Understanding Medicare can feel overwhelming with all its unique terms and acronyms. This comprehensive glossary is designed to help you navigate Medicare with confidence. Whether you’re approaching Medicare eligibility, comparing Medicare Advantage plans, considering Medicare Supplement insurance, or helping a loved one, this guide will clarify the most important Medicare terms you need to know.

A

Advance Beneficiary Notice of Noncoverage (ABN)

A written notice that healthcare providers give you before providing a service that Original Medicare may not cover. The ABN explains why Medicare might deny payment and estimates the cost, allowing you to decide whether to receive the service and potentially pay for it yourself.

Annual Enrollment Period (AEP)

Also known as Open Enrollment, this is the period from October 15 through December 7 each year when Medicare beneficiaries can make changes to their Medicare coverage. During this time, you can switch between Original Medicare and Medicare Advantage, change Medicare Advantage plans, or join, drop, or switch Medicare Part D prescription drug plans. Changes made during AEP take effect on January 1 of the following year. Learn more about important Medicare enrollment periods.

Assignment

An agreement by a healthcare provider to accept the Medicare-approved amount as full payment for covered services. When a doctor accepts assignment, you only pay your share of the Medicare-approved amount (typically 20% coinsurance for Part B services after meeting your deductible), and the provider cannot charge you more.

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B

Balance Billing

When a healthcare provider bills you for the difference between what Medicare approves and what the provider charges. This can occur when a provider doesn’t accept assignment. However, federal law limits how much more providers can charge above the Medicare-approved amount (typically no more than 15% above the Medicare-approved rate).

Benchmark

The maximum amount Medicare pays a Medicare Advantage plan to provide coverage in a specific county or service area. The benchmark is calculated based on traditional Medicare costs in that area. Plans that operate below the benchmark may receive rebates from Medicare, which they can use to offer additional benefits like dental, vision, hearing, or reduced premiums to their members.

Beneficiary

A person who receives health insurance through the Medicare program. If you’re enrolled in Medicare, you’re a Medicare beneficiary.

Benefit Period

For Medicare Part A, a benefit period begins the day you’re admitted as an inpatient in a hospital or skilled nursing facility and ends when you haven’t received inpatient care for 60 consecutive days. There’s no limit to the number of benefit periods you can have, and the Part A deductible applies to each new benefit period.

C

Centers for Medicare & Medicaid Services (CMS)

The federal agency within the U.S. Department of Health and Human Services that administers Medicare, Medicaid, CHIP (Children’s Health Insurance Program), and the Health Insurance Marketplace. CMS sets Medicare policy, manages the Medicare program, and oversees all Medicare plans.

Chronic Special Needs Plan (C-SNP)

A type of Special Needs Plan designed for people with specific severe or disabling chronic conditions. C-SNPs tailor their benefits, provider choices, and drug formularies to the specialized needs of people with conditions such as diabetes, cardiovascular disease, chronic heart failure, dementia, or end-stage renal disease. To enroll, you must have one of the chronic conditions the plan is designed to serve.

Coinsurance

Your share of costs for a covered healthcare service, calculated as a percentage of the Medicare-approved amount. For example, under Original Medicare Part B, you typically pay 20% coinsurance for most doctor services after meeting your annual deductible. If the Medicare-approved amount is $100, you pay $20.

Copayment (Copay)

A fixed dollar amount you pay for a covered healthcare service or prescription drug. Common in Medicare Advantage plans, copayments are predetermined amounts (for example, $10 for a primary care visit or $5 for a generic prescription) rather than a percentage of the cost.

Coverage Gap (Donut Hole)

A temporary limit on what Medicare Part D prescription drug plans will cover for drugs. In 2025, once you and your plan have spent a certain amount on covered drugs, you enter the coverage gap where you may pay more for your prescriptions until you reach catastrophic coverage. However, recent legislation has significantly reduced out-of-pocket costs in this phase.

🧠 Want to understand the basics? Check out our Guide to the Four Parts of Medicare!

D

Deductible

The amount you must pay for healthcare services before your insurance plan begins to pay. Medicare Part A has a deductible per benefit period ($1,736 in 2026), and Medicare Part B has an annual deductible ($283 in 2026). Medicare Advantage and Part D plans may have their own separate deductibles.

