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.

Assignment

In the Original Medicare Plan, this means a doctor agrees to accept the Medicare-approved amount as full payment. If you are in the Original Medicare Plan, it can save you money if your doctor accepts assignment. You still pay your share of the cost of the doctor's visit.

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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 skilled nursing facility. 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 a 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.

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Coinsurance

The percent of the Medicare approved amount that you have to pay after you pay the deductible for Part A and/or Part B. In the Original Medicare Plan, the coinsurance payment is a percentage of the approved amount for the service (like 20%).

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Copayment

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

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Creditable Coverage (Medigap)

Certain kinds of previous health insurance coverage that can be used to shorten a pre-existing condition waiting period. (See pre-existing conditions.)

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Deductible

The amount you must pay for health care or prescriptions, before Medicare or your prescription drug plan begins to pay. For example, either for each benefit period for Part A, or each year for Part B. These amounts can change every year.

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End-Stage Renal Disease (ESRD)

Permanent kidney failure that requires dialysis or a kidney transplant.

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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 insurance coverage or place conditions on a policy, must cover you for all pre-existing conditions, and can't charge you more for a 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.

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Hospice Care

A special way of caring for people who are terminally ill, and for their family. This care includes physical care and counseling. Hospice care is covered under Medicare Part A (Hospital Insurance).

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Lifetime Reserve Days

In the Original Medicare Plan, there are 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.

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Long Term Care

A variety of services that help people with health or personal needs and activities of daily living over a long period of time. Long-term care can be provided at home, in the community, or in various types of facilities, including nursing homes and assisted living facilities. Most long term care is custodial care. Medicare doesn't pay for this type of care if this is the only kind of care you need.

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Managed Care Plan

A type of Medicare Advantage Plan that is available in some areas of the country. In most managed care plans, you can only go to doctors, specialists, or hospitals on the plan's list. Plans must cover all Medicare Part A and Part B health care. Some managed care plans cover extras, like prescription drugs. Your costs may be lower than in the Original Medicare Plan.

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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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Medically Necessary

Services or supplies that:

• are proper and needed for the diagnosis or treatment of your medical condition;
• are provided for the diagnosis, direct care, and treatment of your medical condition;
• meet the standards of good medical practice in the local area; and
• are not mainly for the convenience of you or your doctor.

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Medicare Advantage Plan

A Medicare Program that gives you more choices among health plans. Everyone who has Medicare Parts A and B is eligible, except those who have End-Stage Renal Disease (unless certain exceptions apply).

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Medicare-approved Amount

In the Original Medicare Plan, this is the Medicare payment amount for an item or service. This is the amount a doctor or supplier is paid by Medicare and you 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."

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Medicare Prescription Drug Plan

Beginning January 1, 2006, Medicare will provide prescription drug coverage through insurance companies and private companies. These companies will offer different Medicare prescription drug plans with different covered prescriptions and costs. Like other insurance, if you join a Medicare prescription drug plan you will pay a monthly premium, a yearly deductible, and a share of the cost of your prescriptions. You can sign up for one of these plans starting November 15, 2005. Note: These plans are different than Medigap policies that offer prescription drug coverage (see "Medigap prescription drug coverage").

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

A Medicare supplement insurance policy sold by private insurance companies to fill "gaps" in Original Medicare Plan coverage. There are 12 standardized plans labeled Plan A through Plan L, except in Massachusetts, Minnesota, and Wisconsin. These states have different standardized plans. Medigap policies only work with the Original Medicare Plan.

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Open Enrollment Period

A one-time-only six month period when you can buy any 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. During this period, you can't be denied coverage or charged more due to past or present health problems.

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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 Part A (Hospital Insurance) and Part B (Medical Insurance).

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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 Medicare Advantage Plan in which 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.

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Premium

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

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Private Fee-for-Service (PFFS) Plan

A type of Medicare Advantage Plan 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 for Medicare-covered benefits. You may have extra benefits the Original Medicare Plan doesn't cover.

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

PACE combines medical, social, and long term care services for frail people. PACE is available only in states that have chosen to offer it under Medicaid. To be eligible, you must:

• Be 55 years old or older,
• Live in the service area of the PACE program,
• Be certified as eligible for nursing home care by the appropriate state agency, and
• Be able to live safely in the community.

The goal of PACE is to help people stay independent and living in their community as long as possible, while getting the high-quality care they need.

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Skilled Nursing Facility Care

A level of care that requires the daily involvement of skilled nursing or rehabilitation staff and can't be done on an outpatient basis. Examples of skilled nursing care include getting intravenous injections and physical therapy. A need for custodial care, such as help with bathing and dressing, can't, in itself, qualify you for Medicare coverage in a skilled nursing facility. However, if you qualify for skilled nursing or rehabilitation care, Medicare covers all of your care needs in the facility.

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Skilled Nursing Facility

A nursing facility with the staff and equipment to give skilled nursing care and/ or skilled rehabilitation services and other related health services.

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Special Needs Plan

A type of Medicare Advantage Plan that provides more focused health care for some people. These plans give you all your Medicare health care as well as more focused care to manage a disease or condition such as congestive heart failure, diabetes, or End-Stage Renal Disease.

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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 any insurance-related problems.

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State Medical Assistance Office

A state agency that is in charge of the state's Medicaid program and can give information about programs that help pay medical bills for people with low incomes. Also provides help with prescription drug coverage.

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