Medicare can be confusing, with a wide array of terms and coverage options that are completely foreign to the average healthcare consumer. In part one of this two-part series from Soundpath Health, we’ll define some key terms. In Part 2, we’ll explain the different coverage options that are available. Below are 10 terms that are essential to understanding the basics of Medicare. Are there other terms you would like us to define? Comment on the article and we’d be glad to help you out with them.
1. Initial Enrollment Period- The initial enrollment period for Medicare lasts from three months before the month an individual turns 65 to three months after. If you do not enroll in Medicare Parts B and D during the initial enrollment period, the seven-month window surrounding your birthday, certain penalties may be assessed. For those turning 65, this is the time to review the options and costs associated with each part of Medicare and to gauge whether a Medicare Advantage plan or another option is right for them.
2. Cost-sharing – Cost-sharing refers to amounts that a member has to pay when drugs or services are received. It includes any combination of the following three types of payments: (1) any deductible amount a plan may impose before drugs or services are covered; (2) any fixed “copayment” amounts that a plan may require be paid when specific drugs or services are received; or (3) any “coinsurance” amount that must be paid as a percentage of the total amount paid for a drug or service.
3. Exclusion – Items or services that are excluded from coverage and that neither Medicare nor any additional coverage covers. You are responsible for paying for excluded items or services along with any applicable cost sharing, co-payments, or coinsurance amounts.
4. Late Enrollment Penalty – An amount added to your monthly premium for Medicare drug coverage if you go without creditable coverage (coverage that expects to pay, on average, at least as much as standard Medicare prescription drug coverage) for a continuous period of 63 days or more. You pay this higher amount as long as you have a Medicare drug plan. There are some exceptions.
5. Low Income Subsidy/Extra Help – A Medicare program to help people with limited income and resources pay Medicare prescription drug program costs, such as premiums, deductibles, and coinsurance.
6. Medicaid (or Medical Assistance) – A joint Federal and State program that helps with medical costs for some people with low incomes and limited resources. Medicaid programs vary from state to state, but most health care costs are covered if you qualify for both Medicare and Medicaid.
7. Service Area – “Service area” is the geographic area approved by the Centers for Medicare & Medicaid Services (CMS) within which an eligible individual may enroll in a certain plan, and in the case of network plans, where a network must be available to provide services.
8. Star Ratings – The Medicare Program rates how well Medicare health and drug plans perform in different categories (for example, detecting and preventing illness, ratings from patients, patient safety, drug pricing and customer service). The information is an overall plan rating of each plan’s performance and is available for all plans on www.medicare.gov.
9. Step Therapy – A utilization tool that requires you to first try another drug to treat your medical condition before we will cover the drug your physician may have initially prescribed.
10. Out-of-Pocket Maximum – The maximum amount that you pay out-of-pocket during the calendar year, usually at the time services are received, for covered Part A (Hospital Insurance) and Part B (Medical Insurance) services. Plan premiums and Medicare Part A and Part B premiums do not count toward the out-of-pocket maximum