Beneficiary - An elderly or disabled person who receives Medicare health insurance.
Benefit (a.k.a., Coverage) - The amount that someone receives from a Medicare insurance plan.
Benefit Period - How Original Medicare measures a beneficiary's use of hospital or skilled nursing facility (SNF) services. A benefit period begins the day a person goes into a hospital or SNF and ends when he/she hasn't received hospital or SNF care for 60 consecutive days.
Catastrophic Coverage - Coverage provided when a person's prescription drug expenses exceed a level ($3,600 out-of-pocket) that is considered very high by the federal government. At this level, the most assistance is provided to beneficiaries and the government pays up to 95% of any additional expenses, with no upper limit.
Catastrophic Coverage Threshold (a.k.a., Stop-Loss Limit) - The amount of total annual spending on prescription drugs required to receive catastrophic coverage. In 2006, catastrophic benefits are provided when a beneficiary's prescription drug costs exceed $5,100. At this point, a Medicare beneficiary would have spent $3,600 out -of -pocket.
CMS - Acronym for the Centers for Medicare & Medicaid Services, the federal government agency that administers the Medicare program and works with states to manage the Medicaid program.
Co-Insurance - A type of cost -sharing arrangement where Medicare beneficiaries pay a percentage of the approved amount for a covered health service.
Co-payment - The amount that someone must pay out -of -pocket when they receive some health services covered through Medicare or purchase a covered prescription drug. Copayments are stated as flat dollar amounts and vary according to the type of service provided.
Coverage Gap (a.k.a., "Doughnut Hole" or "Donut Hole") - The term given to the coverage gap in Medicare Part D between $2,250 and $5,100 of total prescription drug expenses that requires beneficiaries to pay up to $2,850 ($5,100 - $2,250) of their drug costs. Above the $5,100 stop -loss limit is considered catastrophic coverage. At this point, Medicare beneficiaries would have spent $3,600 out -of -pocket on prescription drugs (between the Part D deductible, coinsurance, and uncovered drug costs in the doughnut hole) and would then be responsible for paying the greater of a $2 co-payment for generics and $5 for brand drugs or 5% coinsurance.
Creditable Coverage - Prescription drug coverage from an insurance plan other than Medicare Part D (e.g., union or employer health coverage for retirees) that pays out as much or more than Medicare's standard Part D prescription drug coverage. If someone has creditable coverage, they will be notified in writing by their plan provider.
Deductible - The amount of money that Medicare beneficiaries must pay out of pocket before they receive health plan benefits. An example is the $250 deductible for Medicare Part D in 2006. Deductible amounts typically change every year to reflect current health care costs.
Dual Eligibles - People who are eligible to receive both Medicare and Medicaid benefits.
Eligible Drugs - Prescription drugs that are listed on a formulary and covered by a Part D plan.
Formulary - A list of prescription drugs that are available through a prescription drug plan such as Medicare Part D. Some formularies contain several tiers with different price levels (e.g., for generic and non -generic brand drugs).
Generic Drugs - Prescription drugs that have the same active ingredients and Food and Drug Administration approval as trademarked brand name drugs and generally cost less.
Inpatient Care - Health care services provided when someone is admitted to a hospital.
Late Enrollment Penalty - Additional charge paid by Medicare beneficiaries when they do not enroll in Parts B and D according to specified guidelines.
Managed Care Plans - Health care plans where beneficiaries will be generally only be covered when they go to doctors and hospitals in the plan's network, except for emergencies. Two common types of managed care plans are HMOs (Health Maintenance Organizations) and PPOs (Preferred Provider Organizations). Costs are often lower for managed care plans than for Original Medicare plans.
Medicaid - Joint federal and state health insurance program for qualified participants with low income and assets. Specific Medicaid eligibility guidelines vary from state to state.
Medicare - Federal government health insurance program for people age 65 and over or under age 65 with specific disabilities or end -stage kidney disease.
