Medicare: A Glossary of Terms

A

• Accepting the assignment: This means a doctor, other healthcare professional, facility, or supplier agrees to accept the Medicare-approved amount as full payment.
• Affordable Care Act (ACA): In 2010, President Barack Obama signed the ACA. It included provisions to expand healthcare to all eligible people in the United States, improve healthcare delivery systems, and control healthcare costs. For Medicare, this meant expanding preventive care services, providing annual free wellness exams for beneficiaries, and taking steps to close the coverage gap (donut hole), which officially occurred in 2025.
• Amyotrophic Lateral Sclerosis (ALS): ALS, also known as Lou Gehrig’s disease, is a degenerative disease that affects the brain and spinal cord. If you have ALS and receive Social Security benefits, you may be eligible for Original Medicare (parts A and B) before you turn 65 years old.
• Annual cap: This is a yearly limit on out-of-pocket expenses.
• Annual Notice of Change (ANOC): The ANOC is a yearly notice from your Medicare plan. This notice includes any changes to costs, coverage, and more that would become effective in January. ANOC notices are typically sent in September.

B

• Benefit period: A benefit period begins the day you are admitted to the hospital. It ends when you have not received any inpatient care for 60 consecutive days. Each new benefit period requires you to pay the Part A hospital deductible.

C

• Catastrophic coverage: This is a stage with Medicare prescription drug coverage (Part D) when your out-of-pocket spending has reached the annual limit of $2,000. Once you enter catastrophic coverage, you pay nothing for your prescription drugs for the rest of the year.
• Claim: This is a request for reimbursement for a healthcare service that healthcare professionals generally send directly to Medicare. You can also submit a claim to Medicare if a healthcare professional does not or cannot file one.
• CMS: This is the acronym for the Centers for Medicare and Medicaid Services. CMS is the federal agency that administers Medicare and Medicaid.
• COBRA: COBRA stands for the Consolidated Omnibus Budget Reconciliation Act. As of 1985, this law allowed some employees to keep their health coverage after they left their employment.
• Coinsurance: Coinsurance is the percentage cost you are responsible for paying toward a healthcare service.
• Copayment: This is also called copay. It is a fixed amount that you may be responsible for paying toward a health service.
• Cost sharing: This refers to the portion of healthcare expenses you are responsible for paying. These include coinsurance, copayment, and deductible.
• 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.

D

• Deductible: This is a fixed dollar amount you must pay before Medicare begins paying for covered services. Generally, each part of Medicare has its own deductible to meet.
• Dual eligible: This means you are eligible for both Medicare and Medicaid.
• Durable Medical Equipment (DME): DME is reusable medical equipment that healthcare professionals deem medically necessary to help manage an illness or injury. Medicare covers various types of DME, including:
  • wheelchairs
  • walkers
  • hospital beds
  • oxygen equipment

E

• End stage renal disease (ESRD): ESRD is the last stage of kidney disease when the kidneys cannot meet the daily needs required of them. It usually requires either dialysis or a transplant. If you have ESRD and receive Social Security benefits, you may be eligible for Medicare even if you are not 65 years old.
• Excess charge: A Medicare Part B excess charge is an amount you may have to pay that is more than the Medicare-approved amount.
• Extra Help: Extra Help is an assistance program related to prescription drug coverage (Part D). It helps people with low incomes pay for their medications.

F

• Formulary: A formulary is a list of drugs covered by the prescription drug (Part D) plan. Each plan provider sets its own formulary. However, every formulary must include most of the drugs from certain protected categories:
  • HIV medications
  • cancer drugs
  • antipsychotics
  • antidepressants
  • anticonvulsants
  • immunosuppressants for organ transplants
• FPL: FPL stands for federal poverty line. It is an income measurement that experts use to determine qualification for and levels of additional support you may be entitled to.

G

• General enrollment period: This is the time of year when you can sign up for Original Medicare (Part A and Part B). This period falls from January 1 to March 31 each year. This period falls from January 1 to March 31 each year.
• Generic drugs: Generic drugs are medications made to be the same as brand-name drugs in:
  • dosage
  • form
  • safety
  • strength
  • form of administration
  • quality
  • intended use
• Guaranteed issue: Guaranteed issue means a company has the duty to offer health insurance to all. Some Medicare beneficiaries are protected in this way from discrimination by insurance companies that offer Medigap policies.

