Annual Deductible

The amount you must pay for your prescriptions or other medical care, before your Medicare Prescription Drug Plan (also known as “PDP”) drug plan or Medicare Health Plan begins to pay. These amounts can change every year.



In original Medicare, this means a doctor or supplier agrees to accept the Medicare-approved amount as full payment. Beneficiary (Medicare) anyone determined by the Social Security Administration to be eligible for Medicare benefits.


Benefit Period

A benefit period begins the day you go to a hospital or skilled nursing facility (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 a hospital or a SNF 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.


Catastrophic Coverage

Once your total drug costs reach the $4,750.00 maximum, you pay a small coinsurance or a small copayment for covered drug costs until the end of the calendar year. This amount applies to the Medicare plan year 2013.



Refers to the partner relationships established between Medicare Prescription Drug Plans and other organizations. Some drug plans enter into agreements with other organizations to help market their drug plans. These relationships are between the drug plan and the partner organizations and are outside of the contract with Medicare.



The amount you may be required to pay for services after you pay the plan deductibles.



In some health and prescription drug plans, the 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.


Cost Sharing

The amount you pay out-of-pocket for health care and/or prescriptions. This amount can include copayments, coinsurance, and/or deductibles.


Coverage Gap

Medicare drug plans may have a coverage gap (also known as the “gap” or the “donut hole”) which means that after you and your plan have spent a certain amount of money for covered drugs (no more than $2,750.00 in 2013), you have to a small co-pay or coinsurance for all your drugs while you are in the gap or donut hole for the rest of plan year. The most you have to pay out-of-pocket in the coverage gap is $1,780.00 in 2013.



The amount you must pay for health care or prescriptions, before original Medicare, your Medicare Prescription Drug Plan (also known as “Medicare Part “ or “PDP”), your Medicare Health Plan, or your other insurance begins to pay.


Disenroll(or Disenrollment)

Disenrollment means ending your enrollment in a health care plan, such as a Supplement, Medicare Advantage and/or Prescription Drug Plan.


Effective Date

The date your original Medicare, health insurance plan (Medicare Supplement or Medicare Advantage Plan), or Prescription Drug Plan becomes effective.


Employer or Union Retiree Plans

Health plans that give health and/or drug coverage to employees, former employees, and their families. These plans are offered to people through their (or a spouse’s) current or former employer or employee organization.


Enhanced Alternative Plan

Enhanced Alternative Plans can offer a more comprehensive level of coverage, with lower cost-sharing and/or additional coverage of certain drugs excluded from the standard level of coverage and basic alternative coverage. Premiums may be higher for these plans, but they offer more coverage.


Estimated Annual Cost

When using this tool, this is an estimate of the average amount you might expect to spend each year for your health and/or drug coverage. The estimates include: 1) Plan benefits (coverage); 2) Costs for premiums, copayments, deductibles, coinsurance, and; 3) Costs not covered by your insurance. Your out-of-pocket costs are based on actual health and/or drug coverage use by people with Medicare, and they may differ depending on your age and health status. Also, if you have limited income and resources, your expenses may be lower.



A list of drugs covered by a plan


Full Dual Eligible

You get the full amount of extra help, because you’re Medicaid-eligible.


Full Subsidy Eligible

You get the full amount of extra help, because you either have MSP, SSI, or you have applied with Social Security.


Generic Drug

A prescription drug that has the same active-ingredient formula as a brand-name drug but usually cost less than brand-name drugs.


Guaranteed Issue Rights

Rights you have in certain situations when insurance companies are required by law to sell or offer you a Medigap (also known as “Medicare Supplement”) policy. In these situations, an insurance company cannot deny you a policy, or place conditions on a policy, such as exclusions for pre-existing conditions, and cannot charge you more for a policy because of past or present health problems.


Health Insurance

Health insurance is insurance against loss by illness or bodily injury. Health insurance provides coverage for medicine, visits to the doctor or emergency room, hospital stays and other medical expenses. Policies differ in what they cover, the size of the deductible and/or co-payment, limits of coverage and the options for treatment available to the policyholder. Health insurance can be directly purchased by an individual, or it may be provided through an employer. Medicare and Medicaid are programs which provide health insurance to elderly, disabled, or uninsured individuals.


