Medicare Glossary

Plain-English definitions for the terms you'll encounter when navigating Medicare.

A B C D E F G H I M N O P S T

A

Annual Enrollment Period (AEP): October 15 – December 7 each year. During AEP you can join, switch, or drop a Medicare Advantage or Part D plan. Changes take effect January 1.

B

Benefit Period: A Medicare Part A measurement of time that begins when you're admitted as an inpatient and ends after you've been out of the hospital or SNF for 60 consecutive days. You can have more than one benefit period in a year, each with its own deductible.

C

CMS (Centers for Medicare & Medicaid Services): The federal agency within the U.S. Department of Health and Human Services that administers Medicare, Medicaid, the Children's Health Insurance Program (CHIP), and the federal Health Insurance Marketplace. CMS sets Medicare coverage policies, approves Medicare Advantage and Part D plans, establishes payment rates for providers, and oversees the Medicare star ratings system.
Coinsurance: Your share of the cost for a service after you've met your deductible, expressed as a percentage. Example: Medicare Part B covers 80% of approved costs; your 20% share is coinsurance.
Copay (Copayment): A fixed dollar amount you pay for a covered service at the time of care. Common in Medicare Advantage plans (e.g., $20 copay for a primary care visit).
Creditable Coverage: Prescription drug coverage that is at least as good as Medicare's standard Part D benefit. If you have creditable coverage, you can delay Part D enrollment without a late penalty. Always get a creditable coverage letter from your plan.

D

Deductible: The amount you pay out of pocket before Medicare or your insurance begins paying. Medicare has separate deductibles for Part A (per benefit period), Part B (annual), and Part D (annual, if applicable).
Durable Medical Equipment (DME): Equipment ordered by a doctor for home use — wheelchairs, walkers, hospital beds, CPAP machines, and oxygen equipment. Covered by Part B when medically necessary.

E

EOB (Explanation of Benefits): A statement from Medicare or your insurer that shows what claims were processed, what was covered, what the plan paid, and what — if anything — you owe. For Original Medicare, this document is called a Medicare Summary Notice (MSN) and is sent quarterly. Review your EOB after receiving care to catch billing errors or potential fraud.
Extra Help: A federal program — also called the Low Income Subsidy (LIS) — that helps people with limited income and resources pay Medicare Part D costs, including premiums, deductibles, and copays. People who qualify for full Medicaid or certain Medicare Savings Programs are often automatically enrolled. Eligibility is based on income and assets and is determined by Social Security. Extra Help can dramatically reduce out-of-pocket drug costs for those who qualify.

F

Formulary: The list of prescription drugs covered by a Part D or Medicare Advantage plan, organized into tiers. Lower tiers typically cost less. Plans can change their formulary annually.

G

General Enrollment Period (GEP): January 1 – March 31 each year. If you missed your Initial Enrollment Period and don't qualify for a Special Enrollment Period, you can sign up for Part A and Part B during the GEP. Coverage starts July 1.

H

HMO (Health Maintenance Organization): The most common type of Medicare Advantage plan structure. Requires you to use doctors and hospitals within the plan's network except in emergencies. You typically need a primary care physician who coordinates your care and provides referrals to see specialists. HMOs generally have lower premiums than PPO plans but offer less provider flexibility.

I

Initial Enrollment Period (IEP): A 7-month window around your 65th birthday: 3 months before, the month of, and 3 months after. This is your first and most important chance to enroll in Medicare Parts A and B without penalty.
IRMAA (Income-Related Monthly Adjustment Amount): An additional monthly surcharge added to Part B and Part D premiums for higher-income Medicare beneficiaries. Determined by MAGI from two years prior. Five income tiers above the standard level.

M

MAGI (Modified Adjusted Gross Income): The income figure Social Security uses to determine IRMAA. Generally your AGI from your federal tax return plus tax-exempt interest income. Based on your return from two years ago.
MAPD (Medicare Advantage Prescription Drug Plan): A Medicare Advantage plan that includes Part D prescription drug coverage. The most common type of Medicare Advantage plan.
Maximum Out-of-Pocket (MOOP): The most you'll pay in a calendar year for covered in-network services under a Medicare Advantage plan. Once you reach your MOOP, the plan covers 100% of in-network costs for the rest of the year. Original Medicare has no MOOP cap.
Medicaid: A joint federal-state program that provides health coverage for people with low incomes. Distinct from Medicare. Some people qualify for both (called "dual eligibles") and receive additional benefits.
Medicare Advantage (Part C): An alternative way to receive Medicare benefits through a private insurer. Plans must cover everything Original Medicare covers; most include drug coverage and extra benefits. You remain enrolled in Parts A and B.
Medicare Prescription Payment Plan (M3P): A voluntary program available starting in 2025 that lets Part D enrollees spread their out-of-pocket drug costs across monthly payments throughout the year instead of paying large amounts at the pharmacy. You opt in through your Part D plan. M3P does not reduce total drug costs — it smooths when you pay them, which can help people who hit the catastrophic coverage phase early in the year manage cash flow.
Medicare Savings Programs: State programs that help people with limited income and resources pay Medicare premiums, deductibles, and copays. Wisconsin's versions include QMB, SLMB, and QI programs.
Medicare-Approved Amount: The fee Medicare has determined is appropriate for a covered service. For Part B services, Medicare pays 80% of this amount after the annual deductible; you pay the remaining 20% as coinsurance. Providers who accept Medicare assignment agree to accept this amount as payment in full and cannot bill you more than it. Also called the Medicare fee schedule rate.
Medigap (Medicare Supplement): Private insurance that works alongside Original Medicare to cover out-of-pocket costs Medicare doesn't pay — deductibles, coinsurance, copays. In Wisconsin, Medigap uses a state-specific standardized benefit structure rather than the federal A–N plan letters.
MSA Plan (Medicare Savings Account): A type of Medicare Advantage plan combining a high-deductible health plan with a savings account. Medicare deposits money into the account annually; you use it to pay healthcare costs until your deductible is met.

