Medicare Glossary: Key Terms in Plain English

The Terms That Matter Most

If a word ever trips you up, this list has you covered. When you are ready to apply it to your own situation, that is exactly what a free, no-pressure review is for.

Original Medicare

Medicare Part A (hospital) and Part B (medical) provided directly by the federal government. You can add a Part D drug plan and a Medicare Supplement to it.

Part A

Hospital insurance: inpatient stays, skilled nursing, hospice, and some home health. Most people pay no premium for Part A.

Part B

Medical insurance: doctor visits, outpatient care, preventive services, and durable medical equipment. It has a monthly premium and an annual deductible.

Part C (Medicare Advantage)

An all-in-one alternative offered by private carriers that bundles Part A, Part B, and usually Part D, often with extra benefits and a network.

Part D

Prescription drug coverage, sold as a standalone plan or built into a Medicare Advantage plan.

Medicare Supplement (Medigap)

Private insurance that pairs with Original Medicare to cover some or all of the costs it leaves behind, such as the 20% Part B coinsurance. Benefits are standardized by letter (Plan G, Plan N, etc.).

Premium

The amount you pay each month to keep a plan, separate from what you pay when you use care.

Deductible

What you pay out of pocket before your plan or Medicare starts paying its share.

Coinsurance

Your share of a cost after the deductible, usually a percentage (Part B is typically 20% with no cap under Original Medicare).

Copay

A flat dollar amount you pay for a covered service, common on Medicare Advantage and Part D.

Out-of-Pocket Maximum

The most you will pay in a year on a Medicare Advantage plan; after you hit it, the plan pays 100% of covered services.

Formulary

The list of drugs a Part D or Advantage plan covers, organized into tiers that affect your cost.

Network

The doctors, hospitals, and pharmacies a plan contracts with. HMO plans require you stay in network; PPO plans allow out-of-network at higher cost.

IEP (Initial Enrollment Period)

Your first chance to enroll, a 7-month window around your 65th birthday month.

AEP (Annual Enrollment Period)

October 15 to December 7 each year, when anyone can change Advantage and Part D plans for the next year.

SEP (Special Enrollment Period)

A window triggered by a life event (moving, losing employer coverage, etc.) that lets you enroll or change plans outside the normal periods.

Guaranteed Issue

Times when an insurer must sell you a Medigap plan without health questions, most notably your Medigap Open Enrollment Period at 65.

IRMAA

An income-related surcharge added to Part B and Part D premiums for higher-income enrollees, based on your tax return from two years prior.

Extra Help (LIS)

A federal program that lowers Part D drug costs for people with limited income and resources.

Late Enrollment Penalty

A permanent surcharge added to Part B or Part D if you go without coverage when first eligible and do not have other creditable coverage.

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