H

• Health Maintenance Organization (HMO): An HMO is one of the four types of Medicare Advantage (Part C) plans. Typically, HMO plans require you to use in-network doctors, other healthcare professionals, and hospitals.
• Home healthcare: This is medical and supportive care provided at home. Medicare covers part-time or intermittent skilled nursing care or home health aide services if you are 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.

I

• Initial enrollment period (IEP): The IEP is the 7-month period when you can sign up for Medicare after initially becoming eligible. It begins 3 months before your 65th birthday and ends 3 months after.
• In-network: This describes a list of providers you may be required to use as part of your plan’s rules. It mostly refers to certain Medicare Advantage plans.
• Inpatient care: This describes the healthcare you receive in a hospital or skilled nursing facility. To receive inpatient care, you must be admitted to the facility at least overnight.
• IRMAA: IRMAA stands for income-related monthly adjustment amount. This means that your monthly premium may change depending on your income. Medicare Part B and Part D premiums may be dependent on IRMAA.

J

• Jurisdiction: This is the geographical area that Medicare assigns to private insurance companies to process Medicare claims for certain plans.

L

• Late enrollment penalty: A late enrollment penalty is a fee you are charged if you do not sign up for certain parts of Medicare in a timely manner. The fee may be lifelong or short term. It is an additional amount paid on top of your monthly premium.
• Lifetime reserve days: Reserve days are additional days in the hospital that Medicare will pay for beyond the initial 90 days. Each person receives 60 reserve days in their lifetime, but you don’t have to use them in the same hospital stay.

M

• 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.
• Medicaid: Medicaid is state-administered medical assistance for low income families, older people, and those with disabilities.
• 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 of money each year for your healthcare, and then the plan deposits a portion into an account. The amount deposited is often less than the deductible, so out-of-pocket costs are possible.
• Medically necessary: This refers to medical procedures, services, or equipment that are necessary for the treatment and diagnosis of medical conditions and that meet current accepted medical standards.
• Medicare: This is a federal health insurance program that mostly serves people over 65 years, regardless of income. It also serves younger people with certain medical conditions or disabilities.
• Medicare Advantage: Medicare Advantage (Part C) is a plan provided by Medicare-approved private insurance companies. At minimum, it offers the same coverage as Medicare Part A and Part B. It also often includes prescription drug coverage (Part D) and other additional benefits.
• Medicare Advantage Open Enrollment Period (OEP): The Medicare Advantage OEP is a period for people with Medicare Advantage plans to change or drop their plan. It runs from January 1 to March 31 each year.
• Medicare-approved amount: This is the maximum fee Medicare sets to pay a healthcare professional for a specific service.
• Medicare Savings Programs (MSPs): MSP is a collective term used to describe four Medicare plans that help people with limited incomes pay for their Medicare out-of-pocket costs. MSPs are state-run programs.
• Medigap: Medigap is also known as Medicare Supplement Insurance. It is extra insurance you can buy from a Medicare-approved private insurance company to help pay for out-of-pocket costs associated with Original Medicare.
• Medigap Open Enrollment Period (OEP): The Medigap OEP is a 6-month period that begins when you turn 65 years old and sign up for Medicare Part B. This is the best time for you to enroll in Medigap, as plans may not be available outside of this period.
• Medicare Summary Notice (MSN): This is a notice you get every 4 months if you have Original Medicare that shows all your Medicare Part A and Part B covered services. It is not a bill, but it lists all services or supplies billed for you during that period, how much Medicare paid, and how much you may owe.

O

• Open Enrollment Period: During the open enrollment period, you can join, drop, or switch Medicare Advantage plans. You can also switch from Original Medicare to Medicare Advantage. This period occurs between October 15 and December 7 each year.
• Original Medicare: Original Medicare includes Part A (hospital insurance) and Part B (medical insurance).
• Out of network: This term describes any healthcare professional that a Medicare plan has not specified as preferrable to that particular plan. In some plans, using an out-of-network healthcare professional or facility may not be an option or may cost you more.
• Out of pocket: This describes the amount you will have to pay for your healthcare. It includes:
  • premiums
  • deductibles
  • copayments
  • coinsurance
• Outpatient: This describes care you receive from a doctor or other healthcare professional without being admitted to a hospital.