N

Network: The group of doctors, hospitals, pharmacies, and other providers that have contracted with a Medicare Advantage plan to provide services at negotiated rates. Using in-network providers results in lower cost-sharing. HMO plans generally require you to stay in-network (except in emergencies); PPO plans allow out-of-network care at higher cost. Original Medicare has no network — you can see any provider nationwide that accepts Medicare.

O

Original Medicare: The traditional federal Medicare program — Part A (hospital) and Part B (medical) administered directly by the federal government. You can use any provider nationwide that accepts Medicare.

P

Part A: Hospital Insurance. Covers inpatient hospital stays, skilled nursing facility care, hospice care, and some home health services. Most people pay no premium if they or their spouse worked 10+ years and paid Medicare taxes.
Part B: Medical Insurance. Covers doctor visits, outpatient care, preventive services, and durable medical equipment. Requires a monthly premium (standard $202.90/month in 2026; higher for high earners via IRMAA).
Part B Giveback: A benefit offered by some Medicare Advantage plans that credits a portion of your Part B premium back to you each month — reducing what you actually pay for Part B. The credit is applied directly to your Social Security benefit or billed amount. Also called the Part B Premium Reduction benefit. Not all plans offer it, amounts vary by plan and county, and plans offering it may have tradeoffs in other benefit areas.
Part C: See Medicare Advantage.
Part D: Prescription Drug Coverage. Added to Original Medicare via a standalone Prescription Drug Plan (PDP), or bundled into a Medicare Advantage plan (MAPD). Has its own premium, deductible, and formulary. A $2,100 annual out-of-pocket cap applies in 2026.
PFFS (Private Fee-for-Service): A type of Medicare Advantage plan that sets its own payment rates for providers rather than using a contracted network in the traditional sense. Any Medicare-participating provider who agrees to the plan's terms and payment rates may treat you. Some PFFS plans have networks; others do not. Less common than HMO and PPO plans.
Pharmacy (Standard/Preferred): Within a Part D or Medicare Advantage drug plan, pharmacies in the network are typically designated as either preferred (lower cost-sharing) or standard (higher cost-sharing). Using a preferred pharmacy can meaningfully reduce your copays and coinsurance per prescription fill. Plans publish their pharmacy directories and preferred pharmacy lists. Many plans also offer mail-order pharmacy at preferred rates for maintenance medications.
PPO (Preferred Provider Organization): A type of Medicare Advantage plan that allows you to see out-of-network providers, usually at higher cost-sharing than in-network. Unlike HMOs, PPOs typically don't require a primary care physician or referrals for specialists. PPOs offer more provider flexibility but often come with higher premiums than HMO plans.
Premium: The monthly amount you pay for Medicare coverage, separate from what you pay when you use care. Part A has no premium for most people (if you or a spouse worked 10+ qualifying years). Part B has a standard monthly premium ($202.90/month in 2026; higher for those subject to IRMAA). Medicare Advantage, Part D, and Medigap plans each carry their own additional premiums.
Prior Authorization: A requirement in some Medicare Advantage plans that you get plan approval before receiving certain services or medications. Original Medicare does not use prior authorization for most services.

S

SEP (Special Enrollment Period): A window to enroll in or change Medicare coverage outside the standard enrollment periods, triggered by qualifying life events such as losing employer coverage, moving, or qualifying for Medicaid. The most common SEP for Part B is an 8-month window after employer coverage ends.
SNF (Skilled Nursing Facility): A facility that provides short-term skilled nursing care or rehabilitation after a qualifying hospital stay of at least 3 days. Part A covers up to 100 days per benefit period, with cost-sharing after day 20.
SeniorCare (Wisconsin): Wisconsin's state pharmaceutical assistance program for low-income seniors. SeniorCare provides drug coverage and interacts with Medicare Part D — enrollees need to coordinate benefits carefully to avoid penalties.
Special Needs Plan (SNP): A type of Medicare Advantage plan tailored to people with specific conditions or circumstances. The three types are: Chronic Condition SNPs (C-SNPs) for people with serious ongoing conditions such as diabetes or heart failure; Dual Eligible SNPs (D-SNPs) for people enrolled in both Medicare and Medicaid; and Institutional SNPs (I-SNPs) for people residing in skilled nursing or long-term care facilities. SNPs customize their benefits, formularies, and care coordination to their target populations.
Star Ratings: Medicare's 1-to-5-star quality rating system for Medicare Advantage and Part D plans, with 5 stars being the highest. Ratings reflect factors such as managing chronic conditions, customer service, member complaints, and plan responsiveness. Plans with 4 or more stars receive bonus payments from Medicare and may offer richer benefits as a result. You can view star ratings for plans in your area at Medicare.gov during the Annual Enrollment Period.

T

Tier (Part D): Drug tier levels within a Part D formulary that determine your cost-sharing. Tier 1 is typically generic drugs at lowest cost; higher tiers are brand-name and specialty drugs at higher cost.

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