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The Medicare Glossary

If you’re reading this, you probably know what an alphabet soup Medicare is! Learning Medicare is almost like learning a new language. There are many terms and lots of acronyms to get used to. Here, we’ve provided a list of common terms you’ll want to learn to better understand the Medicare Program.

woman holding the Medicare glossary


Accountable Care Organizations (ACO)

Groups of doctors and health care facilities working together to provide you high-quality, coordinated health care.

Advance Beneficiary Notice of Noncoverage (ABN)

In Original Medicare, a notice that a provider or supplier gives a person with Medicare before giving an item or service if they believe that Medicare may deny the payment. If you are not given an ABN before you get the service, and Medicare denies payment, then you might not have to pay for it. If you are given an ABN, and you sign it, you'll be required to pay even if Medicare denies it.

Advance coverage decision

A notice from a Medicare Advantage (Part C) plan letting you know whether it will cover a service.


Amyotrophic lateral sclerosis (Lou Gehrig's disease).

Ambulatory surgical center

A facility where some surgeries can be performed for patients who will not need more than 24 hours of care.


An appeal is an action you take if you disagree with a coverage or payment decision made by Medicare or your Medicare plan.


An agreement by your provider thats says they will be paid directly by Medicare, will accept the Medicare-approved amount for services, and will not bill you for more than the deductible and coinsurance.


Benefit period

The way Medicare counts your use of hospital and skilled nursing facility (SNF) services. A benefit period begins on the day you are admitted to a hospital or SNF. The benefit period ends when you’ve been hospital-free for 60 consecutive days. If you are admitted to the hospital after a benefit period has ended, a new benefit period starts. You must pay the deductible for each benefit period.



A healthcare benefit for dependents of veterans.


A request for payment submitted to Medicare or other health insurance when you get services that you think are covered.


A percentage you are required to pay as your portion of the cost for services after you pay any deductibles.

Comprehensive outpatient rehabilitation facility

A facility that provides services on an outpatient basis.


An amount you are required to pay as your share of the cost for a medical service or supply. A copayment is usually a set amount, not a percentage.

Coverage determination (Part D)

The initial decision made by your drug plan about your benefits, including if a drug is covered, if you’ve met all the requirements to receive the drug, and how much you’ll pay for the drug.

Coverage gap

Also known as the “donut hole,” it is a period of time during which you pay higher costs for prescription drugs until you spend enough to qualify for catastrophic coverage. The coverage gap begins when you and your plan have paid a certain dollar amount for prescription drugs during the year.

Creditable coverage (Medigap)

Prior health insurance that can be used to shorten a pre-existing condition waiting period for a Medigap policy.

Creditable prescription drug coverage

Prescription drug coverage (like under a group health plan) that's expected to pay at least as much as Medicare's prescription drug coverage. People who have creditable coverage can delay Medicare enrollment with no penalties.

Custodial care

Personal care, like help with activities of daily living (ADLs) like bathing, eating, dressing, getting in or out of a chair or bed, moving around, and using the restroom. It might also include health-related care that most people do themselves, like using eye drops. Medicare does not pay for custodial care in most cases.



The amount you have to pay for services or prescriptions before your insurance plan begins to pay.

Durable Medical Equipment (DME)

Certain medical equipment, like a wheelchair, walker, or hospital bed.


End-Stage Renal Disease (ESRD)

Kidney failure that requires regular dialysis or even a kidney transplant.


A kind of prescription drug coverage determination. A formulary exception is a plan's decision to pay for a drug that is not on its drug formulary or to waive a coverage rule.

Excess charge

If the amount a provider charges is higher than the Medicare-approved amount, the difference is called an excess charge.

Extra Help

A federal Medicare program to help those with limited incomes and resources pay Medicare prescription drug costs, like premiums, deductibles, and coinsurance.



A list of prescriptions covered by a Part D plan.



A complaint about the way your Medicare plan is providing care.

Guaranteed renewable

An insurance plan that cannot be terminated by the insurance company unless you commit fraud, make untrue statements to the insurance company, or fail to pay your premiums. All Medigap policies are guaranteed renewable.


Health care provider

A person or organization licensed to provider healthcare services.

Home healthcare

Healthcare services and supplies a doctor decides can receive in your home under a plan of care established by your doctor. Medicare only covers home health care on a limited basis as ordered by your doctor.


A way of caring for people who are terminally ill. Hospice care involves an approach that addresses the physical, medical, emotional, social, and spiritual needs of the patient. Hospice also gives support to the patient's family.


Inpatient rehabilitation facility

A hospital that provides a rehabilitation program to inpatients.


Lifetime reserve days

In Traditional Medicare, these are extra days that Medicare will pay for when you're in a hospital for longer than 90 days. You are given 60 reserve days that can be used during your lifetime. You will still have a coinsurance expense when using a reserve day.

Limiting charge

The hmost money you can be charged for a covered service by doctors who don't accept assignment. The limiting charge is 15% above Medicare's approved amount.

Long-term care

Services provided to individuals who are unable to perform basic activities of daily living (ADLs). Support can be provided at home, in assisted living facilities, or in nursing homes. Most insurance plans (including Medicare) do not pay for long-term care.