Medicare Advantage - Medicare managed -care plan (i.e., HMO or PPO) that offers both Part A and Part B services and may be available with or without Part D prescription drug coverage. These plans were formerly known as Medicare + Choice plans, under Part C of Medicare. On average, Medicare Advantage plans save beneficiaries about $100 a month compared to fee -for -service Medicare, according to CMS.
Medicare Advantage Prescription Drug Plan (MA-PD) - A Medicare Advantage plan that is approved by CMS to offer Medicare Part D prescription drug benefits.
Medicare-Approved Amount (a.k.a., Approved Charge) - The amount, in the Original Medicare program, that a doctor or other health care provider is paid for a health care service including the deductible, coinsurance, and co-payment amounts that a beneficiary pays. The Medicare approved amount is the total that Medicare considers a reasonable amount for a health care service.
Medicare Part A - Provides hospitalization coverage, paid for by payroll deductions, for which eligible beneficiaries are automatically enrolled.
Medicare Part B - Provides payment for physician expenses, outpatient care, and other medical services not covered under Part A. Enrollment in Part B is optional and beneficiaries pay an annual deductible and monthly premiums.
Medicare Part C - Managed care plans that offer Medicare Part A and Part B services together.
Medicare Part D - Voluntary outpatient prescription drug benefit for Medicare beneficiaries that allows private companies to provide coverage instead of mandating that the government provide it.
Medigap Insurance (a.k.a., Medicare Supplement Policy) - Health insurance policy for Medicare beneficiaries that is designed to cover expenses that are not covered by Original Medicare coverage (e.g., deductibles and co-payments and services not covered by Medicare). There are a variety of standardized plans available ranging from A (least coverage) to J (most coverage) and, beginning in 2006, Plans K and L. Due to the implementation of Medicare Part D, no new Medigap plans can now be sold with drug coverage.
Network - A group of pharmacies, hospitals, and doctors who have contracts with an insurance plan to provide care to its members. Members save money when they stay "in network" and use the services of participating network providers.
Original (a.k.a., Traditional or Fee-for-Service) Medicare - Coverage that reimburses a fee for a service provided by any doctor, hospital, or other health care provider. Beneficiaries are responsible for deductibles, co-payments, and coinsurance amounts in Original Medicare Parts A and B. Beneficiaries will remain in Original Medicare plans unless they opt to join another type of health plan such as a Medicare Advantage HMO or PPO.
Out-of-Pocket Costs - The amount of health care expenses that Medicare beneficiaries pay themselves including deductibles, co-insurance, and the Medicare Part D coverage gap (a.k.a., "doughnut hole").
Outpatient Care - Health care services that do not include an overnight stay in a hospital.
Premium - Fee that is charged to pay for Medicare coverage. Both Medicare Part B and Medicare Part D require the payment of premiums. Medicare Part B premiums are adjusted annually by the Federal government and Medicare Part D premiums are set by participating providers.
Prescription Drug Plan (PDP) - A CMS -approved plan that provides outpatient prescription drug coverage to beneficiaries of Original (fee -for -service) Medicare (i.e., Parts A and B).
Referral - A written authorization from a primary care physician in a Medicare managed care plan to see a specialist or receive certain diagnostic or health care services. If a plan participant does not receive a proper referral, their plan may not pay for their care.
State Health Insurance Program (SHIP) - State -operated program that provides free local health insurance counseling for Medicare beneficiaries and others with questions about senior health insurance.
True Out-of-Pocket Spending (TrOOP) - The amount that Medicare beneficiaries must pay out of pocket in order to be eligible for catastrophic coverage under Part D of Medicare. The Medicare PDP premium does not count towards the TrOOP amount. In 2006, the TrOOP limit for Part D is $3,600, calculated as follows: $250 deductible, 25% of expenses from $251 to $2,250 or $500, and $2,850 of uncovered "doughnut hole" expenses ( $250 + $500 + $2,850 = $3,600).