P

• Part A: Part A is one part of Original Medicare. It covers inpatient care and services, hospice care, and some home healthcare.
• Part B: Part B is the other part of Original Medicare. It covers outpatient care, many preventive services, and durable medical equipment (DME). It may also cover some home healthcare.
• Part C: Part C is another term for Medicare Advantage.
• Part D: Part D plans are administered by Medicare-approved private insurance companies. These plans cover prescription drugs. You can enroll in one of these plans if you have Original Medicare.
• Part D out-of-pocket savings cap: In 2025, the old coverage gap (donut hole) was closed and replaced by the savings cap. This means when your Part D out-of-pocket expenses reach $2,000, you automatically enter catastrophic coverage and pay nothing for prescriptions for the rest of the year.
• Preferred Provider Organization (PPO): A PPO is one of four types of Medicare Advantage plans. PPO plans give you the flexibility to choose either in-network or out-of-network providers.
• Premiums: Premiums are the amount you pay monthly to use coverage provided by a plan. Each part of Medicare may have its own premium.
• Primary care physician (PCP): A PCP is a doctor who provides basic, nonspecialized 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 the four types of Medicare Advantage plans. PFFS plans have set fees that Medicare will pay to providers and a set amount you 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.

Q

• Qualified Disabled and Working Individuals (QDWI) program: The QDWI program is one of four Medicare Savings Programs (MSPs). It helps pay Part A premiums for working people under the age of 65 years who have a disability.
• Qualified Medicare Beneficiary (QMB) program: The QMB program is another one of the four MSPs. It helps pay for Part A and Part B premiums, along with deductibles, coinsurance, and copayments.
• Qualifying Individual (QI) program: The QI program is another of the four MSPs. It helps pay for Part B premiums as long as you have both Part A and Part B.

R

• Referral: A written order from a primary care physician for you to see a specialist. Many Medicare Advantage plans will not pay for care from a specialist without 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.

S

• Secondary payer: 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 with the staff and equipment available to provide skilled nursing and rehabilitation. The facility must also be certified by Medicare to qualify for Medicare coverage.
• 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. You also enroll for Medicare through the SSA.
• Social Security Disability Insurance (SSDI): Social Security benefits that you or certain family members receive if you have an eligible disability.
• Special Enrollment Period (SEP): SEPs are periods that occur under specific circumstances that allow you to enroll in a Medicare Advantage or Part D plan or switch plans outside the usual enrollment periods.
• Special Needs Plans (SNPs): SNPs provide benefits and services to people with specific needs, chronic conditions, or who have Medicaid. They include care coordination and tailored benefits.
• Specified Low-Income Medicare Beneficiary (SLMB) program: SLMB is one of the four types of Medicare Savings programs. It helps pay for Part B premiums if you have both Part A and Part B.
• State Health Insurance Assistance Program (SHIP): SHIP is a state program funded by the federal government to provide unbiased and free counseling to people who qualify for Medicare.
• Supplemental Security Income (SSI): This is a program administered through the SSA. It provides limited financial assistance to older people and those with disabilities who have not worked enough quarters to qualify for SSDI.

T

• Tiers: Tiers refer to how insurance providers categorize their formularies (drug lists). Generally, tiers are divided into generic drugs, preferred drugs, nonpreferred drugs, and specialized drugs. Each insurance provider sets its own tiers. However, the generic drug tier, sometimes known as tier 1, usually has the lowest costs.

U

• Underwriting: This involves a full review of your medical history to determine the premiums you should pay. Sometimes, this can lead to Medicare or private insurers excluding certain medical conditions from their coverage.

W

• Work credits: These are also known as Social Security Credits. You must earn at least 40 credits 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.

Takeaway

Understanding Medicare can be confusing. Having an A to Z glossary of terms and acronyms can help.