Medicare terms explained simply

The glossary, A to Z

Annual Enrollment PeriodAlso called AEP, open enrollment

October 15 to December 7, every year. It's when you can change your Medicare Advantage plan or your drug plan. Changes start January 1. AEP checklist.

Annual Notice of ChangeAlso called ANOC

The letter your plan mails you each fall. It lists what will be different next year, like your premium, your copays, and your covered drugs. How to read your ANOC.

Assignment

When a doctor agrees to take the Medicare-approved amount as full payment. A doctor who accepts assignment can only bill you for your deductible and coinsurance.

Benefit period

How Part A counts a hospital stay. It starts the day you're admitted and ends after you've been out of the hospital or skilled nursing facility for 60 days in a row. The Part A deductible applies to each one.

Coinsurance

Your share of a bill, as a percentage. With Part B, you usually pay 20% and Medicare pays 80% after your deductible.

CopayAlso called copayment

Your share of a bill, as a set dollar amount. For example, a flat fee each time you see a doctor or fill a prescription.

Creditable coverage

Drug coverage from somewhere else, like a job, that's expected to pay at least as much as Medicare's standard drug coverage. If you have it, you can wait on Part D without a late penalty.

Deductible

What you pay for covered care before your coverage starts paying its share. Part A, Part B, and most drug plans each have their own.

Evidence of CoverageAlso called EOC

Your plan's full rulebook for the year. It spells out what's covered, what you pay, and how to appeal a decision. The Annual Notice of Change is the short version of what's changing.

Extra HelpAlso called Low-Income Subsidy

A federal program that lowers Part D costs for people with limited income and savings. You apply through Social Security. Free Medicare help in the Triad.

FormularyAlso called drug list

The list of prescription drugs a plan covers. Every plan has its own, and it can change each year. If a drug isn't on the list, the plan usually won't pay for it.

HMOAlso called Health Maintenance Organization

A type of Medicare Advantage plan. You generally have to use the plan's doctors and hospitals, except in an emergency. Many HMOs ask you to pick a primary care doctor.

IRMAAAlso called income-related monthly adjustment amount

An extra amount added to your Part B and Part D premiums if your income is above a certain level. It's based on your tax return from two years ago. Medicare costs 2027.

Late enrollment penalty

An amount added to your premium if you sign up late and didn't have other qualifying coverage. The Part B penalty lasts as long as you have Part B. Work out the Part B penalty.

Maximum out-of-pocketAlso called out-of-pocket limit

The most you'd pay in a year for covered medical care in a Medicare Advantage plan. Each plan sets its own. Original Medicare by itself has no yearly limit.

Medicare AdvantageAlso called Part C

A plan from a private company that covers your Part A and Part B benefits in one package. Most include drug coverage. You usually need to use the plan's network.

Medicare SupplementAlso called Medigap

A policy you buy to go with Original Medicare. It helps pay costs Original Medicare leaves to you, like the deductibles and the 20% coinsurance. It doesn't include drug coverage. Medicare Advantage or Medigap?.

Network

The doctors, hospitals, and pharmacies a plan has contracts with. In network usually costs less. Out of network can cost more, or may not be covered at all. Keep my doctor.

Original Medicare

Part A and Part B together, run by the federal government. You can see any doctor or hospital in the country that takes Medicare.

Part AAlso called hospital insurance

Covers hospital stays, skilled nursing facility care after a hospital stay, hospice, and some home health care. Most people pay no monthly premium for it.

Part BAlso called medical insurance

Covers doctor visits, outpatient care, preventive services, and medical equipment. You pay a monthly premium for it.

Part DAlso called prescription drug coverage

Coverage for prescription drugs, sold by private companies. You can get it as a separate drug plan or as part of most Medicare Advantage plans.

PPOAlso called Preferred Provider Organization

A type of Medicare Advantage plan. You can see doctors outside the plan's network, but it usually costs more than staying in network.

Premium

What you pay each month to have coverage, whether or not you use it.

Prior authorization

Approval your plan may require before it will cover certain services or drugs. Your doctor's office usually asks for it.

Referral

A written okay from your primary care doctor to see a specialist. Some plans require one before they'll cover the visit.

Special Enrollment PeriodAlso called SEP

A chance to sign up or change plans outside the usual dates. A life change opens it, like moving or losing coverage from a job. Special Enrollment Periods.

Tier

A group of drugs on a plan's drug list. Drugs in lower tiers generally cost you less than drugs in higher tiers.

Want the yearly dollar amounts that go with these words? See Medicare costs 2027.