Medicare Education
Medicare Glossary — Common Terms Explained Simply
Medicare comes with its own vocabulary. If you’ve ever been confused by terms like “creditable coverage,” “formulary,” or “Medigap,” you’re not alone.
This glossary breaks down the most important Medicare terms — in plain language.
Still have questions? We explain everything during your free consultation.
A
Annual Enrollment Period (AEP)
The window each year from October 15 through December 7 when you can make changes to your Medicare coverage. You can switch Medicare Advantage plans, change Part D drug plans, or move between Original Medicare and Advantage. Changes take effect January 1.
➡ Learn about Annual ReviewsAppeal
A formal process to challenge a Medicare decision — such as a denied claim, a coverage refusal, or a late enrollment penalty. Medicare has a multi-level appeals process with specific deadlines at each stage.
Assignment (Accept Assignment)
When a doctor or provider agrees to accept the Medicare-approved amount as full payment for a service. Providers who accept assignment will not bill you beyond the Medicare-approved amount (plus any applicable deductible and coinsurance).
B
Beneficiary
A person who is enrolled in Medicare and eligible to receive Medicare-covered benefits. Once you enroll in Part A and/or Part B, you are considered a Medicare beneficiary.
Benefit Period
A way Medicare measures your use of hospital and skilled nursing facility services. A benefit period begins the day you’re admitted as an inpatient and ends when you haven’t received inpatient care for 60 consecutive days. If you’re readmitted after a benefit period ends, a new deductible applies.
C
Coinsurance
The percentage of costs you pay for a covered service after you’ve met your deductible. For example, under Original Medicare Part B, you typically pay 20% coinsurance — Medicare pays 80% and you pay 20%. This 20% is one reason many people purchase a Medicare Supplement plan.
➡ Learn how Supplement plans cover coinsuranceCopay (Copayment)
A fixed dollar amount you pay for a covered service. For example, a Medicare Advantage plan might charge a $20 copay for a primary care visit and $40 for a specialist. Copay amounts vary by plan and service type.
Coverage Gap (Donut Hole)
A phase of Part D prescription drug coverage where you may pay more for medications. After you and your plan have spent a certain amount on covered drugs, you enter the coverage gap. Once your out-of-pocket spending reaches the catastrophic threshold, your costs drop significantly. The gap amount changes annually.
➡ Learn about Part D cost phasesCreditable Coverage
Health insurance coverage that meets Medicare’s standards, allowing you to delay enrollment without penalties. For Part B, this typically means active employer group coverage from a company with 20 or more employees. For Part D, it means drug coverage that is at least as good as Medicare’s standard benefit. COBRA does not typically count as creditable coverage for Part B. Understand the penalty risks.
D
Deductible
The amount you must pay out of pocket before Medicare or your plan begins to pay its share. Part A has a per-benefit-period deductible for hospital stays. Part B has an annual deductible. Medicare Advantage and Part D plans each set their own deductible amounts.
Durable Medical Equipment (DME)
Medical equipment prescribed by a doctor for use at home — such as wheelchairs, hospital beds, walkers, oxygen equipment, and CPAP machines. Medicare Part B covers DME when ordered by a doctor and supplied by a Medicare-approved supplier.
E
Enrollment Period
A specific time window during which you can sign up for, change, or drop Medicare coverage. Key enrollment periods include the Initial Enrollment Period, Annual Enrollment Period, Medicare Advantage Open Enrollment, General Enrollment Period, and Special Enrollment Periods.
➡ See all enrollment periods explainedExplanation of Benefits (EOB)
A statement from Medicare or your plan that summarizes what was billed, what Medicare paid, and what you may owe. An EOB is not a bill — it’s an informational summary. Review EOBs regularly to catch billing errors.
Extra Help (Low-Income Subsidy / LIS)
A Medicare program that helps people with limited income and resources pay for Part D prescription drug costs. Extra Help can significantly reduce premiums, deductibles, and copays. Qualifying for Extra Help also triggers a Special Enrollment Period.
