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When getting to know Medicare, you will probably come across some words and phrases that are not familiar to you. Here are definitions of some of the more common terms associated with Medicare and health care coverage.

Centers for Medicare & Medicaid Services (CMS)
The federal agency that runs the Medicare program. In addition, CMS works with the states to run the Medicaid program. CMS works to make sure that the beneficiaries in these programs are able to get high quality health care.

Coinsurance
An amount you are responsible for paying for covered services under a health plan. Coinsurance is usually stated as a percentage, such as 20% of eligible expenses for outpatient surgery. That means the insurance plan would pay 80% of covered charges and you would pay coinsurance of 20%.

Copayment
The amount you pay at the time you receive a covered service, such as a doctor’s office visit. This is usually a fixed, predictable dollar amount.

Custodial care
Non-medical care that helps people with activities of daily living, preparation of special diets and other tasks.

Deductible
An amount you must pay for covered services within a given year before the insurance company or Medicare begins to pay. For instance, if you have a $500 deductible, you must pay for the first $500 in covered medical expenses before your health plan pays.

Coverage Gap
The initial Part D coverage limit during which you pay 100% of drug costs. When your covered drug costs reach the first part of the limit, Medicare provides no drug benefit until you reach the upper part of the limit. The upper limit can change if the retiree has additional coverage.

Formulary
A list of prescription drugs along with their formulas, uses, dosages and methods of preparation. In some Medicare health plans or Part D plans, doctors must order or use only drugs listed on the plan’s formulary.

Generic Drug
A prescription drug that has the same active-ingredient formula as a brand-name drug. Generic drugs usually cost less than brand-name drugs and are rated by the Food and Drug Administration (FDA) to be as safe and effective as brand-name drugs.

Home Health Agency
An organization that gives home care services, like skilled nursing care, physical therapy, occupational therapy, speech therapy, and personal care by home health aides.

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).

Initial Enrollment Period
The Initial Enrollment Period is the first chance you have to enroll in Medicare Part B. Your Initial Enrollment Period starts three months before you first meet all of the eligibility requirements for Medicare, includes the month of eligibility and continues for the three months after the month of eligibility.

Medicaid
Medicaid is a joint federal and state program that helps pay for certain health services for people with limited income and resources. If you qualify, you may be able to get help to pay for nursing home care or other health care costs.

Medicare
A federal health insurance program for people 65 and older or people who are disabled (as defined by the Social Security Administration). Hospital Insurance (Part A), which is available to people when they reach the age of 65, covers in-patient hospital care, skilled nursing care, home health care, and hospice care. Medical Insurance (Part B), a voluntary program, covers physician services, physical therapy, lab services and outpatient services. You are required to pay a premium for the services under Part B.

Medicare Advantage HMO Plans
A Medicare Advantage Health Maintenance Organization (HMO) makes health coverage available through primary care doctors, specialists and hospitals in the plan’s network of participating providers. If you choose to go to a doctor outside of our network, you must pay for these services yourself except in limited situations (for example, emergency care). Neither the plan nor the Original Medicare plan will pay for these services.

Only emergency and urgently needed care are covered when traveling. HMOs have guidelines for what is considered an emergency. It’s important that you read this information before going to an emergency room facility for care. The definition and examples of emergency care are usually provided in your member handbook.

Medicare-Approved Amount
To help control costs, Medicare limits the amount of money it will pay for specific services. Doctors who accept Medicare agree to charge Medicare patients this amount their services. Therefore, Medicare-approved amount may be less than the actual amount a doctor or health care provider would normally charge.

Medicare Part A
Medicare hospital insurance that pays for inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care.

Medicare Part B
Medicare medical insurance that helps pay for doctors services, outpatient hospital care, durable medical equipment, and some medical services that are not covered by Part A.

Medicare Part C (Medicare Advantage Plans)
Medicare Advantage is an expanded set of options for the delivery of health care under Medicare. While all Medicare beneficiaries can receive their benefits through the original fee-for-service program, beneficiaries entitled to Medicare Part A and enrolled in Part B can choose to participate in a Medicare Advantage plan instead. Organizations that seek to contract as Medicare Advantage plans must meet specific organizational, financial, and other requirements.

Medicare Part D (PDP/Medicare Rx Plans)
This is the part of Medicare that provides prescription drug benefits. Coverage is provided through a prescription drug plan (PDP) made available by private insurance companies approved under contract with Medicare.

Medicare Supplement Policy
As the name implies, this type of health insurance is designed to supplement Original Medicare. It helps to fill the “gaps” in Original Medicare by paying uncovered costs—such as copayments, coinsurance and deductibles.

Original Medicare
Also known simply as Medicare Parts A & B. The term “Original Medicare” came into use after Medicare Advantage plans were introduced as an alternative to traditional/original Medicare benefits offered through the government.

Part B Premium
The monthly amount most people pay for Medicare Part B (Medical insurance). You must continue to pay your Medicare Part B premium if you have a Medicare Advantage or Medicare supplement plan.

Point of Service (POS)
A Managed Care health plan that encourages its members to seek care from certain providers by offering them a higher level of reimbursement. Care sought outside of the network, however, is still covered but at a lower reimbursement level.

Premium
The payment you make to Medicare, an insurance company or a health care plan (usually on a monthly basis) for health or prescription drug coverage.

Primary Care Physician (PCP)
This is the doctor you see first for most health issues. Your PCP will coordinate your care with specialists and other health care providers to make sure you get the care you need to manage your health. In many Medicare Advantage HMO Plans, you must obtain a referral from your primary care doctor before you see any other doctor, specialist or health care provider.

Referral
A referral is a written order from your primary care doctor for you to see a specialist or get certain medical services. In many HMOs, you need to get a referral before you can receive medical care from anyone except your primary care doctor.

Skilled Nursing Facility (SNF) Care
A high level of care that requires the daily attention of a skilled nursing or rehabilitation staff. Examples include intravenous injections, physical therapy and Custodial care—such as help with activities of daily living, like bathing and dressing. If you qualify for coverage, based on your need for skilled nursing care or rehabilitation, Medicare will cover your care in a skilled nursing facility.

TDD/TTY
A telecommunications device for the deaf (TDD) or a teletypewriter (TTY) is a communication device used by people who are deaf, hard of hearing, or speech-impaired. When calling a TTY phone number, you are connected with operators who are available to send and interpret TTY messages.

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