Medicare Glossary

A benefit period begins the day you're admitted to a hospital or skilled nursing facility and ends when you haven't received inpatient care for 60 consecutive days. If you're readmitted after a benefit period ends, a new benefit period begins and you'll pay a new deductible. There's no limit to the number of benefit periods you can have.

The phase of Part D drug coverage that begins after you've spent a certain amount out of pocket on prescription drugs. During this phase, you pay significantly reduced costs for covered medications. Starting in 2025, the annual out-of-pocket cap for Part D is $2,000, after which catastrophic coverage kicks in.

The percentage of costs you pay for a covered healthcare service after you've met your deductible. For example, if Medicare pays 80% of the approved amount for a service, your coinsurance would be the remaining 20%. Coinsurance amounts vary by plan and type of service.

A fixed dollar amount you pay for a covered healthcare service, usually at the time you receive the service. For example, you might pay a $20 copay for a doctor visit or a $10 copay for a generic prescription. Copays differ from coinsurance in that they are a set dollar amount rather than a percentage.

Health insurance coverage (such as employer group health plans) that is expected to pay, on average, at least as much as Medicare's standard coverage. Having creditable coverage matters because it can protect you from late enrollment penalties if you delay signing up for Medicare Part B or Part D.

The amount you must pay out of pocket for covered services before Medicare or your plan begins to pay its share. For example, the 2025 Part B deductible is $257 per year — you pay the first $257 of Part B-covered services, then Medicare covers its portion of subsequent costs.

Specific times during the year when you can sign up for or make changes to your Medicare coverage. Key periods include the Initial Enrollment Period (around your 65th birthday), the Annual Enrollment Period (October 15 – December 7), Special Enrollment Periods (triggered by qualifying events), and the General Enrollment Period (January 1 – March 31).

A federal program that helps people with limited income and resources pay for Medicare Part D prescription drug costs. Extra Help can pay for premiums, deductibles, and copays related to Part D coverage. Eligible beneficiaries can save an average of $5,000 or more per year. You can apply through the Social Security Administration.

A list of prescription drugs covered by a Medicare Part D or Medicare Advantage plan. Drugs on the formulary are organized into tiers, with each tier having different cost-sharing amounts. Generic drugs are typically on the lowest-cost tier. Plans can change their formularies each year, so it's important to check that your medications are still covered when reviewing plans.

An additional amount added to your Part B and Part D premiums if your income exceeds certain thresholds. The Social Security Administration determines IRMAA based on your modified adjusted gross income from your tax return two years prior. If your income has decreased significantly (due to retirement, for example), you can request a new determination.

A permanent surcharge added to your monthly premium if you didn't sign up for Medicare when you were first eligible and don't qualify for a Special Enrollment Period. The Part B penalty is 10% for each full 12-month period you could have had Part B but didn't. The Part D penalty is 1% of the national base premium for each month without creditable drug coverage.

A joint federal and state program that provides health coverage to people with limited income and resources. Medicaid covers services that Medicare doesn't, such as long-term care and personal care services. People who qualify for both Medicare and Medicaid ("dual eligibles") can get help paying Medicare premiums, deductibles, and copays.

Hospital insurance that helps cover inpatient hospital stays, skilled nursing facility care (following a qualifying hospital stay), hospice care, and some home health services. Most people don't pay a premium for Part A if they or their spouse paid Medicare taxes while working for at least 10 years (40 quarters).

Medical insurance that helps cover doctor visits, outpatient care, preventive services (like screenings and vaccines), durable medical equipment, mental health services, and ambulance services. The standard Part B premium for 2025 is $185 per month, and most beneficiaries pay 20% coinsurance after meeting the annual deductible.

An alternative to Original Medicare offered by private insurance companies approved by Medicare. Part C plans must cover everything Original Medicare covers and often include additional benefits like prescription drugs, dental, vision, hearing, and wellness programs. Plans may use provider networks (HMO, PPO) and typically have an annual out-of-pocket maximum.

Prescription drug coverage available through private insurance companies. Part D can be purchased as a standalone Prescription Drug Plan (PDP) to supplement Original Medicare, or it may be included as part of a Medicare Advantage plan (MAPD). Starting in 2025, annual out-of-pocket drug costs are capped at $2,000 thanks to the Inflation Reduction Act.

State-run programs that help eligible individuals with limited income pay Medicare costs. There are four types: QMB (pays Part A and B premiums, deductibles, coinsurance, and copayments), SLMB (pays Part B premium), QI (pays Part B premium with limited funding), and QDWI (pays Part A premium for certain working disabled individuals).

Private insurance policies that help pay some of the out-of-pocket costs that Original Medicare doesn't cover, such as copayments, coinsurance, and deductibles. Medigap plans are standardized and labeled with letters (A, B, C, D, F, G, K, L, M, N). You cannot use Medigap with a Medicare Advantage plan — it only works with Original Medicare.

A group of doctors, hospitals, pharmacies, and other healthcare providers that have agreed to provide services to plan members, usually at negotiated rates. HMO plans typically require you to use in-network providers (except in emergencies), while PPO plans allow out-of-network care at higher cost. Original Medicare does not use networks.

The most you have to pay for covered services in a plan year. After you reach this amount, your plan pays 100% of covered services for the rest of the year. Medicare Advantage plans are required to have an out-of-pocket maximum, while Original Medicare does not have one (which is one reason people purchase Medigap policies).

The monthly amount you pay for your Medicare coverage, similar to a subscription fee for your health insurance. You may have separate premiums for Part A (if applicable), Part B, Part D, Medicare Advantage, and/or Medigap. Premiums are usually deducted from your Social Security check.

Approval from your plan required before certain drugs, services, or procedures are covered. Your doctor must get this approval in advance, or you may have to pay the full cost. Prior authorization is more common with Medicare Advantage and Part D plans than with Original Medicare.