F
Formulary (Drug List)
The list of prescription drugs covered by a Medicare Part D or Medicare Advantage plan. Each plan has its own formulary, organized into tiers with different cost levels. A medication on one plan’s formulary may not be covered — or may cost significantly more — on another plan’s formulary. Always check before enrolling.
➡ Learn about Part D formularies and tiersG
General Enrollment Period (GEP)
An annual enrollment window from January 1 through March 31 for people who missed their Initial Enrollment Period and don’t qualify for a Special Enrollment Period. Coverage begins July 1. Late enrollment penalties may apply.
➡ See all enrollment periodsGuaranteed Issue Rights
Certain situations where a Medicare Supplement insurer must sell you a policy regardless of your health status and cannot charge you more due to pre-existing conditions. These rights typically apply in specific circumstances, such as losing employer coverage or leaving a Medicare Advantage plan during your first year.
➡ Learn about Supplement enrollmentH
HMO (Health Maintenance Organization)
A type of Medicare Advantage plan that typically requires you to use doctors and hospitals within the plan’s network (except in emergencies). Most HMOs require a referral from your primary care physician to see a specialist. HMOs generally have lower premiums but less flexibility than PPO plans.
I
Initial Enrollment Period (IEP)
The 7-month window when you first become eligible for Medicare — typically around your 65th birthday. It includes the 3 months before your birthday month, your birthday month, and the 3 months after. This is when you can enroll in Part A, Part B, Part D, Medicare Advantage, and Medigap without penalties.
➡ Read the Turning 65 GuideIRMAA (Income-Related Monthly Adjustment Amount)
An additional amount added to your Part B and Part D premiums if your modified adjusted gross income exceeds certain thresholds. IRMAA is based on your tax return from two years prior. Higher-income beneficiaries pay more for both Part B and Part D.
L
Late Enrollment Penalty
An amount added to your monthly premium if you did not enroll in Medicare when first eligible and did not have qualifying coverage. Part B penalties are 10% per 12-month period of delay, and Part D penalties are 1% of the national base premium per uncovered month. Both are typically permanent.
➡ Learn about Medicare penaltiesM
Maximum Out-of-Pocket (MOOP)
The most you pay out of pocket for covered services in a plan year. Once you reach this limit, your plan pays 100% for covered services for the rest of the year. Medicare Advantage plans are required to have a MOOP. Original Medicare does not have a MOOP — which is one reason Supplement plans are valuable.
Medicare Advantage (Part C)
A private health plan that replaces Original Medicare. Medicare Advantage plans bundle Part A (hospital), Part B (medical), and usually Part D (drugs) into one plan. Many include extras like dental, vision, hearing, and fitness. Plans use networks (HMO or PPO), may require referrals, and have an annual maximum out-of-pocket limit.
➡ Learn about Medicare AdvantageMedicare Part A (Hospital Insurance)
The part of Medicare that covers inpatient hospital stays, skilled nursing facility care, hospice care, and some home health care. Most people don’t pay a premium for Part A if they or their spouse paid Medicare taxes for at least 10 years (40 quarters).
Medicare Part B (Medical Insurance)
The part of Medicare that covers doctor visits, outpatient care, preventive services, lab tests, durable medical equipment, and mental health services. Part B has a monthly premium, an annual deductible, and typically requires 20% coinsurance.
➡ Learn about Part B enrollmentMedicare Part D (Prescription Drug Coverage)
Medicare’s prescription drug coverage, available through standalone Part D plans (with Original Medicare) or built into Medicare Advantage plans. Part D plans have their own formularies, tiers, deductibles, and cost-sharing phases. Coverage and costs vary significantly between plans.
➡ Learn about Part DMedicare Supplement (Medigap)
A private insurance policy that helps pay the “gaps” in Original Medicare — such as deductibles, coinsurance, and copays. Supplement plans are standardized by letter (e.g., Plan G, Plan N) and work with any doctor who accepts Medicare. They do not include drug coverage — you need a separate Part D plan.
