ESRD). The plans have customized benefits, drug formularies, and healthcare professional choices to ensure that people receive the most appropriate care.
SNPs are available to people with certain medical conditions, such as end stage renal disease (ESRD). The plans have customized benefits, drug formularies, and healthcare professional choices to ensure that people receive the most appropriate care. Specified Low-Income Medicare Beneficiary (SLMB) program: The SLMB program is one of four Medicare savings programs. The SLMB program pays Part B premiums.
The SLMB program is one of four Medicare savings programs. The SLMB program pays Part B premiums. State Health Insurance Assistance Program (SHIP): SHIP is a state program that is funded by the federal government to provide unbiased and free counseling to people who qualify for Medicare.
SHIP is a state program that is funded by the federal government to provide unbiased and free counseling to people who qualify for Medicare. Supplemental Security Income (SSI): SSI is a program administered through the SSA that provides limited financial assistance to older people and those with disabilities who have not worked enough quarters to qualify for SSDI.
Tiers: Tiers refer to lists of drugs within a formulary that a Part D prescription drug plan categorizes. For example, Tier 1 usually has less expensive drug options and the lowest copayments.
Underwriting: This involves a full review of a person's medical history to determine the premiums they should pay. Sometimes, this can lead to Medicare or private insurers excluding certain medical conditions from the coverage they offer.
Work credits: These are also known as Social Security Credits. A person must earn at least 40 credits in order to qualify for premium-free Part A at 65 years old. This equates to around 10 years of working and paying Federal Insurance Contributions Act (FICA) taxes. An individual earns 1 credit for every $1,810 they make in income, for up to 4 credits per year.
Learning Medicare definitions takes some time at first, but the terms will usually become easier to understand with time and experience.
The most important things to know are the basic programs' definitions, including those of Original Medicare, Medicare Advantage, Part D, and Medigap.
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