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This topic provides brief definitions for much of the specialized terminology used in conjunction with Medigap policies (Medicare Supplement Insurance) and Medicare.
Assignment - In the Original Medicare Plan, this means a doctor or supplier agrees to accept the Medicare-approved amount as full payment. If you are in the Original Medicare Plan, it can save you money if your doctor accepts assignment. You still pay your share of the cost of the doctor's visit.
Benefit Period - The way that the Original Medicare Plan measures your use of hospital and skilled nursing facility (SNF) services. A benefit period begins the day you go to a hospital or skilled nursing facility. The benefit period ends when you haven't received any hospital care (or skilled care in a SNF) for 60 days in a row. If you go into the hospital or a SNF after one benefit period has ended, a new benefit period begins. You must pay the inpatient hospital deductible for each benefit period. There is no limit to the number of benefit periods you can have.
Coinsurance - The amount you may be required to pay for services after you pay any plan deductibles. In the Original Medicare Plan, this is a percentage (like 20%) of the Medicare-approved amount. You have to pay this amount after you pay the deductible for Part A and/or Part B. In a Medicare drug plan, the coinsurance will vary depending on how much you have spent.
Copayment - In some Medicare health and prescription drug plans, the amount you pay for each medical service, like a doctor's visit, or prescription. A copayment is usually a set amount you pay. For example, this could be $10 or $20 for a doctor's visit or prescription. Copayments are also used for some hospital outpatient services in the Original Medicare Plan.
Creditable Coverage (Medigap) - Certain kinds of previous health insurance coverage that can be used to shorten a pre-existing condition waiting period under a Medigap policy. (See pre-existing conditions.)
Deductible - The amount you must pay for health care or prescriptions, before Original Medicare, your prescription drug plan, or other insurance begins to pay. For example, in Original Medicare, you pay a new deductible for each benefit period for Medicare Part A, and each year for Medicare Part B. These amounts can change every year.
End-Stage Renal Disease (ESRD) - Permanent kidney failure that requires a regular course of dialysis or a kidney transplant.
Excess Charges - If you are in the Original Medicare Plan, this is the difference between a doctor's or other health care provider's actual charge (which may be limited by Medicare or the state) and the Medicare-approved payment amount.
Guaranteed Issue Rights (also called "Medigap Protections") - Rights you have in certain situations when insurance companies are required by law to sell or offer you a Medigap policy. In these situations, an insurance company can't deny you a policy, or place conditions on a policy, such as exclusions for pre-existing conditions, and can't charge you more for a policy because of past or present health problems.
Guaranteed Renewable - A right you have that requires your insurance company to automatically renew or continue your Medigap policy, unless you make untrue statements to the insurance company, commit fraud or don't pay your premiums.
Health Maintenance Organization (HMO) Plan (Medicare) - A type of Medicare Advantage Plan that is available in some areas of the country. Plans must cover all Medicare Part A and Medicare Part B health care. Some HMOs cover extra benefits, like extra days in the hospital. In most HMOs, you can only go to doctors, specialists, or hospitals on the plan's list except in an emergency. Your costs may be lower than in the Original Medicare Plan.
Hospice Care - A special way of caring for people who are terminally ill. Hospice care involves a team-oriented approach that addresses the medical, physical, social, emotional and spiritual needs of the patient. Hospice also provides support to the patient's family or caregiver as well. Hospice care is covered under Medicare Part A (Hospital Insurance).
Lifetime Reserve Days - In the Original Medicare Plan, a total of 60 extra days that Medicare will pay for when you are in a hospital more than 90 days during a benefit period. Once these 60 reserve days are used, you don't get any more extra days during your lifetime. For each lifetime reserve day, Medicare pays all covered costs except for a daily coinsurance.
Long-term Care - A variety of services that help people with health or personal needs and activities of daily living over a long period of time. Long-term care can be provided at home, in the community, or in various types of facilities, including nursing homes and assisted living facilities. Most long-term care is custodial care. Medicare doesn't pay for this type of care if this is the only kind of care you need.
Medicaid - 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.
Medical Underwriting - The process that an insurance company uses to decide, based on your medical history, whether or not to take your application for insurance, whether or not to add a waiting period for pre-existing conditions (if your state law allows it), and how much to charge you for that insurance.
Medically Necessary - Services or supplies that are needed for the diagnosis or treatment of your medical condition, meet the standards of good medical practice in the local area, and aren't mainly for the convenience of you or your doctor.
Medicare Advantage Plan - A plan offered by a private company that contracts with Medicare to provide you with all your Medicare Part A and Part B benefits. Medicare Advantage Plans are HMOs, PPOs, or PFFSs Plans. If you are enrolled in a Medicare Advantage Plan, Medicare services are covered through the plans, and aren't paid for under Original Medicare.