Dual Eligible

A person who qualifies for both Medicare and Medicaid coverage. Dual eligible individuals typically receive help paying Medicare premiums, deductibles, and copayments through Medicaid, and may qualify for special Medicare programs with extra benefits and lower costs.

Dual Eligible Special Needs Plan (D-SNP)

A type of Special Needs Plan for people who have both Medicare and Medicaid (dual eligibles). D-SNPs coordinate Medicare and Medicaid benefits, often offering lower costs, additional benefits, and simplified care coordination. These plans are designed to help members navigate both programs and may include benefits like transportation, over-the-counter items, and care management services.

Durable Medical Equipment (DME)

Medical equipment that serves a medical purpose, can withstand repeated use, and is appropriate for use in the home. Examples include wheelchairs, hospital beds, walkers, oxygen equipment, and blood sugar monitors. Medicare Part B covers medically necessary DME when prescribed by a doctor.

E

Excess Charges

The difference between what a doctor charges and the Medicare-approved amount when the doctor doesn’t accept assignment. Federal law limits excess charges to 15% above the Medicare-approved amount. Some Medigap plans (like Plan F, Plan G, and Plan N) help cover these charges, while others don’t.

Explanation of Benefits (EOB)

A statement from Medicare or your Medicare plan that explains what services were provided, what Medicare paid, and what you may owe the provider. An EOB is not a bill, but rather a detailed summary of your healthcare charges and coverage.

Extra Help

Also called the Low-Income Subsidy (LIS), this is a Medicare program that helps people with limited income and resources pay for Medicare prescription drug program costs, including premiums, deductibles, and coinsurance. Extra Help can significantly reduce prescription drug costs for those who qualify. Individuals with annual income below certain thresholds and limited resources may qualify. Those who receive Extra Help pay little to no premium for Part D coverage and have significantly reduced copayments for prescriptions.

F

Federal Poverty Level (FPL)

A measure of income issued annually by the Department of Health and Human Services used to determine eligibility for certain programs and benefits, including Extra Help for Medicare prescription drug costs and some Medicaid programs. The FPL varies by household size and is higher in Alaska and Hawaii.

Formulary

A list of prescription drugs covered by a Medicare Part D plan or Medicare Advantage plan with drug coverage. Formularies are organized into tiers, with different cost-sharing levels for each tier. Plans can change their formularies during the year with proper notice to members. It’s important to check that your medications are on a plan’s formulary before enrolling.

G

General Enrollment Period (GEP)

A period from January 1 through March 31 each year when people who are eligible for Medicare can sign up for Part A and/or Part B if they didn’t enroll during their Initial Enrollment Period. Coverage begins July 1 of that year. If you missed your Initial Enrollment Period and don’t qualify for a Special Enrollment Period, you may have to pay a late enrollment penalty.

Guaranteed Issue Rights

Also called Medigap protections, these are rights you have in certain situations when insurance companies are required to sell you a Medigap policy. During these times, an insurance company can’t refuse to sell you a policy, can’t charge you more for pre-existing conditions, and can’t make you wait for coverage to start due to pre-existing conditions.

✅ Confused about your enrollment rights? Timothy Gibson can help clarify your options.

H

Health Maintenance Organization (HMO)

A type of Medicare Advantage plan that typically requires you to use doctors and hospitals within the plan’s network (except in emergencies). HMO plans usually require you to choose a primary care physician who coordinates your care and provides referrals to specialists. HMO plans often have lower premiums but less flexibility than PPO plans. Compare HMO vs PPO plans.

Home Health Care

Part-time or intermittent skilled nursing care and home health aide services, physical therapy, occupational therapy, speech-language pathology services, medical social services, and medical supplies provided in your home when you’re homebound and under a doctor’s care. Medicare Part A or Part B may cover home health care when medically necessary.

Hospice Care

A special way of caring for people who are terminally ill and expected to live six months or less. Hospice care involves a team-oriented approach to provide medical care, pain management, and emotional and spiritual support. Medicare Part A covers hospice care when you’re certified as terminally ill by a doctor.

I

Income-Related Monthly Adjustment Amount (IRMAA)

An additional amount that higher-income Medicare beneficiaries must pay for Part B and Part D coverage. IRMAA is based on your modified adjusted gross income from your tax return from two years prior. For 2026, individuals with income above $109,000 (or couples above $218,000) pay higher premiums. The surcharge increases progressively with higher income levels.