Health Insurance Portability and Accountability

The Health Insurance Portability and Accountability (HIPAA) is a 1996 federal law that expanded health insurance coverage for those who lost their jobs or changed jobs. This law also regulated the electronic exchange of healthcare data, including the security of personably identifiable information


Health Maintenance Organization (HMO)

A Health Maintenance Organization (also known as “HMO”) is a type of Medicare Health Plan that is available in most 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.


High-Deductible Medigap (or Supplement) Policy

A type of Medigap (Medicare Supplement) policy that has a high deductible but a lower premium. You must pay the deductible before the policy pays anything. The deductible amount can change each year.


Income-Related Monthly Adjustment Amount

The Income-Related Monthly Adjustment Amount (also known as “IRMMA”) is the amount that can be applied to a Medicare beneficiary’s Medicare Part D and Medicare Part B premiums. IRMMA affects only those Medicare beneficiaries who have high incomes. Specifically, Medicare beneficiaries who have a modified adjusted gross income of more than $85,000.00 for individuals or $170,000.00 for married couples filing joint income tax returns pay additional fee for their Medicare Part D and/or Medicare Part B based on their income.


Initial Coverage Limit

Once you have met your yearly deductible, if applicable, and until you reach the $2,970.00 maximum (in 2013), you pay a co-payment or coinsurance (a percentage of the total cost) for each covered drug.



Doctors, hospitals, pharmacies, and other healthcare providers that have agreed to provide members of a certain insurance plan with services and supplies at a discounted price. In some insurance plans, your care is only covered if you get it from in-network doctors, hospitals, pharmacies, and other healthcare providers.



A promise of compensation for specific potential future losses in exchange for a periodic payment.


Insurance Agent

An individual or firm authorized to act on behalf of another (called the principal), such as by executing a transaction or selling and servicing an insurance policy. The agent does not assume any financial risk in the transaction.


Insurance Broker

An independent agent who represents the buyer, rather than the insurance company, and tries to find the buyer the most affordable and most appropriate policy by comparison shopping.


Insurance Brokerage

A group of independent agents representing the buyer of insurance, rather than the insurance company, and finds the buyer the most appropriate and most affordable policy by comparison shopping.


Insurance Company

A company that offers insurance policies to the public, either by selling directly to an individual or through another source such as an employee’s benefit plan. An insurance company is usually comprised of multiple insurance agents. An insurance company can specialize in one type of insurance, such as life insurance, health insurance, or auto insurance, or offer multiple types of insurance.


Issue Age

An applicant’s age when submitting a completed application to an insurance company for underwriting.


Lifetime Maximum

A set limit on the total benefits to be paid by the plan over the course of the health insurance policy/certificate.



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


Medically Necessary

Services or supplies that are needed for the diagnosis and/or treatment of your medical condition, meet the standards of good medical practice in the local area, and are not for the convenience of you or your doctor.


Medicare Advantage Plan

Health plans that are approved by Medicare but administered by private insurance companies. A Medicare Advantage Plan is part of the Medicare Program and is also known as “Medicare Part C”.


Medicare Beneficiary

Anyone who has been determined by the Social Security Administration to be eligible for Medicare Benefits.


Medicare Cost Plan

A Medicare Cost Plan is a type of Health Maintenance Organization (also known as an “HMO”). These plans may work in much the same way, and have some of the same rules, as Medicare Advantage Plans. In a Medicare Cost Plan, if you go to a non-network provider, the services are covered under 0riginal Medicare. You would pay the Medicare Part A and Part B coinsurance and deductibles.


Medicare Health Plan

Medicare Health Plans offer Part A and Part B coverage all in one plan and many also include Medicare Prescription Drug coverage. (Also known as Medicare Advantage plans.)


Medicare Medical Savings Account (MSA) Plan

Medicare Medical Savings Account Plans are a type of Medicare Advantage Plan. Medical Savings Account (MSA) Plans have two parts. The first part is a high-deductible Medicare Advantage MSA Health Plan. This health plan will not begin to pay covered costs until you have met the annual deductible, which varies by plan. The second part is a Medical Savings Account into which Medicare deposits money that you may use to pay health care costs.


