Medicare Part D Glossary of Terms
Medicare prescription drug coverage (Part D) can help you pay for your prescription medications, whether you are enrolling for the first time or are considering changing from one plan to another. Liberty can help you choose the Medicare Prescription Drug Plan that will best serve your needs.
We hope you find the following glossary of Medicare terms helpful.
assets
Property you own that the government may review when you apply for assistance.
For help with a Medicare Part D prescription drug plan's costs, the government counts cash or any
property that can be turned into cash within 20 days. This includes checking
and savings accounts, certificates of deposit, IRAs and 401(k)s, stocks, bonds,
and similar items. It does not include your primary home or certain property
related to burial expenses. It does include a second home.
benefit
Another name for coverage. See coverage.
brand-name drugs
Prescription drugs that are sold under a trademarked brand name.
catastrophic coverage
A name for the step of a Medicare Part D prescription drug plan in which the plan pays for nearly
all your drug expenses until the end of the year, with no upper limit, after
your out-of-pocket costs have exceeded $4,350. In this step, you pay only a
small share of your drug expenses (approximately five percent).
Centers for Medicare and Medicaid Services (CMS)
The federal agency that runs the Medicare program and works with the states to manage the Medicaid program.
co-insurance
A kind of cost sharing where costs are split on a percentage basis. For
example, a plan might pay 75 percent and you would pay 25 percent. See cost
sharing.
co-payment
A kind of cost sharing where you
pay a pre-set, flat amount for each service. In a Medicare drug plan, for
example, you might pay $10 for each prescription you receive and the plan would
pay the remaining cost of the drug. See cost sharing.
cost sharing
A term for the way an insurance plan shares its costs with someone. The most
common types of cost sharing are co-insurance and co-payments. See co-insurance
and co-payments.
coverage
The benefits you receive from an insurance plan. In a Medicare Part D prescription drug plan, the
prescription drug costs that are paid by the plan are your benefits, or
coverage.
coverage gap
A name for the step in a standard Medicare Part D prescription drug plan in which you pay 100% of
your expenses for eligible drugs, until your out-of-pocket drug costs have
reached $4,350. Some people call this the "doughnut hole."
creditable coverage
Prescription drug coverage from a retiree or union plan that on average
provides coverage at least as good as a standard Medicare Part D prescription drug plan. If you are
currently enrolled in a drug plan that gives you prescription drug coverage,
your plan will tell you if it meets the Medicare standards for creditable
coverage.
deductible
The amount you must pay out-of-pocket before your plan starts to pay. In a
standard Medicare drug plan, you must pay the first $295 of your eligible
drug expenses for the year as your deductible.
doughnut hole
See coverage gap.
dual eligibles
People with both Medicare and Medicaid.
eligible drugs
Drugs that are covered by a prescription drug plan. In a Medicare drug plan,
eligible drugs are listed on the plan's formulary. See formulary.
exclusions
Items that are not covered by an insurance policy. Medicare drug plans have two
types of exclusions. The first type is drugs that Medicare has excluded from
coverage, such as weight-loss drugs. The second type is drugs that are excluded
from a plan's list of covered drugs, or formulary. See eligible drugs and
formulary.
formulary
A list of prescription drugs that are covered by a Medicare Part D prescription drug plan.
generic drugs
Prescription drugs covered by the Medicare prescription drug plan that have the
same active ingredient formula as a brand name drug. Generic drugs covered by
Medicare Part D prescription drug plans usually cost less than brand-name drugs
and are rated by the Food and Drug Administration (FDA) to be as safe and
effective as brand-name drugs.
Medicaid
A program that pays for medical assistance for certain individuals and families
with low incomes and resources. Medicaid is jointly funded by the federal and
state governments to assist states in providing assistance to people who meet
certain eligibility criteria.
Medicare Advantage Plans
Health plans offered by private
insurance companies that contract with Medicare to provide Medicare coverage.
Depending on where you live, Medicare Advantage Plans may be available both
with and without Medicare Part D prescription drug plans. You may also hear Medicare Advantage
Plans referred to as Medicare Health Plans. The Medicare Advantage Plans used
to be called the Medicare+Choice plans.
Medicare
The federal government health
insurance program for:
- People age 65 and older
- People with certain disabilities
- People of all ages with End-Stage Renal Disease (permanent kidney failure requiring dialysis or kidney transplant)
Medicare prescription drug coverage
Insurance plans offering prescription drug coverage that meets the standards
established by Medicare. Other names for these plans include Medicare Drug
Plans, PDPs, or MA-PDs. However, not all private insurance plans offering
prescription drug coverage are Medicare Part D prescription drug plans. You'll want to pay close
attention to whether a plan is a Medicare Part D prescription drug plan.
Medicare supplement policy
The traditional federal Medicare insurance program doesn't pay the total amount
of medical expenses. Expenses that are not covered are called "gaps" in
Medicare coverage. Private insurance companies sell insurance policies that
fill some of these gaps and pay for some of these expenses. These policies are
known as Medicare supplement or "Medigap" policies.
Medigap
See Medicare supplement policy.
medication therapy management
The term used to describe the type of extra help that people with multiple
prescriptions, chronic diseases, and high drug costs may receive to help them
manage all of their medications. The purpose is to make sure that all of a
patient's drugs work well together, he or she understands his or her
medications and knows how to manage potential side effects.
network
The group of doctors, hospitals, and pharmacies who have contracts with an
insurance plan to provide care to that plan's members. You should use your
Medicare Part D prescription drug plan's network of pharmacies to maximize the money
you save on your drugs.
out-of-pocket costs
The amounts you pay as your share of your prescription drug costs.
Out-of-pocket costs include deductibles, co-insurance, and the amounts you pay
in any coverage gap.
In a Medicare Part D prescription drug plan, any amounts you pay that are later reimbursed by
someone else (such as an employer's insurance plan) do not count as part of
your out-of-pocket costs. The out-of-pocket costs you pay for which you are not
reimbursed are called your "true out-of-pocket costs" or "TROOP."
When your true out-of-pocket costs have exceeded $4,350, you are eligible for the
additional coverage. See catastrophic coverage.
premium
The money you pay to have an insurance plan. In a Medicare Part D prescription drug plan, this is
usually a monthly fee.
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