Frequently Used Medicare Supplement Terms

The following terms are from the "Words to Know" section of the Guide to Health Insurance For People With Medicare.

Benefit Period

The way that the Original Medicare Plan measures your use of hospital and skilled nursing facility (SNF) services. A benefit period begins the day you go to a hospital or skilled nursing facility. The benefit period ends when you haven't had any inpatient hospital care (or skilled care in a SNF) for 60 days in a row. If you go into a hospital or a skilled nursing facility after one benefit period has ended, a new benefit period begins. You must pay the inpatient hospital deductible for each benefit period. There is no limit to the number of benefit periods, although inpatient mental health care in a psychiatric hospital is limited to 190 days in a lifetime.

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Coinsurance

An amount you may be required to pay for services after you pay any plan deductibles. In the Original Medicare Plan, this is a percentage (like 20%) of the Medicare-approved amount. You have to pay this amount after you pay the Part A and/or Part B deductible. In a Medicare Prescription Drug Plan, the coinsurance will vary depending on how much you have spent.

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Copayment

In some Medicare health and prescription drug plans, an amount you pay for each medical service, like a doctor's visit, or prescription. A copayment is usually a set amount you pay. For example, this could be $10 or $20 for a doctor's visit or prescription. Copayments are also used for some hospital outpatient services in the Original Medicare Plan.

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Creditable Coverage

Certain kinds of previous health insurance coverage that can be used to shorten a pre-existing condition waiting period under a Medigap policy. (See pre-existing conditions.)
Note: This isn't the same as creditable prescription drug coverage.

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Deductible

The amount you must pay for health care or prescriptions, before the Original Medicare Plan, your prescription drug plan, or other insurance begins to pay. For example, in the Original Medicare Plan, you pay a new deductible for each benefit period for Medicare Part A, and each year for Medicare Part B. These amounts can change every year.

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Excess Charges

If you are in the Original Medicare Plan, this is the difference between a doctor's or other health care provider's actual charge (which may be limited by Medicare or the state) and the Medicare-approved payment amount.

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Guaranteed Issue Rights (also called "Medigap Protections")

Rights you have in certain situations when insurance companies are required by law to sell or offer you a Medigap policy. In these situations, an insurance company can't deny you a Medigap policy or place conditions on a Medigap policy, such as exclusions for pre-existing conditions, and can't charge you more for a Medigap policy because of past or present health problems.

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Guaranteed Renewable

A right you have that requires your insurance company to automatically renew or continue your Medigap policy, unless you make untrue statements to the insurance company, commit fraud or don't pay your premiums. Required in all Medigap policies issued since 1992.

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Health Maintenance Organization (HMO) Plan (Medicare)

A type of health plan available in some areas of the country. Plans must cover all Medicare Part A and Part B health care. Some HMOs cover extra benefits, like extra days in the hospital. In most HMOs, you can only go to doctors, specialists, or hospitals on the plan's list except in an emergency. Your costs may be different than in the Original Medicare Plan.

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Lifetime Reserve Days

In the Original Medicare Plan, these are additional days that Medicare will pay for when you are in a hospital for more than 90 days. You have a total of 60 reserve days that can be used during your lifetime. For each lifetime reserve day, Medicare pays all covered costs except for a daily coinsurance.

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Medicaid

A joint Federal and state program that helps with medical costs for some people with limited incomes and resources. Medicaid Programs vary from state to state, but most health care costs are covered if you qualify for both Medicare and Medicaid.

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Medical Underwriting

The process that an insurance company uses to decide, based on your medical history, whether or not to take your application for insurance, whether or not to add a waiting period for pre-existing conditions (if your state law allows it), and how much to charge you for that insurance.

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Medicare Advantage Plan (Part C)

A type of Medicare plan offered by a private company that contracts with Medicare to provide you with all your Medicare Part A and Part B benefits.

Medicare Advantage Plans are HMOs, PPOs, Private Fee-for-Service Plans, Special Needs Plans, or Medicare Medical Savings Account Plans. If you are enrolled in a Medicare Advantage Plan, Medicare services are covered through the plan and aren't paid for under the Original Medicare Plan. Most Medicare Advantage Plans offer prescription drug coverage.

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Medicare-approved Amount

In the Original Medicare Plan, this is the amount a doctor or supplier that accepts assignment can be paid. It includes what Medicare pays, and any deductible, coinsurance, or copayment that you pay. It may be less than the actual amount a doctor or supplier charges.

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Medicare Medical Savings Account (MSA) Plan

MSA Plans combine a high-deductible Medicare Advantage Plan (like an HMO or PPO) with a Medical Savings Account for medical expenses.

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Medicare Prescription Drug Plan (Part D)

A stand-alone drug plan offered by insurers and other private companies to people who get benefits through the Original Medicare Plan, through some Medicare Private Fee-for-Service Plans that offer prescription drug coverage, a Medicare Cost Plan, or Medicare Medical Savings Account Plan. Medicare Advantage Plans may also offer prescription drug coverage that must follow the same rules as Medicare Prescription Drug Plans.

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Medicare SELECT

A type of Medigap policy that may require you to use hospitals and, in some cases, doctors within its network to be eligible for full benefits.

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Medigap Policy

Medicare Supplement insurance sold by private insurance companies to fill "gaps" in Original Medicare Plan coverage. Medigap policies only work with the Original Medicare Plan.

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Original Medicare Plan

The Original Medicare Plan has two parts: Part A (Hospital) and Part B (Medical). It is a fee-for-service health plan. Medicare pays its share of the Medicare-approved amount, and you pay your share (coinsurance and deductibles).

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Pre-Existing Condition

A health problem you had before the date that a new insurance policy starts.

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Preferred Provider Organization (PPO) Plan

A type of health plan available in a local or regional area in which you pay less if you use doctors, hospitals, and providers that belong to the network. You can use doctors, hospitals, and providers outside of the network for an additional cost. Many Medicare Advantage Plans are PPOs.

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Premium

The periodic payment to Medicare, an insurance company, or a health care plan for health care or prescription drug coverage.

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Private Fee-for-Service (PFFS) Plan

A type of Medicare Advantage Plan (Part C) in which you may go to any Medicare-approved doctor or hospital that accepts the plan's payment. The insurance plan, rather than the Medicare Program, decides how much it will pay, and what you pay, for the services you get. You may pay more or less for Medicare-covered benefits. You may have extra benefits the Original Medicare Plan doesn't cover.

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Special Needs Plan

A special type of Medicare Advantage Plan (Part C) that provides more focused health care for specific groups of people, such as those who have both Medicare and Medicaid, who reside in a nursing home, or who have certain chronic medical conditions.

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State Health Insurance Assistance Program

A state program that gets money from the Federal Government to give free local health insurance counseling to people with Medicare.

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State Insurance Department

A state agency that regulates insurance and can provide information about Medigap policies and other private insurance.

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