Initial Coverage Period

The period at the beginning of the plan year when you pay your Part D plan’s copayment or coinsurance for prescription drugs until you reach the initial coverage limit. After reaching this limit, you enter the coverage gap (donut hole).

Initial Enrollment Period (IEP)

A seven-month period when you can first sign up for Medicare. It includes the three months before you turn 65, the month you turn 65, and the three months after you turn 65. If you’re under 65 and disabled, your IEP begins after you’ve received disability benefits for 24 months. Learn more about Medicare enrollment periods.

Institutional Special Needs Plan (I-SNP)

A type of Special Needs Plan for people who live in institutions (like nursing homes) or require nursing home level of care but live in the community. I-SNPs tailor their benefits and care coordination to meet the needs of institutionalized individuals or those requiring similar levels of care.

L

Lifetime Reserve Days

Under Medicare Part A, you have 60 lifetime reserve days that can be used after you’ve used up your 90 days of inpatient hospital coverage in a benefit period. These 60 days are not renewable and can be used only once during your lifetime. You pay a daily coinsurance for each lifetime reserve day used ($868 per day in 2026).

Limiting Charge

The highest amount of money you can be charged for a covered service by doctors who don’t accept assignment. The limiting charge is 15% more than Medicare’s approved amount. For example, if Medicare’s approved amount is $100, the limiting charge is $115.

Low-Income Subsidy (LIS)

See Extra Help.

📆 Don’t miss important deadlines! Check out our Key Medicare Dates and Deadlines resource.

M

Maximum Out-of-Pocket Limit

The most you pay during a policy period (usually a year) before your health insurance begins to pay 100% of covered services. Medicare Advantage plans have maximum out-of-pocket limits ($9,250 for in-network services in 2026), but Original Medicare does not.

Medicaid

A joint federal and state program that helps with healthcare costs for people with limited income and resources. Medicaid programs vary from state to state. Some people qualify for both Medicare and Medicaid and are called dual eligibles.

Medical Underwriting

The process insurance companies use to decide whether to accept your application for insurance coverage and how much to charge you. During certain periods, Medigap insurers cannot use medical underwriting—for example, during your Medigap Open Enrollment Period or when you have guaranteed issue rights.

Medically Necessary

Healthcare services or supplies needed to diagnose or treat an illness, injury, condition, disease, or its symptoms and that meet accepted standards of medicine. Medicare only covers services and supplies that are medically necessary.

Medicare Advantage (Part C)

A type of Medicare health plan offered by private companies that contract with Medicare. Medicare Advantage plans provide all Part A and Part B benefits (except hospice) and usually include Part D prescription drug coverage. These plans may also offer extra coverage, like vision, hearing, dental, and health and wellness programs. Medicare Advantage plans include HMOs, PPOs, Private Fee-for-Service plans, and Special Needs Plans. Compare Medicare Advantage vs Medicare Supplement.

Medicare Open Enrollment Period

See Annual Enrollment Period (AEP).

Medicare Part A (Hospital Insurance)

Covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care. Most people don’t pay a monthly premium for Part A if they or their spouse paid Medicare taxes while working. Read our complete Part A guide.

Medicare Part B (Medical Insurance)

Covers doctors’ services, outpatient care, medical supplies, preventive services, and some home health care. Most people pay a monthly premium for Part B. The standard premium is $202.90 per month in 2026, though higher-income beneficiaries pay more. Read our complete Part B guide.

Medicare Part D (Prescription Drug Coverage)

Helps cover the cost of prescription drugs. Part D coverage is provided through private insurance companies that contract with Medicare. You can get Part D coverage through a stand-alone prescription drug plan or through a Medicare Advantage plan that includes drug coverage.

Medicare Savings Program (MSP)

State programs that help pay Medicare premiums, and in some cases, deductibles, coinsurance, and copayments for people with limited income and resources. The four Medicare Savings Programs are: Qualified Medicare Beneficiary (QMB), Specified Low-Income Medicare Beneficiary (SLMB), Qualifying Individual (QI), and Qualified Disabled and Working Individuals (QDWI).

Medicare Summary Notice (MSN)

A notice you get after the doctor, provider, or supplier files a claim for Part A or Part B services in Original Medicare. The MSN shows what the provider billed, what Medicare approved, how much Medicare paid, and what you may owe the provider. It’s not a bill.

