Questions about Medicare terms?

Words You Should Know.

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Common Medicare Words

 

Term Definition

Annual Election Period (AEP)

October 15 through December 7. During this time you can enroll in a new Medicare Advantage health plan for coverage beginning on January 1 of the next year.

Benefit

A payment your health plan makes for your services or drugs covered under the plan.

Catastrophic Coverage

Once your personal costs for prescription drugs and other drug costs reaches a limit designated by Medicare, you need “catastrophic coverage” and you will pay a discounted drug fee (or copay) the rest of the year.

Coinsurance

The percentage of your medical or prescription drug expenses that you are required to pay. For example, your plan might have a 20 percent coinsurance for the cost of a piece of durable medical equipment. If the charges are $200, your coinsurance would be $40.

Copay

A flat fee that you are required to pay for a medical service or prescription drug. For example, your plan might have a $10 copay for a doctor's office visit.

Cost Sharing

A term for the costs that you pay. The most common types of cost-sharing are deductibles, copays and coinsurance. You pay these costs and your plan covers the rest of the expense.

Coverage

The costs that your insurance company or Medicare pays for your medical services or prescription drugs.

Coverage Gap

Sometimes called the “donut hole,” this is a temporary limit on what some plans will pay on covered drugs. The gap usually begins after you have paid your Initial Coverage Limit and goes until you’ve paid enough to qualify for Catastrophic Coverage.

Covered Services

Medically necessary services or supplies shown in the Evidence of Coverage for which your plan might pay, in part or in full.

Creditable Coverage

Prescription drug coverage offered by a plan, other than a Part D plan, that is as good as or better than what is required by Medicare. If your plan provides drug coverage, that plan is required to tell you if it meets these standards for creditable coverage.

Deductible

The amount of your medical or prescription drug expenses that you pay each year before your plan starts to pay. For example, a plan may require you to pay $250 of your drug expenses before the plan pays anything during the calendar year.

Donut Hole

See Coverage Gap.

Durable Medical Equipment

Medical equipment that your doctor orders for use in your home. These items must be reusable, such as walkers, wheelchairs or hospital beds. Durable Medical Equipment is paid for under Medicare Part B for home health services.

Exclusions

Items that are not covered by a health plan.

Explanation of Benefits (EOB)

A statement from your insurance company that shows what your plan has paid for your medical services and what you owe your health care provider. For plans that include prescription drug coverage, you will receive a separate EOB that lists your drug purchases for the month. This EOB will help you know when you have met your deductible (if applicable), your Initial Coverage Limit, and your Catastrophic Coverage Threshold.

Formulary

A list of prescription drugs covered by a prescription drug plan or another plan offering prescription drug benefits. Also called a drug list.

Generic Drugs

Prescription drugs that have the same active ingredients as brand-name drugs. Generic drugs usually cost less than brand-name drugs, and are deemed just as safe and effective by the Food and Drug Administration (FDA).

Health Maintenance Organization (HMO)

Members of health maintenance organization (HMO) plans must receive all of their health care from a network provider unless there is an emergency situation. HMOs require you to select a primary care physician (PCP) who serves as your personal doctor to provide all basic healthcare services.

Income-Related Monthly Adjustment Amount (IRMAA)

If your modified adjusted gross income as reported on your IRS tax return is more than $85,000 (individuals and married individuals filing separately) and $170,000 (married individuals filing jointly), you will have to pay extra for your Medicare prescription drug coverage. You will have to pay this extra amount in addition to your monthly Part D plan premium.

Initial Coverage Limit

The maximum amount of total drug costs you can have before you enter the next phase in coverage, the coverage gap or “donut hole.”

Initial Election Period (IEP)

The seven-month period surrounding the date you become eligible for Medicare that includes three months before, the month of, and three months after the qualifying event.

Late Enrollment Penalty (LEP)

An amount added to your Part D premium if, at any time after your initial enrollment period is over, there is a period of 63 or more days in a row when you don't have Part D or other creditable prescription drug coverage.