➡ Learn about Supplement plansMedigap Open Enrollment Period
A one-time, 6-month window that begins when you are 65 or older and enrolled in Part B. During this period, insurers cannot deny you a Supplement policy or charge more due to health conditions. After this window closes, medical underwriting may apply in most states. This is one of the most important deadlines in Medicare.
➡ Learn about Supplement enrollmentN
Network
The group of doctors, hospitals, pharmacies, and other providers that a Medicare Advantage plan has contracted with to provide services. Using in-network providers typically costs less. HMO plans generally require you to stay in-network; PPO plans allow out-of-network use at a higher cost.
O
Original Medicare
The traditional, government-run Medicare program consisting of Part A and Part B. With Original Medicare, you can see any doctor or hospital that accepts Medicare nationwide — no network restrictions or referrals needed. However, Original Medicare has no annual out-of-pocket maximum, which is why many people add a Supplement plan and a standalone Part D plan.
➡ Compare Original Medicare vs. AdvantageOut-of-Pocket Costs
The total amount you pay for healthcare that is not covered by insurance — including premiums, deductibles, copays, and coinsurance. Comparing total out-of-pocket costs (not just premiums) is the most accurate way to evaluate Medicare plan value.
P
Part B Giveback (Premium Reduction)
A benefit offered by certain Medicare Advantage plans that pays back part of your monthly Part B premium, reducing your Social Security deduction. Not all plans offer this, and the amount varies by ZIP code. A higher giveback does not automatically mean better overall value.
➡ Learn about Part B GivebackPPO (Preferred Provider Organization)
A type of Medicare Advantage plan that allows you to see both in-network and out-of-network providers. You pay less when using in-network providers, but you have the flexibility to see out-of-network doctors at a higher cost. PPOs typically do not require referrals to see specialists.
Premium
The monthly amount you pay for your Medicare coverage. Part A is usually premium-free. Part B has a standard monthly premium (adjusted for income). Medicare Advantage and Part D plan premiums vary by plan and location. Your premium is separate from any deductibles, copays, or coinsurance you also pay.
Preventive Services
Healthcare services intended to prevent illness or detect conditions early — such as annual wellness visits, flu shots, mammograms, colonoscopies, and certain screenings. Medicare Part B covers many preventive services at no cost when provided by a Medicare-accepting provider.
Prior Authorization (Pre-Authorization)
Approval that some Medicare Advantage plans require before you can receive certain services, procedures, or medications. If you don’t get prior authorization when required, the plan may not pay for the service. Original Medicare with a Supplement plan generally does not require prior authorization.
Q
Qualifying Life Event (QLE)
A change in circumstances — such as moving, losing employer coverage, or gaining Medicaid — that triggers a Special Enrollment Period. A QLE allows you to make Medicare plan changes outside the standard enrollment windows.
➡ See enrollment periods & deadlinesS
Skilled Nursing Facility (SNF)
A facility that provides short-term skilled care — such as rehabilitation after surgery or a hospital stay. Medicare Part A covers up to 100 days per benefit period in a SNF following a qualifying hospital stay. After day 20, daily coinsurance applies, which a Supplement plan may cover.
Special Enrollment Period (SEP)
A window outside standard enrollment periods that allows you to join, switch, or drop Medicare coverage due to specific qualifying life events. Common triggers include losing employer coverage, moving, qualifying for Medicaid, or entering/leaving a care facility. Each SEP has its own rules and timeline.
➡ See all enrollment periodsStar Rating
A quality rating system used by Medicare to measure how well Medicare Advantage and Part D plans perform. Plans are rated on a scale of 1 to 5 stars based on factors including customer service, member complaints, drug pricing, and chronic disease management. A 5-star rating may qualify you for a special enrollment period.
T
Tier (Drug Tier)
The level assigned to a prescription drug on a plan’s formulary, which determines your cost. Most plans use a tiered structure — with generics on lower (cheaper) tiers and specialty or brand-name drugs on higher (more expensive) tiers. The same medication can be placed on different tiers by different plans.
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