Words You Should Know

In choosing a Medicare prescription drug plan, you will need to understand words like “deductibles” and “formularies.” You must be able to estimate the amount of money you pay for prescriptions and understand the cost you will share in this program. During the year, the costs you pay may change considerably as drug costs are incurred.

And to understand your coverage and what out-of-pocket costs to expect, you must also take into account whether your prescribed medications are brand-name or generic and whether they are included in the formularies (list of approved drugs for coverage).

The following guide explains many of these terms.

Access: Your ability to get needed medical services.

Accredited (Accreditation): Means having a seal of approval. Being accredited means that a facility or health care organization has met certain quality standards. These standards are set by private, nationally recognized groups that check on the quality of care at health care facilities and organizations. Organizations that accredit Medicare Managed Care Plans include the National Committee for Quality Assurance, the Joint Commission on Accreditation of Healthcare Organizations and the American Accreditation Healthcare Commission/URAC.

Active Treatment: Therapy designed specifically for you to help
resolve or improve your condition.

Appeal: A special kind of complaint you make if you disagree with certain kinds of decisions made by Medicare or your health plan. You can appeal if you request a health care service, supply or prescription that you think you should be able to get, or you request payment for health care you already received, and Medicare or a health plan denies the request. You can also appeal if you are already receiving coverage and the plan stops paying. There is a specific process your Medicare Advantage Plan, other Medicare Health Plan, Medicare drug plan, or the Original Medicare plan must use when you ask for an appeal.

Approved Amount: The fee Medicare sets as reasonable for a covered medical service. This is the amount a doctor is paid by you and Medicare for a service or supply. It may be less than the actual amount charged by a doctor or supplier. The approved amount is sometimes called the “Approved Charge.”

Assignment: In the Original Medicare Plan, a process in which a doctor or supplier agrees to accept the amount Medicare approves as full payment.

Benefit Period: The way that Medicare measures your use of hospital and skilled nursing facility (SNF) services. A benefit period begins the day you go to a hospital or SNF. The benefit period ends when you haven’t received any hospital care (or skilled care in a SNF) for 60 days in a row. If you go into the hospital or SNF after one benefit period has ended, a new benefit period begins if you are in the Original Medicare Plan. You must pay the inpatient hospital deductible for each benefit period. There is no limit to the number of benefit periods you can have.

Benefits: The money or services provided by an insurance policy. In a health plan, benefits take the form of health care.

Coinsurance: The 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 deductible for Part A and/or Part B.

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

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 Part A, and each year for Part B. These amounts can change every year.

Dual Eligibles: Persons who are entitled to Medicare (Part A and/or Part B) and who are eligible for Medicaid.

Eligibility/Medicare Part A: Your are eligible for premium-free (no coast) Medicare Part A (Hospital Insurance) if:

You are 65 or older and you are receiving, or are eligible for, retirement benefits from Social Security or the Railroad Retirement Board or You are under 65 and you have received Railroad Retirement disability benefits for the prescribed time and you meet the Social Security Act disability requirements, or Your or your spouse had Medicare-covered government employment, or You are under 65 and have End-Stage Renal Disease (ESRD).

Eligibility Part A (continued)
If you are automatically eligible for premium-free Medicare Part A, you can buy Part A by paying a monthly premium if:

• You are age 65 or older and

• Your are enrolled in Part B, and

• You are a resident of the US and are either a citizen or an alien lawfully admitted for permanent residence who has lived in the US continuously during the 5 years immediately before the month in which you apply.

Eligibility /Medicare Part B: You are automatically eligible for Part B if you are eligible for premium-free Part A. You are also eligible for Part B if you are not eligible for premium-free Part A, but are age 65 and older and a resident of the US or a citizen or an alien lawfully admitted for permanent residence. In this case, you must have lived in the US continuously during the 5 years immediately before the month during which you enroll in Part B.

Formulary: In medicine, a listing of prescription drugs approved for use. Gaps: The costs or services that are not covered under the Original Medicare Plan.

Inpatient Care: Health care that you get when you are admitted to a hospital.

Lifetime Reserve Days (Medicare): in the Original Medicare Plan, 60 days that Medicare will pay for when you are in a hospital more than 90 days during a benefit period. These 60 reserve days can be used only once during your lifetime. For each lifetime reserve day, Medicare pays all covered costs except for a daily coinsurance ($456 in 2005).

Medicare Advantage Plan: A plan offered by a private company that contracts with Medicare to provide you with all your Medicare Part A and Part B benefits. In most cases, Medicare Advantage Plans also offer Medicare prescription drug coverage. A Medicare Advantage Plan can be an HMO, PPO, or a Private
Fee-for-Service Plan.

Medicare Health Plan: A Medicare Advantage Plan (such as an HMO, PPO, or Private Fee-for-Service Plan) or other plan such as a Medicare Cost Plan. Everyone who has Medicare Part A and Part B is eligible for a plan in their area, except those who have End-Stage Renal Disease (unless certain exceptions apply).

Medicare Part A (Hospital Insurance): The part of Medicare that covers inpatient hospital stays, skilled nursing facility care, home health care, and hospice care.

Medicare Part B (Medical Insurance): The part of Medicare that covers doctors’ services and outpatient hospital care. It also covers other medical services that Part A doesn’t cover, like physical and occupational therapy.

Medigap Policy: A Medicare supplement insurance policy sold by private insurance companies to fill “gaps” in Original Medicare Plan coverage. Except in Massachusetts, Minnesota and Wisconsin, there are 10 standardized plans labeled Plan through Plan J. Medigap policies only work with the Original Medicare Plan.

Original Medicare Plan: A fee-for-service health plan that lets you go to any doctor, hospital, or other health care supplier who accepts Medicare and is accepting new Medicare patients. You must pay the deductible. Medicare pays its share of the Medicare-approved amount, and you pay your share (coinsurance). In some cases you may be charged more than the Medicare-approved amount. The Original Medicare Plan has two parts: Part A (Hospital Insurance) and Part B (Medical Insurance).

Outpatient Care: Medical or surgical care that doesn’t include an overnight hospital stay.

Outpatient Hospital Services: Medical or surgical care that Medicare Part B helps pay for and doesn’t include an overnight hospital stay. Outpatient hospital services include blood transfusions; certain drugs; hospital billed laboratory tests; mental health care; medical supplies such as splints and casts; emergency room or outpatient clinic, including same day surgery; and x-rays and other
radiation services.

Partial Hospitalization: A structured program of active treatment for psychiatric care that is more intense than the care received in a doctor’s or therapist’s office.