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Medicare words, translated.
The industry loves jargon. Here's what the words actually mean, no acronym left unexplained.
- Premium
- The amount you pay every month just to have the plan, like a subscription. You pay it whether you use the coverage or not.
- Deductible
- What you pay out of your own pocket before the insurance starts paying its share.
- Co-pay
- A fixed amount you pay when you use care, say, $20 at the doctor's office. The plan pays the rest.
- Coinsurance
- Like a co-pay, but a percentage instead of a fixed amount. Original Medicare's 20% is coinsurance, and it has no cap, which is why Supplement plans exist.
- Original Medicare
- Part A (hospital) plus Part B (medical), run directly by the federal government. Covers about 80% of approved costs.
- Medicare Supplement / MediGap
- A private plan that pairs with Original Medicare and fills the 20% gap. Standardized by law, Plan G is Plan G at every company; only the premium differs.
- Medicare Advantage (Part C)
- A private plan that replaces Original Medicare, often lower premium, but with doctor networks and co-pays, and it can change every year.
- Part D
- Prescription drug coverage. Separate plan with Original Medicare + Supplement; usually built in with Advantage.
- Formulary
- A drug plan's list of covered medications, sorted into price tiers. If your medication isn't on the formulary, or sits on a high tier, you pay more. Check it every year.
- Network
- The doctors and hospitals a plan has contracts with. Advantage plans use them; Original Medicare and Supplements don't.
- The Donut Hole
- The old nickname for Part D's coverage gap, where your drug costs jumped mid-year. Recent law changes have largely closed it, but how your plan handles high drug costs still varies. Ask us.
- Initial Enrollment Period (IEP)
- Your personal 7-month window around your 65th birthday. Miss it and penalties can follow you for life. Use our calculator to see your dates.
- Annual Enrollment (AEP)
- October 15 – December 7 every year: the window to change Advantage or Part D plans for the following year.
- Special Enrollment Period (SEP)
- Extra enrollment windows triggered by life events, moving, losing employer coverage, and more. If you missed a deadline, an SEP may save you.
- Late-Enrollment Penalty
- A permanent premium increase for enrolling late in Part B or Part D without qualifying coverage. Avoidable, that's half our job.
- Guaranteed Issue Rights
- Situations where companies MUST sell you a Supplement plan regardless of health history. Timing matters enormously, ask before you switch anything.
A word we missed?
Call and ask. Explaining this stuff in plain English is literally the job.