A federal program administered by the individual states that helps with medical costs for people with limited incomes. Medicaid programs vary by state, but most healthcare costs are covered if you qualify for Medicare and Medicaid.

Medical underwriting

The process an insurance carrier uses to decide, based on your health history, whether to grant your application, whether to add a waiting period for pre-existing conditions, and what premium to charge you for that insurance.

Medically necessary

Healthcare services needed to diagnose or treat an illness or its symptoms and that meet accepted standards of care in medicine.


Medicare is the federal health insurance program for people who are age 65 and older, younger people with certain disabilities, and individuals diagnosed with ESRD.

Medicare Advantage (Part C) Plan

A type of Medicare plan offered by private companies that contract with Medicare. Medicare Advantage plans provide all Part A and Part B benefits, except for hospice care. There are several kinds of Part C plans and benefits vary.

Medicare Cost Plan

A type of Medicare plan only available in some areas. In a Medicare Cost Plan, if you receive services outside of the plan's network and without a referral, your Medicare-covered services will be paid for under Original Medicare (your Cost Plan only pays for emergency services).

Medicare drug coverage (Part D)

Optional coverage for prescription medicine available to all people with Medicare for an extra premium. Part D plans are offered by private companies approved by Medicare.

Medicare Health Maintenance Organization (HMO) Plan

A type of Medicare Advantage plan. In most HMOs, you can only go to providers or hospitals on the plan's approved list except in an emergency. Most HMOs also require a referral from your primary care physician before you see a specialist.

Medicare Medical Savings Account (MSA) Plan

MSA plans combine a high-deductible Medicare Advantage Plan and a savings account. The plan deposits money into the account. You can use the money in the account to pay for your healthcare costs. The amount deposited will be less than your deductible amount, so you will have to pay for all expenses out-of-pocket before your coverage begins.

Medicare Part A (Hospital Insurance)

Part A covers inpatient hospital stays, skilled nursing facility care, hospice care, and some home health care.

Medicare Part B (Medical Insurance)

Part B covers doctors' services, outpatient care, medical supplies, and preventive services.

Medicare Preferred Provider Organization (PPO) Plan

A kind of Medicare Advantage Plan in which you pay less if you use doctors and hospitals that are in the plan's network. You can see providers outside of the network, but they will cost more.

Medicare Private Fee-For-Service (PFFS) Plan

A type of Part C in which you can see any doctor or hospital you could go to if you had Original Medicare, as long as the doctor or hospital agrees to treat you. The plan decides how much it will pay, and how much you must pay when you get care.

Medicare Savings Program

State-run programs that help individuals with lower incomes and resources pay some (or all) of their Medicare premiums, deductibles, and coinsurance.

Medicare SELECT

A kind of Medigap (Medicare Supplement) policy that will require you to use hospitals and doctors within its network to be eligible for full benefits.

Medicare Special Needs Plan (SNP)

A type of Part C plan that provides specialized healthcare for specific groups of people.

Medicare Summary Notice (MSN)

A notice you get after your provider files a claim for services. It explains what the provider billed, the Medicare-approved amount, how much Medicare paid, and what you are responsible for paying.

Medicare-approved amount

The amount a provider that accepts assignment can be paid. It might be less than the actual amount a doctor or supplier charges.


Also known as Medicare Supplement insurance, sold by private insurance companies to help pay expenses that remain after Original Medicare pays its share.


Original Medicare

A federal health insurance program, Original Medicare consists of two parts: Part A (Hospital Insurance) and Part B (Medical Insurance).

Out-of-pocket costs

Health costs that you must pay because they aren’t covered by Medicare or other insurance.



An amount added on top of your monthly premium for Part B and/or Part D if you don't join when you first become eligible. You'll pay this higher amount as long as you are enrolled in Parts B and/or D. 


A payment you make to Medicare or another insurance company to have an insurance plan. Most premiums are paid monthly but can be set up on a quarterly or annual basis.

Prior authorization

Approval that you have to get from a Medicare plan before you can get services or prescription medication. Each plan has its own set of rules and requirements around prior authorizations.



A written order from your primary care physician that allows you to see a specialist or get certain medical services.


Secondary payer

The insurance plan that pays second on a claim for medical care.

Service area

A geographic area where the plan accepts members.

Skilled nursing care

Care that can only be given by a doctor or registered nurse.

Skilled nursing facility (SNF)

A nursing facility with staff and equipment to give skilled nursing care.

State Health Insurance Assistance 

Program (SHIP)

A state program that gives free local health insurance counseling to people with Medicare.

State Pharmaceutical Assistance Program (SPAP)

A state program that helps pay for drug coverage based on financial need, medical condition, or age.

Step therapy

A coverage rule used by some Part D plans that requires you to try similar, lower-costing drugs to treat your condition before the plan will consider covering the prescribed drug.



Medical or other health services provided to a patient using a communications system (like a computer or smartphone) by a practitioner in a location different than the patient's.


Groups of prescriptions. Each tier is associated with a different cost. Prescriptions in lower tiers will cost you less than those in higher tiers.

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