Medicare Terms Glossary

Annual Election Period (AEP)

The main fall enrollment window that runs October 15 through December 7 each year. During AEP, you can switch Medicare Advantage plans, switch from Original Medicare to Medicare Advantage, change your Part D drug plan, or drop Medicare Advantage and return to Original Medicare. Any changes take effect January 1 of the following year.

Annual Notice of Change (ANOC)

The letter your plan sends you each September listing any changes to costs, coverage, or network for the coming year. You should receive it before AEP begins — read it carefully, because what worked for you this year may not be the best option next year.

Benefit Period

Under Part A, a benefit period starts 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. There's no limit to the number of benefit periods you can have — but each one comes with its own deductible.

Beneficiary

The person enrolled in and covered by Medicare. If you're the one signed up for the coverage, you're the beneficiary.

Carrier

The private insurance company that administers a Medicare Advantage, Part D, or Medigap plan. Carriers contract with Medicare to offer these plans, and they set their own premiums, networks, and formularies within CMS guidelines.

Coinsurance

Your share of a covered service's cost expressed as a percentage — typically after you've met your deductible. For example, if Medicare covers 80% of an outpatient service, your coinsurance is the remaining 20%. A Medigap plan can help cover that gap.

Co-pay (Copayment)

A flat dollar amount you pay for a specific covered service, like $20 for a primary care visit or $45 for a specialist. Copayments are fixed regardless of the total cost of the service and are common in Medicare Advantage plans.

Coordination of Benefits (COB)

The process that determines which insurance plan pays first (primary) and which covers the remainder (secondary) when you have more than one plan. This applies when you have Medicare alongside an employer plan, Medicaid, or a Medigap policy.

Coverage Gap ("Donut Hole")

A phase of Part D spending where your cost-sharing increases after your total drug costs reach a set threshold. In 2025, the coverage gap effectively closes — meaning you'll pay no more than 25% of drug costs throughout the year. That said, the phases still exist and still affect how costs are calculated.

Creditable Coverage

Drug coverage from an employer, union, or the VA that is at least as good as standard Part D. If you have creditable coverage, you can delay Part D enrollment without being hit with a late-enrollment penalty when you do sign up. Your plan must tell you each year in writing whether your coverage is creditable — keep that notice.

CMS (Centers for Medicare & Medicaid Services)

The federal agency within the Department of Health and Human Services that runs Medicare and Medicaid. CMS sets the rules, approves plans, determines coverage guidelines, and publishes the official information at medicare.gov.

Deductible

The amount you pay out of pocket for covered services before your insurance starts sharing costs. Part A, Part B, and Part D each have their own deductibles, and Medicare Advantage plans may set their own as well.

Dual Eligible

Someone who qualifies for both Medicare and Medicaid. Dual eligibles often receive additional cost-saving benefits and may qualify for special plans (D-SNPs) designed to coordinate both programs seamlessly.

Durable Medical Equipment (DME)

Equipment prescribed by a doctor for use at home, such as wheelchairs, walkers, hospital beds, and oxygen equipment. Part B covers DME when it's medically necessary — typically at 80% after your deductible, with you covering the remaining 20%.

Effective Date

The date your Medicare coverage actually begins. Depending on when you enroll, your effective date might be the first of the month you turn 65, the month after, or later — getting the timing right matters, and Harry can walk you through it before it costs you.

Enrollment Period

A defined window of time during which you can sign up for, switch, or drop a Medicare plan. Different actions have different windows — your Initial Enrollment Period (IEP), Annual Election Period (AEP), Special Enrollment Period (SEP), and Open Enrollment Period (OEP) each have their own rules.

Evidence of Coverage (EOC)

The full document your plan sends each year spelling out exactly what's covered, what it costs, and how to get care. It's long, but it's the definitive answer when a claim question comes up. Keep it in a safe place.

Extra Help (Low Income Subsidy / LIS)

A federal program that significantly reduces Part D drug costs — including premiums, deductibles, and copayments — for people with limited income and resources. If you think you might qualify, it's worth a conversation. Many people who are eligible never apply.

Formulary

Your drug plan's official list of covered medications, organized into tiers that determine your cost-sharing. Tier 1 drugs (usually generics) cost the least; higher tiers cost more. Always check the formulary — and confirm your specific drugs are on it — before enrolling in any Part D or Advantage plan.

Gap Coverage

See Coverage Gap / Donut Hole above. Also informally used to describe any supplemental coverage designed to fill the gaps Original Medicare leaves behind.

