Key Words and Definitions
Annual Enrollment Period—The period each year that you can enroll in or change to another drug plan to receive Medicare prescription drug coverage, typically November 15 to December 31 of each year.
Area Agency on Aging—Local agencies that coordinate and support a wide range of home- and community-based services, including information and referral, benefits counseling, home-delivered meals, transportation, employment services, senior centers, adult day care, and a long-term care ombudsman program.
Copayment—A part of a prescription’s cost that you pay out of your pocket. A fixed amount for each prescription.
Coinsurance—A share of a prescription’s cost that you pay out of your pocket. The amount is a percentage of the price of the drug.
Coverage Gap—The stage in Medicare prescription drug coverage when you have to pay all of your own drug costs.
Creditable Coverage—Drug coverage offered by other plans, such as a current or former employer or union, that gives you coverage at least as good as the standard Medicare prescription drug coverage.
Deductible—The amount you must pay each year for your medicine or medical treatment before your insurance starts to pay your costs.
Donut Hole—Another term for the Coverage Gap.
Formulary—A list of drugs that are covered by a drug plan.
Initial Enrollment Period—For those newly eligible for Medicare in or after March 2006, the initial enrollment period for Medicare prescription drug coverage is three months before and three months after the month they turn 65.
Late Enrollment Penalty—The extra amount you have to pay in premiums if you decide not to enroll in a Medicare prescription drug plan when you first become eligible. The penalty is 1% of the premium for each month you wait. This penalty amount will continue every month as long as you are in a Medicare prescription drug plan.
Medicaid—A joint federal/state-funded program, run by your state, that provides help with medical expenses for families, older people, and people with disabilities. Note: the Medicaid program in your state may have another name.
Medicare Part A—The part of Medicare that primarily covers much of the cost of hospital care, home health, or a skilled nursing facility.
Medicare Part B—The part of Medicare that covers most of the cost of your doctor visits, outpatient care, and other services.
Medicare Part C—Also known as Medicare Health Plans (formally, “Medicare+Choice” and “Medicare Advantage”). These are Medicare-approved private insurance plans, including HMOs, PPOs, private fee-for-service plans, and medical saving accounts. These plans may or may not include prescription drug coverage.
Medicare Part D—Also known as Medicare prescription drug coverage. This is Medicare’s new insurance coverage to help people in Medicare pay for their prescription drugs.
Medicare Prescription Drug Coverage—Another name for Medicare Part D.
Medicare Advantage—Another name for Medicare Part C.
Medicare+Choice—An earlier name for Medicare Part C.
Medicare Health Plans—A way to get Medicare coverage through a private health plan. Also known as Medicare Part C or Medicare Advantage.
Medicare Supplemental Insurance—Another name for Medigap.
Medigap—A specific type of insurance policy that supplements the coverage you receive from Medicare. Individuals without retiree or union health benefits sometimes buy these to insure against costs not covered by Medicare.
Out-of-Pocket Spending—The amount of money that you pay for your covered drugs from your own money. If you have insurance coverage for drugs, this is the amount you pay yourself (not including the amount your prescription drug company or the plan pays).
Preferred Drug List—Another word for “formulary.”
Premium—The amount you pay each month to receive insurance coverage.
State Health Insurance Assistance Program (SHIP)—A state program that offers one-on-one counseling and assistance to people with Medicare and their families. The name for this program may vary from state to state.
State Pharmacy Assistance Program (SPAP)—A state-run program, separate from Medicaid, that provides drug coverage and may coordinate that coverage with Medicare prescription drug plans for maximum saving to eligible residents.
Total Drug Costs—The total amount paid for your medicines. It includes what you pay and also what Medicare pays.