Medicare-approved Amount - In the Original Medicare Plan, this is the amount a doctor or supplier can be paid, including what Medicare pays and any deductible, coinsurance, or copayment that you pay. It may be less than the actual amount charged by a doctor or supplier.
Medicare Prescription Drug Plan - A stand-alone drug plan, offered by insurers and other private companies to beneficiaries that get their Medicare Part A and/or Part B benefits through the Original Medicare Plan; Medicare Private Fee-for-Service Plans that don't offer prescription drug coverage; and Medicare Cost Plans offering Medicare prescription drug coverage.
Medicare SELECT - A type of Medigap policy that may require you to use hospitals and, in some cases, doctors within its network to be eligible for full benefits.
Medigap Policy - Medicare supplement insurance sold by private insurance companies to fill "gaps" in Original Medicare Plan coverage. Except in Massachusetts, Minnesota, and Wisconsin, there are up to 12 standardized policies labeled Plan A through Plan L. Medigap policies only work with the Original Medicare Plan. Medigap policies may also be called Medicare Supplement Insurance. They are called Medicare SELECT policies if they require people with Medicare to use network providers in order to get full supplemental benefits.
Open Enrollment Period (Medigap) - A one-time-only six-month period when you can buy any Medigap policy you want that is sold in your state. It starts in the first month that you are covered under Medicare Part B and you are age 65 or older (or under age 65 in some states). During this period, you can't be denied coverage or charged more due to past or present health problems.
Original Medicare Plan - A fee-for-service health plan that lets you go to any doctor, hospital, or other health care supplier who accepts Medicare and is accepting new Medicare patients. You must pay the deductible. Medicare pays its share of the Medicare-approved amount, and you pay your share (coinsurance). In some cases you may be charged more than the Medicare-approved amount. The Original Medicare Plan has Part A (Hospital Insurance) and Part B (Medical Insurance).
Pre-existing Condition - A health problem you had before the date that a new insurance policy starts.
Preferred Provider Organization (PPO) Plan (Medicare) - A type of Medicare Advantage Plan in which you pay less if you use doctors, hospitals, and providers that belong to the plan's network. You can use doctors, hospitals, and providers outside of the network for an additional cost.
Premium - The periodic payment to Medicare, an insurance company, or a health care plan for health care or prescription drug coverage.
Private Fee-for-Service (PFFS) Plan - A type of Medicare Advantage Plan in which you may go to any Medicare-approved doctor or hospital that accepts the plan's payment. The insurance plan, rather than the Medicare Program, decides how much it will pay and what you pay for the services you get. You may pay more or less for Medicare-covered benefits. You may have extra benefits the Original Medicare Plan doesn't cover.
Programs of All-inclusive Care for the Elderly (PACE) - A Program of All-Inclusive Care (PACE) combines medical, social, and long-term care services for frail people to help people stay independent and living in their community as long as possible, while getting the high-quality care they need. PACE is available only in states that have chosen to offer it under Medicaid. To be eligible, you must
· be 55 years old or older,
· live in the service area of the PACE program,
· be certified as eligible for nursing home care by the appropriate state agency, and
· be able to live safely in the community.
Skilled Nursing Facility - A nursing facility with the staff and equipment to give skilled nursing care and/or skilled rehabilitation services and other related health services.
Skilled Nursing Facility Care - This is a level of care that requires the daily involvement of skilled nursing or rehabilitation staff and that, as a practical matter, can't be provided on an outpatient basis. Examples of skilled nursing facility care include intravenous injections and physical therapy. The need for custodial care (for example, assistance with activities of daily living, like bathing and dressing) cannot, in itself, qualify you for Medicare coverage in a skilled nursing facility. However, if you qualify for coverage based on your need for skilled nursing or rehabilitation, Medicare will cover all of your care needs in the facility, including assistance with activities of daily living.
Special Needs Plan - A special type of plan that provides more focused health care for specific groups of people, such as those who have both Medicare and Medicaid, who reside in a nursing home, or who have certain chronic medical conditions.
State Health Insurance Assistance Program - A State program that gets money from the federal government to give free local health insurance counseling to people with Medicare. See the State Health Insurance Assistance Program (SHIP) topic for comprehensive information.
State Insurance Department - A State agency that regulates insurance and can provide information about Medigap policies and other private insurance.
State Medical Assistance Office - A State agency that is in charge of the state's Medicaid program and can give information about programs that help pay medical bills for people with low incomes.
Medigap Policies (Medicare Supplement Insurance) - Overview
CMS publication #02110, Choosing a Medigap Policy: A Guide to Health Insurance for People With Medicare, available online at:
http://www.medicare.gov/Publications/Pubs/pdf/02110.pdf
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