Medicare Supplement Insurance (Medigap)

Insurance sold by private companies that helps pay some of the healthcare costs that Original Medicare doesn’t cover, like copayments, coinsurance, and deductibles. Medigap policies are standardized and labeled with letters (Plan A, Plan B, Plan G, Plan N, etc.). You must have Medicare Part A and Part B to buy a Medigap policy. Compare Medicare Supplement vs Medicare Advantage.

Medigap Open Enrollment Period

A six-month period when you have a guaranteed right to buy any Medigap policy sold in your state. This period begins the month you’re both 65 or older and enrolled in Part B. During this time, you can’t be turned down or charged more due to health problems. After this period ends, you may not be able to buy a Medigap policy and may pay more.

🛡️ Deciding between Medicare Advantage and Medigap? Read our detailed comparison guide.

N

Network

The facilities, providers, and suppliers your health insurer has contracted with to provide healthcare services. In most Medicare Advantage plans, you’ll pay less if you use doctors, hospitals, and other providers that belong to the plan’s network. Some plans won’t pay anything if you go outside the network.

Non-Participating Provider

A provider who doesn’t have a contract with your health plan. Depending on your plan, you may pay more to see a non-participating provider or the plan may not cover the visit at all. In Original Medicare, a non-participating provider is one who doesn’t accept assignment.

O

Observation Status

When you’re in a hospital receiving services, but your doctor hasn’t formally admitted you as an inpatient. Observation services are hospital outpatient services and are covered by Medicare Part B, not Part A. Days spent in observation status don’t count toward the three-day hospital stay requirement for Medicare to cover skilled nursing facility care.

Original Medicare

Traditional fee-for-service health coverage under Medicare Part A (Hospital Insurance) and Part B (Medical Insurance). With Original Medicare, you can go to any doctor, hospital, or other healthcare provider that accepts Medicare. Original Medicare is offered by the federal government and doesn’t include prescription drug coverage—you need to add a Part D plan for that.

Out-of-Network

Describes providers who don’t have a contract with your health plan. Depending on your Medicare Advantage plan type, you may pay more for out-of-network care or your plan may not cover it at all (except in emergencies).

Out-of-Pocket Costs

Healthcare costs you must pay on your own because they aren’t covered by Medicare or other insurance. Examples include deductibles, coinsurance, and copayments for covered services plus all costs for services that aren’t covered.

Out-of-Pocket Maximum

The most you could pay during a coverage period (usually one year) for your share of the costs of covered services. After you reach this amount, your health plan pays 100% of covered services. All Medicare Advantage plans have an out-of-pocket maximum ($9,250 for in-network services in 2026). This limit doesn’t include your plan premiums, prescription drugs (which have a separate limit), or services not covered by your plan. Original Medicare doesn’t have an out-of-pocket maximum.

P

Part B Giveback

A benefit offered by some Medicare Advantage plans that reduces or eliminates your monthly Medicare Part B premium. The plan pays part or all of your Part B premium directly to Social Security on your behalf, effectively giving you back that money. The giveback amount varies by plan and location. Not all Medicare Advantage plans offer this benefit, and those that do may have other trade-offs such as higher copayments or a more limited network.

Preferred Provider Organization (PPO)

A type of Medicare Advantage plan that offers more flexibility than HMO plans. PPO plans have a network of preferred providers, but you can use out-of-network doctors and hospitals, though you’ll typically pay more. PPO plans don’t require you to choose a primary care physician or get referrals to see specialists. This added flexibility usually comes with higher premiums than HMO plans, but PPOs are popular for those who want the option to see providers outside the network or who travel frequently. Compare HMO vs PPO plans.

Premium

The amount you pay each month for your health insurance coverage. Most people don’t pay a premium for Part A. The standard Part B premium in 2026 is $202.90 per month, though higher-income individuals pay more. Medicare Advantage and Part D plans charge their own monthly premiums in addition to the Part B premium. Medigap policies also have monthly premiums.

Preventive Services

Healthcare services that help prevent illness or detect health problems early when treatment is most effective. Medicare covers many preventive services at no cost to you when provided by an eligible provider, including screenings for cancer, diabetes, cardiovascular disease, and annual wellness visits.

Prior Authorization

Approval from your health plan that may be required before you receive a service or prescription drug for your plan to provide coverage. Medicare Advantage and Part D plans may require prior authorization for certain services or medications. Original Medicare rarely requires prior authorization.