Low-Income Subsidy (LIS)

If your income and resources are under a certain amount, you may qualify for Extra Help from Medicare to pay the costs of prescription drugs. Learn more.

Medicaid

The state's medical assistance program for low-income people. In Tennessee, this program is called TennCare℠.

Medicare

The federal health insurance program for people 65 years of age or older, certain people with disabilities, and people with End-Stage Renal Disease (permanent kidney failure with dialysis or a transplant, sometimes called ESRD).

Medicare Advantage Disenrollment Period (MADP)

From January 1 through February 14, you can leave a Medicare Advantage plan and return to Original Medicare. You can also join a Part D plan at this time. You cannot join or switch Medicare Advantage plans during this time. Changes that you make during this period go into effect the first day of the following month.

Medicare Advantage Plan

A plan provided by a private insurance company that covers everything Original Medicare would cover and often includes extra benefits that it doesn’t. Medicare pays the private company for covered services and you use your member ID card instead of your Medicare card.

Medicare-Allowed Amount

The amount of money Medicare will pay a provider for a particular covered service.

Medicare Beneficiary

A person who is eligible for the Medicare program because he or she is 65 years or older or has a qualifying disability.

Medicare Limiting Charge

The highest amount of money you can be charged for a covered service by doctors and other health care providers who don't accept the Medicare payment in full. The limiting charge is 15 percent over Medicare's approved amount. This charge only applies to certain services and doesn't apply to supplies or equipment.

Medicare Modernization Act

The legislation passed by the Federal Government that preserves and strengthens the current Medicare program and adds important preventive benefits. It also adds a prescription drug benefit (Medicare Part D) that Medicare beneficiaries may purchase from a private insurer and provides Extra Help to people with low incomes.

Medicare Part A

Part of Original Medicare managed by the federal government. It helps cover some, but not all, of the costs of inpatient hospital care or skilled nursing facility care (not a custodial care facility). Some hospice care and some home health care are also covered.

Medicare Part B

Part of Original Medicare managed by the federal government. This helps cover medically necessary services from doctors or outpatient hospital care. It also helps with some physical and occupational therapist services and some home health care services. You typically must sign up for Part B and pay a monthly premium in order to get coverage.

Medicare Part C

This part of Medicare includes medical and other benefits provided through private companies (with a Medicare approved contract) known as Medicare Advantage plans. A Medicare Advantage Plan covers the same benefits as Original Medicare and more. You can choose a Medicare Advantage plan that includes Medicare prescription drug coverage (MA-PD) or one that does not (MA). Learn more about BlueCross BlueShield of Tennessee Medicare Advantage plans.

Medicare Part D Prescription Drug Plan

A plan that covers only prescription drug benefits for Medicare Part D-approved drugs.

Medicare Supplement or Medigap Plan

A plan offered by private insurance companies that pays your out-of-pocket expenses such as Medicare Part A and B deductibles and coinsurance amounts. Your medical claims are paid by Original Medicare first and the Medicare Supplement plan second. Learn more about BlueCross BlueShield of Tennessee Medicare Supplement plan options.

Network

A list of doctors, hospitals or pharmacies that have agreed to a discounted rate for covered services.

Non-Preferred Brand Drugs

These brand-name drugs are covered by your plan, but less affordable than similar preferred drugs.

Open Enrollment Period for Institutionalized Individuals (OEPI)

The Open Enrollment Period for Institutionalized Individuals is continuous. An institutionalized beneficiary going into, residing in or leaving an institution can make any number of Medicare Advantage elections into a plan that is open for elections.

Out-of-Network Doctor

A doctor with whom we do not have a contract. You may pay more for using an out-of-network provider.

Out-of-Network Pharmacy

A pharmacy with which we do not have a contract. Most drugs you get from out-of-network pharmacies are not covered by our plan unless certain conditions apply.

