If you’re new to Medicare and Medicare Advantage Plans, you may be feeling a bit overwhelmed by a lot of new terminology. Don’t worry — we’re here to help.
Below is a list of some of the words we use most often when talking about Medicare Advantage Plans. Once you have these basics under your belt, you’ll have the knowledge you need to make a confident decision about your Medicare Advantage Plan.
Medicare Advantage Plan
Before diving into these terms, let’s first cover the difference between A Medicare Advantage Plan and Original Medicare.
A Medicare Advantage Plan is a Medicare plan offered through a private insurance company. Original Medicare (also called Medicare Part A and Part B) is administered by the federal government.
Medicare Advantage Plans cover everything that Original Medicare covers except hospice care. The plans also cover many services Original Medicare does not cover, including dental, vision, hearing, and prescription drugs.
You are eligible for a Medicare Advantage Plan if you are eligible for Original Medicare. That means you can sign up during the Initial Medicare Enrollment Period. If you miss your initial window, you can also sign up for a Medicare Advantage Plan during the Open Enrollment Period.
Coinsurance is the amount that you may have to pay after you reach your plan’s deductible. This amount varies across different plans.
For example, your plan may have a 10% coinsurance after you hit your deductible. That means you will pay 10% of the Medicare-approved cost for any service or procedure. So, if a service costs $500, you will pay $50.
A copayment is a set amount you may pay for a doctor’s visit, procedure, or prescription. For example, you may pay $20 for a doctor’s appointment, $50 for a specialist visit, or $10 for a generic prescription drug. Copayments usually count toward your annual deductible.
The coverage gap is also called the Medicare “donut hole.” You may hit the coverage gap when you reach the prescription drug spending limit on your plan. When this happens, you may need to pay a higher amount for your prescription drugs until you hit a maximum of $4700 (called catastrophic coverage). Once you hit this limit, you’ll pay a small coinsurance for your prescription drugs.
The maximum amount you have to spend out-of-pocket before your Medicare plan starts to pay for services. Deductible amounts can change every year.
Someone who is “dual eligible” is eligible for both Medicare and Medicaid. These individuals qualify for Medicare because of age or disability and meet low income requirements.
Most dual-eligible people use Original Medicare or Medicare Advantage for their primary coverage and have Medicaid as supplemental insurance. In some cases, Medicaid may cover certain services that Medicare does not.
A formulary is a list of prescription drugs that your Medicare Advantage Plan covers. Some plans may have different tiers of prescription drugs, each with a different price range. Low-tier drugs, for example, are usually generic medications that cost less.
Initial Medicare Enrollment Period
The Initial Medicare Enrollment Period starts three months before you turn 65 and ends three months after you turn 65. You can apply for Original Medicare, Medicare Advantage, and Part D Prescription Drug Plans during this period.
Integrated Medicare Advantage-Part D Plans
An Integrated Medicare Advantage-Part D Plan combines prescription drug coverage and other healthcare coverage. They are different from standalone Part D plans, which only cover prescription drugs.
Medicare Part C
Medicare Part C is another name for Medicare Advantage. The four parts of Medicare include:
- Medicare Part A – This is part of Original Medicare and is also called hospital insurance. It is administered by the federal government.
- Medicare Part B – This is also part of Original Medicare and is called medical insurance. It is administered by the federal government.
- Medicare Part C – This is another name for Medicare Advantage Plans, which are administered by private insurance companies.
- Medicare Part D – This includes Prescription Drug Plans (PDPs) that are administered by private insurance companies.
Medicare vs. Medicaid
Although they sound similar, Medicare and Medicaid have many differences. Medicare is a federal healthcare program for individuals over 65 or younger people with a qualifying disability. Medicare also covers people with end-stage renal disease.
On the other hand, Medicaid covers healthcare services for people who meet low income and family size eligibility requirements. Medicaid can also cover certain individuals with disabilities. State governments administer Medicaid, which means Medicaid eligibility varies state to state.
Open Enrollment Period
If you miss the Initial Medicare Enrollment Period, you can sign up for Medicare Advantage during Medicare’s annual Open Enrollment Period. This period runs from October 15 to December 7. You can also drop or switch your coverage during this time.
A premium is how much you may pay Medicare or an insurance company for coverage. You may have monthly or annual premiums. In some cases, you may be able to sign up for a Medicare Advantage Plan with a $0 premium.
Star rating program
The Centers for Medicare & Medicaid Services (CMS) has a star rating program to measure the quality of Medicare Advantage Plans. CMS creates these ratings based on member data, complaints, and surveys. Plans can receive a rating from one to five stars, with one star being “poor” and five stars being “excellent.”