Medicare Pathways, Inc.

Medicare Pathways, Inc. in an insurance brokerage office specializing in the sale of Medicare Supplements, Medicare Advantage Plans and Medicare Prescription Drug Plans utilizing multiple insurance carriers. Employees at Medicare Pathways are salaried employees that a paid a flat salary and do not work on commission sales. This allows them to offer an unbiased opinion on your insurance options. (For more information visit


Medicare Prescription Drug Plan

A Medicare Prescription Drug Plan (also known as “Medicare Part D” or “PDP”) is a stand-alone drug plan that adds drug coverage to original Medicare, some Medicare Advantage Plans, Private Fee-for-Service plans, some Medicare Cost Plans, and Medicare Medical Savings Account Plans.


Medicare Savings Program

Medicaid programs that help pay some or all Medicare premiums and deductibles.


Medicare SELECT

A Medicare SELECT (sometimes referred to as “MedSelect”) is a type of Medicare Supplement Plan (also known as “Medigap”) that may require you to use hospitals and, in some cases, doctors within its network to be eligible for full benefits.


Medicare Special Needs Plan(SNPs)

A special type of Medicare Advantage Plan that provides all original Medicare Part A and Part B health care and services to people who can benefit the most from things like special care for chronic illnesses, care management of multiple diseases, and focused care management.


Medicare-Approved Amount

This is the amount that a doctor or supplier can be paid by Medicare, including what Medicare pays and any deductible, coinsurance, or copayment that you pay. It may be less than the actual amount charged by a doctor or supplier.


Medigap Policy

A Medigap Policy is also known as a Medicare Supplement Plan sold by private insurance companies to fill the gaps in original Medicare coverage. These Plans are labeled A through N (except in Massachusetts, Minnesota, and Wisconsin). Medigap, or Medicare Supplement policies only work with original Medicare.


Monthly Premium

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


No Subsidy Eligible

You don’t qualify for extra help.


Non-preferred 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 network pharmacy.


Open Enrollment Period

A one-time only six month period when you can buy any Medicare Supplement (or Medigap) policy you want that is sold in your state. It starts in the first month that you are covered under Medicare Part B and you are age 65 or older (or under age 65 in some states and you are on Social Security Disability and you meet the eligibility requirement). During this period, you cannot be denied coverage or charged more due to past or present health problems.


Optional Supplemental Benefits

Services not covered by Medicare that enrollees can choose to buy or reject. Enrollees that choose such benefits pay for them directly, usually in the form of premiums and/or cost sharing. Those services can be grouped or offered individually and can be different for each Medicare Health Plan offered.


Original Medicare

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. Original Medicare contains two parts: Part A (hospital insurance) and Part B (medical insurance.)



Generally, an out-of-network benefit provides you with the option to access plan services outside of the plan’s contracted network of providers. In some cases, your out-of-pocket costs may be higher for an out-of-network benefit, or a service or prescription that is not approved by original Medicare.


Out-of-Pocket Costs

Health care costs that you must pay on your own because they are not covered by original Medicare or other insurance. Out-of-pocket costs also include your deductibles, co-pays and co-insurances.


PACE (Programs of All-inclusive Care for the Elderly)

PACE combines medical, social, and long-term care services for frail people who live and get health care in the community. They are a joint Medicare and Medicaid option in some states.


Medicare Part A (Hospital Insurance)

The part of original Medicare that pays for inpatient hospital stays, care in a skilled nursing facility, hospice care and some home health care expenses.


Medicare Part B (Medical Insurance)

The part of original Medicare that helps pay for doctors’ services, outpatient hospital care, durable medical equipment, and some medical services that are not covered by original Medicare Part A.


Part B Excess

Medicare Part B excess only applies if you go to a physician or medical facility that does not accept Medicare assignment. If the amount Medicare has deemed reasonable and customary but the physician, supplier or medical facility does not agree with the amount then you can be billed for the difference. However, the Medicare beneficiary cannot be billed for more than 15% of the amount that Medicare has deemed reasonable and customary for the medical service.


