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Medicare Terminology

Medicare Terminology

Mastering the lingo: Medicare and health insurance terms you should know

If you’re just starting your Medicare journey, you’ll likely come across a lot of complex insurance words. Sorry about that — let’s clear up a bit of the confusion. We’ve picked out some of the most common Medicare and health care terms and defined them as simply as possible.

ANNUAL ENROLLMENT PERIOD

This is a set time period each year when you can enroll in a medical insurance plan.

October 15 – December 7 is your window to shop for Medicare plans. Whichever one you choose takes effect on January 1.

CLAIM

The request for payment that’s sent to your health insurance company after you receive covered care.

COINSURANCE

The percentage you may owe after reaching your deductible for certain eligible services, such as an office visit, tests, prescriptions, or another medical treatment that’s recommended by your doctor. For example, if your plan pays 80%, your coinsurance cost is 20%. It’s always a good idea to ask your provider what a service may cost, so you can budget accordingly based on the coinsurance amount you will have to pay. If, for example, the covered charges for an MRI are $2,000 and your coinsurance is 20%, you will be responsible for $400. Your health insurance company will pay the remaining $1,600.

Also keep in mind that  before you can use your coinsurance, you must first meet your annual deductible. So if your yearly or annual deductible is $2,000, you’ll first need to pay this amount for the total eligible medical services you receive before your coinsurance takes effect.

COPAY

The set amount you pay for certain eligible services, such as $20 for a primary care physician (PCP) or $30 for a specialist, including a cardiologist or orthopaedist.

COVERAGE GAP/DONUT HOLE

Once your total prescription costs reach a certain dollar amount, you enter a coverage gap, also known as the donut hole. While in this coverage gap, you’ll be responsible for 25% of the retail cost of your prescriptions.

DEDUCTIBLE

This is the set amount, not including copays, you pay each year for eligible health services or prescription drug costs before your plan starts paying for covered services. So if your deductible is $2,000, you must first pay this amount before your health plan pays anything.

FORMULARY

The list of medicines covered by your plan.

HEALTH MAINTENANCE ORGANIZATION (HMO)

This type of private health insurance provides health coverage that you must get through an in-network group of physicians. Emergency care and urgent care is also covered no matter where you are. These plans must offer the same benefits as Medicare Parts A and B, but have different rules and restrictions. Some HMOs also offer additional benefits like hearing and vision coverage.

IN-NETWORK PROVIDER

A doctor or hospital that participates with your plan’s network.

MAXIMUM OUT-OF-POCKET

The most you’d pay annually for covered care. If you hit this amount, your plan pays 100% after that.

OUT-OF-NETWORK PROVIDER

A doctor or hospital that does not participate with your plan’s network. You may pay more to see these providers.

PREFERRED PROVIDER ORGANIZATION (PPO)

A type of plan that offers more flexibility in choosing doctors and hospitals, usually with the added security of coverage for care you might need when you’re away from home.

PREMIUM (Medicare Version)

The monthly amount paid to a private insurer so you have coverage, in addition to your Medicare Part B premium.

SPECIAL ENROLLMENT PERIOD

This is a special period of time when you qualify for health insurance due to certain life events, including the loss of commercial health coverage, moving to a new state, or changes in your yearly income.

TELEMEDICINE

Health care or guidance that you get from a doctor virtually in real time, via a smart device or computer.

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