Glossary of Common Medicare Terms
Plan Benefit Information:
- Summary of Benefits: A document which summarizes your plan’s key feature such as benefits, cost sharing provisions, and limitations. The document is meant to be used in conjunction with the plan’s Evidence of Coverage.
- Evidence of Coverage: A document which describes in detail the features of your plan such as eligibility, benefits, cost sharing provisions, and limitations. The document is also used to indicate how you may receive your care and with what restrictions as well as how to file appeals or grievances regarding your care.
- Formulary: A list of prescription drugs covered by you insurance plan.
- Star Ratings: A system used by Medicare to measure how well Medicare Part D and Medicare Advantage Plans perform. Performance is measured in several categories.
- Tier: Used by Medicare Part D prescription plan to indicate groups of medications which have a different cost sharing for each group. Generally, a medication in a lower tier will cost you less than a medication in a higher tier.
Cost sharing:
Medical service or prescription drug cost which you must pay.
Different kinds of Cost Sharing include:
- Premium: The cost to purchase the insurance plan. The periodic payment you must pay to your insurance carrier for your insurance coverage. Most carriers require monthly premium payments although you may be allowed to pay on a quarterly, semi-annual or annual basis.
- Deductible: The amount you must pay before your insurance begins to pay. The deductible may apply to some or all benefits and you should reference your Summary of Benefits for additional information.
- Co-pay: An amount you may be required to pay as your share of the cost for a medical service or prescription drug. A copayment is usually a set amount, rather than a percentage. For example, you might pay $10 or $20 for a doctor’s visit or prescription drug.
- Co-insurance: An amount you may be required to pay as your share of the cost for a medical service or prescription drug. A co-insurance is usually a percentage such as 20%.
- Out-of-pocket maximum: The maximum amount you will pay for eligible medical services only under your Medicare Advantage Plan. Medicare Part D plans do not have any maximum cap on prescription drug costs.
- Coverage Gap (aka Donut Hole) Stage: Used by Medicare Part D prescription plan to indicate the stage of your prescription plan year where you will have a 25% coinsurance for all medications covered under your plan.
- Catastrophic Stage: Used by Medicare Part D prescription plan to indicate the stage of your prescription plan year where you will have a 5% coinsurance for all medications covered under your plan.
Plan Restrictions:
- Prior Authorization: Approval you must get from your insurance provider in order for a medical service or prescription drug to be covered. You should refer to your plan’s Evidence of Coverage or call your plan’s member services to get instructions on how to file for prior authorization.
- Step Therapy: A coverage rule used by some Medicare Part D Plans that requires you to try one or more similar, lower cost drugs to treat your condition before the plan will cover the prescribed medication. You should refer to your plan’s Evidence of Coverage or call your plan’s member services to get further information.
- Quantity limits: A coverage rule used by some Medicare Part D Plans to limit the amount or frequency you may receive certain medications. It can also be used by Medicare Advantage Plans to limit the types and frequencies of medical services you may receive.
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