Medicare Glossary

Terms and definitions you may need to know

Annual Enrollment Period (AEP) +

The time period between October 15 and December 7 every year during which you may make changes to your Medicare coverage for the upcoming calendar year. Those changes go into effect January 1 of the following year.
A document that private Medicare plans send to plan members each fall, detailing any changes in plan coverage, costs, or service areas that will go into effect January 1 of the following year.
The federal government agency that runs the Medicare program and works with the states to manage their Medicaid programs.
The Medicare-allowed amount of your health care services that you're expected to pay after you've paid your plan deductibles. For example, Medicare Part B might pay 80% of the cost of a medical service and you would pay 20%.
A pre-set, fixed amount that you pay out-of-pocket for a service at the time you receive it. In a Medicare Advantage plan, for example, you might pay a $25 copayment for a primary care physician visit. 
The cost for medical care that you pay yourself like a copayment, coinsurance, or deductible.

Most Medicare Part D drug plans have a coverage gap—also known as the "donut hole"—that temporarily limits what the drug plan will cover for drugs. Not everyone enters the coverage gap. It begins after you and your drug plan have spent a certain amount for covered drugs. This amount may change each year. For instance, in 2022, once you and your plan have spent $4,430 on covered drugs, you'll enter the coverage gap.

If you reach the coverage gap, you'll pay no more than 25% of the cost for your plan's covered brand name prescription drugs, regardless of whether you purchase them at a pharmacy or order them through the mail. Some plans may offer you even lower costs in the coverage gap. Although you’ll only pay 25% of the price—or less—for a brand name drug, 95% of the full price of the drug will count as your out-of-pocket costs to help you get out of the coverage gap faster. If you get Extra Help paying Part D costs, you won't enter the coverage gap.

Once you've spent the out-of-pocket limit ($7,050 in 2022), you're out of the coverage gap and will automatically get "catastrophic coverage." This ensures you only pay a small coinsurance percentage or copayment for covered drugs for the rest of the calendar year.

Prescription drug coverage from a health plan other than a Medicare Part D standalone plan or a Medicare Advantage plan that includes prescription drug coverage and is at least as good as Medicare Part D or better.
An established, out-of-pocket amount that you pay for your medical care and services before Medicare or other insurance begins taking over payment.
A person who is enrolled in both Medicare and Medicaid. This occurs when a Medicare enrollee's income and assets are low enough to qualify for Medicaid help in paying for some of the costs of Medicare—or to qualify for full coverage under both Medicare and Medicaid.
A Medicare program that helps individuals with limited income and resources pay Medicare Part D prescription drug plan costs, like premiums, deductibles and coinsurance.
A list of the approved prescription drugs that are covered by a specific Medicare Part D or Medicare Advantage plan. To lower costs, many plans offering prescription drug coverage place drugs into different "tiers" on their formularies. Each plan can divide its tiers in different ways, and each tier costs a different amount. Generally, a drug in a lower tier will cost you less than a drug in a higher tier.
Medicare's general enrollment period (GEP) is an annual opportunity for certain eligible individuals to enroll in Original Medicare. The GEP is January 1–March 31 every year. Coverage takes effect on July 1, and you may owe a late-enrollment penalty. 
Generic prescription drugs use the same active-ingredient formula as their brand name counterparts and work the same way. Generic drugs typically cost less than brand name drugs and are rated by the Food and Drug Administration (FDA) to be as safe and effective as brand name drugs.
With an HMO plan, you generally must get your care from doctors and hospitals in the plan's network. If you go outside the network for services other than Emergency Room, urgent care services, or out-of-area renal dialysis, you're responsible for paying for your own care.
This is the seven-month enrollment window when you first become eligible for Medicare—generally when you turn 65. Your IEP begins three months prior to your 65th birthday and ends three months after your birth month. 
A type of Medicare Advantage plan that combines a high-deductible insurance plan with a medical savings account (MSA) that you can use to pay for your health care costs. The plan will only begin to cover your costs once you meet a high yearly deductible, which varies by plan. The MSA Plan deposits money in a special savings account for you to use to pay health care expenses. The amount of the deposit varies by plan. You can use this money to pay your Medicare-covered costs before you meet the deductible.
The group of health care providers, such as hospitals, doctors, lab services and pharmacies, that agrees to provide care to the members of a Medicare Advantage coordinated care plan or Medicare Part D prescription drug plan. These providers are called "network providers" and "network pharmacies."
The amount of health care costs you pay on your own because they are not covered by Medicare or other insurance, including deductibles, copays and coinsurance.
A limit that plans set on the amount of money you will have to spend out of your own pocket in a single plan year for covered Medical services.
A type of Medicare Advantage HMO plan that gives members the ability to visit doctors and hospitals outside their network for some covered services, usually for a higher copayment or coinsurance. Some POS plans do not require referrals for specialty services.
A type of Medicare Advantage plan in which you can use doctors and hospitals in the plan's network or go to doctors and hospitals outside the network—as long as the provider accepts Original Medicare. If you go outside the network, you'll usually pay a larger share of the cost of your care.
A fixed amount you must pay to participate in a plan or program, usually as a monthly payment in addition to your Medicare Part B premium.
A standalone Medicare Part D insurance plan that helps with the cost of prescription drugs. A PDP is one of two ways Medicare beneficiaries can enroll in Medicare coverage for prescription drugs. The Medicare Part D benefit is offered through private insurers, either as a standalone PDP or through a Medicare Advantage plan that has prescription drug benefits (MAPD).
Care that is provided to keep you healthy or prevent illness, such as Pap tests, pelvic exams, flu shots, screening mammograms, and diabetes screenings.
A type of Medicare Advantage plan that allows you to visit any Medicare-eligible doctor, hospital or other health care service provider who is willing to accept the plan's payment terms and conditions. PFFS plan members don't need a referral from a primary care doctor in order to see a specialist.
A person or organization that provides medical services and products, such as a doctor, hospital, health care professional or health care facility.
In Medicare Advantage, the area in which a plan offers service. A service area is typically a county, state or region.
A set time when you can sign up for Medicare Part B if you didn’t take Medicare Part B during the Initial Enrollment Period, because you or your spouse were working and had group health plan coverage through the employer or union. You can sign up at any time you are covered under the group plan based on current employment status. The last eight months of the Special Enrollment Period begin the month after the employment ends or the group health coverage ends, whichever comes first.
A type of Medicare Advantage plan that provides all the health care and services of Medicare Parts A and B to people who require special care for chronic illnesses, care management of multiple diseases, and focused care management. Membership may be limited to individuals in specific types of institutions, such as nursing homes, or to beneficiaries who are dual eligible or who have specific chronic or disabling conditions.

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Our AAA Medicare Licensed Advisors will talk with you to understand your personal situation and help you sort through your options. We’ll give you unbiased advice about the coverage options that are best for you. If you have questions, please call us at (877) 477-7120.

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