Out-of-Pocket Costs

The amount you must pay out of your own pocket for drugs and services, including deductibles, coinsurance and copays.

Out-of-Pocket Maximum

The highest amount you are expected to pay for the year. After this max is reached, your plan will pay 100 percent of covered expenses.

Pre-Existing Condition

A condition for which a doctor gave you medical advice or treatment recommendations before you enrolled in a health plan.

Preferred Brand Drugs

Brand-name drugs that are affordable and medically sound. There may still be a cheaper generic version of these drugs available.

Preferred Generic Drugs

These generic drugs are the most common and have the lowest cost to you.

Preferred Pharmacy

A pharmacy that’s part of a Medicare drug plan’s network. You may pay lower out-of-pockets costs for some of your prescription drugs if you get them from a preferred cost sharing pharmacy instead of a standard cost sharing pharmacy.

Preferred Provider Organization (PPO)

PPO plans offer a network of doctors and hospitals. You are free to use out-of-network providers for covered services, but it may cost you more. You do not need a referral to see an in-network specialist.

Premium

The set amount you pay every month for your insurance plan coverage.

Preventive Service

A service such as a cancer screening or a flu vaccine that is given to prevent or detect a condition at an early stage.

Primary Care Physician (PCP)

A Primary Care Physician (PCP) manages and coordinates your medical care. Your PCP is generally either a Family Medicine or Internal Medicine physician, but other types of doctors can serve as your PCP.

Prior Authorization

Your doctor must tell your plan before performing some services or prescribing certain drugs. The plan may suggest an alternate if the service or drug does not meet medical policy.

Provider

Any doctor, practitioner, hospital, facility or pharmacy that provides you with medical services or prescription drugs.

Quantity Limits

Limits assigned to drugs that are often taken inappropriately or used in amounts that exceed recommendations for dosage or length of treatment. Limits are based on Federal Drug Administration (FDA) and manufacturer recommendations.

Service Area Reduction

A situation where a Medicare Advantage or Medicare Part D plan is no longer offered in a geographic area it served the previous year. As a result, members who live in the area that has been eliminated will be disenrolled from the plan. This qualifies the member for a Special Election Period.

Skilled Nursing Facility

A facility that provides inpatient skilled nursing care, rehabilitation services or other related health services. "Skilled nursing" does not include a convalescent home or custodial care.

Special Election Period (SEP)

An election period that allows you to make a plan change or selection outside of the typical yearly election periods. Individuals qualify for SEPs when a special circumstance occurs, such as moving out of your plan's service area or becoming eligible for Medicaid.

Specialty Drugs

Certain highly-specialized drugs that require special handling and administering by the patient or provider.

Standard Pharmacy

A network pharmacy that offers covered drugs to plan members at higher out-of-pocket costs than what the member would pay at a preferred cost sharing pharmacy.

Step Therapy

Some health or prescription drug plans may require you to try a drug on a lower tier first. If the lower tier drug does not work, you may advance to a higher tier drug.

Telehealth

The use of electronic information and telecommunications technologies to support long-distance clinical health care, patient and professional health-related education, public health and health administration.

Tier

A category of drugs on your list, or formulary. Copays often vary by tier.

True Out-of-Pocket (TrOOP)

The Medicare-defined amount of your actual costs before moving into the catastrophic phase of the plan. Once that amount is reached, your prescription cost sharing will change to the catastrophic coverage phase. This amount can change from year to year.

TrOOP expenses include your yearly prescription drug deductible, copayments or coinsurance for covered prescription drugs, and what you pay during the coverage gap. Your Medicare prescription drug plan premium and costs for prescription drugs that aren't covered by the plan do not count toward this limit.

Value-Added Item or Service

The products and services provided by your plan that are not part of your medical or prescription drug benefits. They are not offered nor guaranteed under the plan's contract with the Medicare program. They are not subject to the Medicare appeals process. Any disputes regarding these products and services may be subject to BlueCross BlueShield of Tennessee's grievance process.

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