Generic Drug

A medication that contains the same active ingredient, strength, and dosage form as a brand-name drug but is sold at a lower price. Generics are typically placed in lower formulary tiers, meaning your out-of-pocket cost is less. Ask your doctor whether a generic option exists for any brand-name prescription.

Initial Enrollment Period (IEP)

A seven-month window centered on the month you turn 65 — three months before your birthday month, your birthday month itself, and three months after. This is your first chance to enroll in Medicare Parts A and B. Enrolling early in this window means your coverage starts on time; waiting until the back half can delay it.

IRMAA (Income-Related Monthly Adjustment Amount)

An extra premium tacked onto your Part B and Part D costs if your income exceeds certain thresholds. IRMAA is based on your federal tax return from two years prior, and it comes in tiers — the higher your income, the higher the surcharge. You can appeal it if your income has dropped significantly since that tax year.

In-Network

Providers, hospitals, and pharmacies that have a contract with your Medicare Advantage or Part D plan and therefore charge lower cost-sharing rates. Going out of network — if your plan allows it at all — typically costs you more. Always confirm a provider is in-network before a scheduled visit.

Late Enrollment Penalty (LEP)

A permanent premium increase added to your Part B or Part D costs if you don't enroll when first eligible and don't have qualifying creditable coverage during that gap. For Part B, the penalty is 10% per full 12-month period you delayed. For Part D, it's 1% per month. These penalties never go away — they stay with you as long as you have coverage.

Level of Care

The intensity of medical services you need, which directly affects what Medicare will cover. Acute inpatient hospital care, skilled nursing facility care, and custodial care are all different levels — and Medicare only covers certain ones. Understanding the distinction can prevent surprise bills.

Medicare Part A

Hospital insurance. Part A covers inpatient hospital stays, skilled nursing facility care following a qualifying hospital stay, hospice, and some home health services. Most people pay no monthly premium for Part A if they or their spouse paid Medicare taxes for at least 10 years.

Medicare Part B

Medical insurance. Part B covers doctor visits, outpatient services, preventive care, lab work, mental health services, and durable medical equipment. Unlike Part A, Part B comes with a monthly premium — and if your income is above a certain level, that premium goes up via IRMAA.

Medicare Part C (Medicare Advantage)

A private-plan alternative to Original Medicare that bundles Part A, Part B, and usually Part D into a single plan. Advantage plans often include extra benefits like dental, vision, and hearing. You must still pay your Part B premium, and you're subject to the plan's network and rules — which vary widely by carrier and region.

Medicare Part D

Prescription drug coverage. Part D is available as a standalone plan you add to Original Medicare, or it's often bundled into a Medicare Advantage plan. Each Part D plan has its own formulary, premiums, deductibles, and cost-sharing tiers — making comparison shopping essential.

Medicare Advantage (MA)

See Part C. Plans vary widely by network, costs, and extra benefits. Harry compares options across multiple carriers so you get the plan that actually fits your doctors, your prescriptions, and your budget — not just the one with the flashiest TV commercial.

Medicare Supplement (Medigap)

A private policy that works alongside Original Medicare (Parts A and B) to cover the costs Medicare leaves to you — things like deductibles, coinsurance, and copayments. Medigap plans are standardized and labeled A through N (not all plans are available everywhere). The best time to enroll is during your Medigap Open Enrollment Period, when carriers can't turn you down based on health.

Medigap

See Medicare Supplement above. The terms are used interchangeably.

MSA (Medical Savings Account)

A type of Medicare Advantage plan that deposits money into a savings account you can use toward qualified medical expenses. MSA plans typically come with high deductibles — the account helps offset that. They're not right for everyone, but for healthy beneficiaries who want more control over their spending, they're worth understanding.

Network

The group of doctors, hospitals, and pharmacies that have agreed to provide services under your plan's terms and at contracted rates. If you're on a Medicare Advantage HMO or PPO, your network matters — going outside it can mean higher costs or no coverage at all.

Non-Participating Provider

A provider who accepts Medicare's approved amounts but hasn't signed a formal participating agreement. They may charge up to 15% above the Medicare-approved amount — known as the "limiting charge." If you have a Medigap plan, it may cover part of this extra cost.

Open Enrollment Period (OEP)

For Medicare Advantage, this runs January 1 through March 31 each year. During OEP, you can switch to a different Medicare Advantage plan or return to Original Medicare (and add a standalone Part D plan). You can use it once during the window — it's not for first-time enrollment.