Q

Qualifying Event

A life event that allows you to make changes to your Medicare coverage outside of the normal enrollment periods. Examples include moving to a new service area, losing other health coverage, moving into or out of a nursing home, or qualifying for Extra Help. These events trigger a Special Enrollment Period.

Quantity Limit

A restriction on the amount of a particular medication you can receive within a specific time period. Medicare Part D plans may place quantity limits on certain drugs to ensure appropriate use and control costs. For example, a plan might limit a medication to a 30-day supply per month or restrict the number of pills you can receive at one time. If your doctor believes you need more than the limit allows, they can request an exception from the plan.

R

Referral

Written approval from your primary care doctor for you to see a specialist or receive certain services. Some Medicare Advantage plans (particularly HMOs) require referrals before you can see specialists. Original Medicare doesn’t require referrals.

👉 Still have questions? Timothy Gibson can walk you through all these terms and help you make sense of Medicare.

S

Skilled Nursing Facility (SNF)

A facility that provides skilled nursing care and rehabilitation services on a short-term basis. Medicare Part A covers up to 100 days per benefit period in a SNF, but only after a qualifying hospital stay of at least three consecutive days. The first 20 days are fully covered; days 21-100 require a daily coinsurance payment ($217 per day in 2026).

Social Security Administration (SSA)

The federal agency that handles enrollment in Medicare Parts A and B, and determines eligibility based on work history and disability status. If you’re already receiving Social Security benefits when you turn 65, you’ll be automatically enrolled in Medicare. The SSA also administers Social Security retirement, disability, and survivor benefits.

Special Enrollment Period (SEP)

A time outside the regular enrollment periods when you can sign up for Medicare or make changes to your coverage due to certain life events or circumstances. Examples include losing employer coverage, moving to a new service area, or qualifying for Extra Help. Each type of SEP has specific eligibility rules and time frames. Learn more about Medicare enrollment periods.

Special Needs Plan (SNP)

A type of Medicare Advantage plan designed for people with specific diseases or characteristics. SNPs tailor their benefits, provider networks, and drug formularies to best meet the needs of their members. The three types are Dual Eligible SNPs (D-SNPs) for people with Medicare and Medicaid, Chronic Condition SNPs (C-SNPs) for people with specific chronic conditions, and Institutional SNPs (I-SNPs) for people living in institutions like nursing homes or requiring nursing home level of care.

Special Supplemental Benefits for the Chronically Ill (SSBCI)

Additional benefits that Medicare Advantage plans can offer to enrollees with chronic conditions. SSBCI allows plans to provide services that don’t primarily focus on health such as adult day care, home-delivered meals, transportation for non-medical needs, bathroom safety devices, air conditioners or air purifiers for people with asthma, pest control, grab bars, and other services that address social determinants of health. These benefits are designed to help chronically ill members maintain their health and independence.

Step Therapy

A coverage rule used by Medicare Part D plans that requires you to try one or more similar, usually less expensive drugs before the plan will cover the originally prescribed drug. For example, if your doctor prescribes a brand-name medication, the plan may require you to try a generic version first. If the generic doesn’t work for you, your doctor can document this and request an exception so the plan will cover the brand-name drug. Step therapy is also called fail-first.

T

Tier

A category that determines how much you’ll pay for a prescription drug in a Medicare Part D plan. Drugs are grouped into tiers based on cost and type. Lower tiers (typically generic drugs) have lower copayments, while higher tiers (brand-name and specialty drugs) have higher copayments. Most plans have four to six tiers.

V

Value-Based Insurance Design (VBID)

A Medicare Advantage innovation that allows plans to reduce cost-sharing for certain services that are particularly beneficial for enrollees with specific chronic conditions. VBID plans can offer lower copayments or even zero cost-sharing for services like doctor visits, prescription drugs, and diagnostic tests that help manage conditions like diabetes, heart disease, or chronic lung disease. These plans may also offer additional benefits such as meal delivery, transportation to medical appointments, or home health visits. VBID aims to improve health outcomes by making it easier and more affordable for people with chronic conditions to access the care they need.

W

Welcome to Medicare Preventive Visit

A one-time preventive visit offered during the first 12 months you have Medicare Part B. During this visit, your doctor will review your medical history, provide health screenings, and create a personalized prevention plan. This visit is covered at no cost if your doctor accepts assignment.

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