Annual Election Period: A Guide of Medicare Terms

Whether you’re new to Medicare or have already enrolled in a Medicare plan in the past, the terminology can be confusing to understand.

Here’s what you need to know to successfully talk the Medicare talk during the Medicare Annual Election Period.

• Premium. What you’ll pay monthly for your Medicare health care or prescription drug coverage.

• Deductible. The deductible is what you’ll owe before Original Medicare, your prescription drug plan or health care coverage begins to pay.

• Copay/coinsurance. For each health care service, such as a doctor visit or prescription drug, this is the amount you pay, also known as cost-sharing.

• Part A. Original Medicare Part A covers costs for hospital care or nursing home stays, which can include home health care and hospice. You won’t have to pay a monthly premium for Part A coverage; however, you’ll typically owe on your deductible for a stint in the hospital.

• Part B. Original Medicare Part B covers doctor visits, tests and labs, X-rays, mental health and other services. You’ll pay a monthly premium for Part B coverage.

• Part C. An alternative to Original Medicare, Part C – also known as Medicare Advantage – is insurance offered by private companies. These plans can include additional benefits such as dental, vision and hearing, as well as prescription drug coverage.

• Part D. This plan is for prescription drug coverage. Part D can be purchased alongside a Supplemental Plan to provide prescription drug coverage. It requires that you pay a monthly premium for the plan, along with copays and/or deductibles. Part D can also be covered by a Medicare Advantage-Prescription Drug (MA-PD) Plan.

• Medigap. If you’re on original Medicare, you can purchase a Medigap or supplemental plan to cover the expenses you incur for Original Medicare Part A and B deductibles and coinsurance.

• HMO. For Part C Medicare Advantage plans, an HMO is a health maintenance organization. HMOs have a defined service area and require that services be performed by in-network providers, except in an emergency. Out-of-Network care received without prior approval may not be covered.

• PPO. A preferred provider organization is a Medicare Advantage Plan that will provide a greater benefit for using doctors and hospitals that are part of the designated network. The use of providers out of network will increase an individual’s out-of-pocket expense.

• Initial Enrollment Period. This is the period of time in which you’re eligible to enroll in Medicare. It generally lasts for seven months. It starts three months prior to the month you turn 65, runs the duration of your birthday month, and continues for three more months after the month you turn 65.

• Medicare Annual Election Period. Every year, Medicare beneficiaries are allowed to enroll in or change their coverage from October 15 to December 7.

Learn these Medicare terms and you’ll have a solid basis to have a discussion about Medicare and your health insurance options during the Medicare Annual Election Period (AEP).