Partial Subsidy Eligible

Partial amount of extra help.


Plan members who qualify for extra help

These plan members qualify to get extra help from Medicare paying their prescription drug coverage costs and sometimes their Medicare plan’s monthly premiums, annual deductible, and prescription co-payments.


Plan Name

The name of the plan offered by the company that contracts with Medicare.


Point of Service (POS)

A Health Maintenance Organization (also known as “HMO”) option that lets you use doctors and hospitals outside the plan for an additional cost.


Policy Fee

An additional premium charge added to a policy by the agent or broker to service your policy.


Pre-Existing Conditions

A health problem, condition or disease you had before the date that a new insurance policy starts.


Preferred Pharmacy

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


Preferred Provider Organization (PPO)

A type of Medicare Advantage Plan (also known as “MA”) 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.



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


Prior Authorization

Prior authorization means that you will need prior approval from an insurance plan before you fill your prescription.


Private Fee-for-Service Plan

This is a type of Medicare Advantage Plan (also known as “MA”) that allows you to go to any Medicare-approved doctor or hospital that accepts the plan’s payment. However, the insurance plan, rather than the Medicare Program, decides how much it will pay and what your portion of the services expense.


Qualified Medicare Beneficiary

Qualified Medicare Beneficiary (also known as “QMB”) is a Medicaid program for people with original Medicare who need help in paying for Medicare services. The person with Medicare must have original Medicare Part A and limited income and resources. For those who qualify, the Medicaid program pays Medicare Part A and Part B premiums, original Medicare deductibles and coinsurance amounts for Medicare services.



Quality is how well the health plan keeps its members healthy or treats them when they are sick. Good quality health care means doing the right thing at the right time, in the right way, for the right person-and getting the best possible results.


Quantity Limitation

For safety and cost reasons, plans may limit the quantity of drugs that they cover over a certain period of time (usually controlled substances).


Rating Area

This is an area used to determine premium rates, usually by zip code. The premium is based on the average healthcare costs, as well as doctor and hospital discounts, in that area.



A referral is a written order from your Primary Care Physician (also known as PCP) for you to see a specialist or get certain services. In many Health Maintenance Organizations (also known as “HMOs”), you need to get a referral before you can get care from anyone except your Primary Care Physician. If you do not get a referral first, the plan may not pay for your care.


Salaried Insurance Agent

An insurance agent who is paid a flat salary, rather than paid by commission on sales, regardless of the number of policies written or sold.


Service Area

The service area is where a health plan accepts members. For plans that require you to use their doctors and hospitals, it is also the area where services are provided. The plan may disenroll you if you move out of the plan’s service area.


Skilled Nursing Facility

A Skilled Nursing Facility (also known as “SNF”) is a facility with the staff and equipment to give skilled nursing care and/or skilled rehabilitation services and other related health services.


Specified Low – Income Medicare Beneficiary

Specified Low – Income Medicare Beneficiary (also known as “MLMB”) is a Medicaid program that pays for original Medicare Part B premiums for individuals who have original Medicare Part A, a low monthly income, and limited resources.


Medicare Star Ranking

Stars for each plan show how well the plan performs in that particular category. Star ratings range from 1 star to 5 stars, where a rating of 1 star means poor quality and 5 stars means excellent quality.


Step Therapy

In some cases, plans require you to first try one drug to treat your medical condition before they will cover another drug for that condition.



Drugs on a formulary are often organized into different drug tiers, or groups of different drug types. Your cost depends on which drug tier your drug is in. The most common drug tiers are: Tier 1: Preferred Generic; Tier 2: Non-Preferred Generic; Tier 3: Preferred Brand; and Tier 4: Non-Preferred Brand.


Underwriting (Insurance)

Underwriting is the process that an insurance company uses to assess the eligibility of a customer to receive insurance coverage. Insurance underwriters evaluate the risk and exposures of potential clients and whether to approve or decline the application for coverage. Each insurance company has its own set of underwriting guidelines to help the underwriter determine whether or not the company should accept the risk. The information used to evaluate the risk of an applicant for insurance will depend on the type of coverage involved.



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