Original Medicare

The federal Parts A and B program administered directly by the government. With Original Medicare, you can use any provider that accepts Medicare nationwide — there are no network restrictions. Most people pair it with a Medigap policy and a standalone Part D plan for fuller coverage.

Out-of-Pocket Maximum

The most you'll pay for covered services in a plan year under a Medicare Advantage plan. Once you hit the maximum, the plan covers 100% of covered costs for the rest of the year. Important note: Original Medicare alone has no out-of-pocket maximum — which is one of the reasons many people add a Medigap policy.

Part D Coverage Phases

Part D spending moves through distinct phases in a year: Initial Deductible, Initial Coverage, Coverage Gap (Donut Hole), and Catastrophic Coverage. Your cost-sharing changes at each threshold. Understanding where you are in the cycle helps you anticipate costs — especially if you take multiple or high-cost medications.

Plan Finder

Medicare's official online comparison tool at medicare.gov. You can enter your ZIP code, list of prescriptions, and preferred pharmacies to compare plans by total estimated annual cost. It's a useful starting point — Harry uses it as part of every review to make sure nothing gets overlooked.

Premium

The monthly amount you pay to have insurance coverage, separate from any cost-sharing you pay when you actually use care. Part A is often premium-free; Part B has a standard monthly premium that can increase with income (see IRMAA). Medicare Advantage and Part D plans have their own premiums set by the carrier.

Preventive Services

Screenings, vaccines, and wellness visits covered by Medicare, usually at no cost to you when you see an in-network provider who accepts assignment. This includes things like mammograms, colonoscopies, flu shots, and the Annual Wellness Visit. Take advantage of them — they're part of what you're paying for.

Primary Care Provider (PCP)

Your main doctor for general health management and referrals. Some Medicare Advantage HMO plans require you to designate a PCP and get referrals before seeing specialists — which is why knowing your plan's rules before you need a specialist matters.

Qualifying Life Event (QLE)

An event that triggers a Special Enrollment Period, allowing you to enroll in or change Medicare coverage outside the standard enrollment windows. Common examples include losing employer coverage, moving to a new service area, or becoming eligible for Medicaid. Timing matters — most SEPs must be used within a specific window after the event.

SEP (Special Enrollment Period)

A time-limited window to enroll in or change Medicare coverage outside standard enrollment periods. SEPs are triggered by qualifying life events — moving out of your plan's service area, losing employer coverage, gaining or losing Medicaid eligibility, and more. Each SEP has its own duration and rules; don't wait to use one.

SNP (Special Needs Plan)

A type of Medicare Advantage plan specifically designed for people with particular chronic conditions (C-SNP), institutional care needs (I-SNP), or dual Medicare/Medicaid eligibility (D-SNP). SNPs tailor their benefits, networks, and formularies to their target population — if you qualify, they're often a better fit than a general Advantage plan.

Step Therapy

A cost-control process where your plan requires you to try a lower-tier (usually cheaper) drug before it will cover the more expensive one your doctor originally prescribed. If the first option doesn't work for you medically, there's typically an exception process — Harry can help you navigate it.

TRICARE

Health coverage for active-duty military, retirees, and their families. TRICARE and Medicare interact in specific ways that can be confusing — which plan pays first, what's still your responsibility, and how enrollment timing affects your benefits. As a veteran himself, Harry understands these overlaps and can help you sort out exactly where you stand.

Turning 65

The most common trigger for Medicare eligibility. Getting your enrollment timing right matters more than most people realize — enroll too late and you may face permanent penalties or a gap in coverage. Harry's specialty is walking people through the 65 transition before it becomes a problem.

Underwriting

The process insurers use to assess your health risk when you apply for a Medigap policy. Outside of guaranteed-issue windows, carriers can charge you more or deny coverage based on your health history. During your Medigap Open Enrollment Period — the six months after you first enroll in Part B at 65 or older — they cannot use medical underwriting. That window is worth protecting.

Welcome to Medicare Preventive Visit

A one-time visit covered during your first 12 months of Part B enrollment. It's not a physical exam — it's a chance to review your health history, establish a baseline, and map out preventive care. Different from the Annual Wellness Visit. Use it; it's there for you.

Wellness Visit (Annual Wellness Visit / AWV)

A yearly preventive visit covered under Part B at no cost-sharing. The AWV focuses on health planning, reviewing your medications, updating your health history, and recommending screenings — it is not a head-to-toe physical exam. Scheduling one each year is a simple way to stay ahead of your coverage and your health.