Plain-English Glossary

Health insurance and government programs come with their own language. This glossary explains common terms in plain English, so you can understand your coverage and your rights.

A

Advance Beneficiary Notice (ABN)

A form a healthcare provider gives you before giving you a service or item, notifying you that Medicare may not cover it and you may have to pay out of pocket. You sign it to acknowledge the risk before proceeding.

Allowable Amount (Allowed Amount)

The maximum amount a health plan will pay for a specific service or procedure. Also called the "allowed charge" or "approved amount." You may be responsible for the difference between the provider's bill and this amount.

Appeal

A formal request to reconsider a plan's decision to deny or reduce a benefit, claim payment, or coverage of a service. You can appeal if you disagree with your plan's determination.

Assignment (Medicare Assignment)

An agreement between a healthcare provider and Medicare in which the provider accepts Medicare's approved amount as payment in full and does not bill you for the difference. Providers who accept assignment cannot balance-bill you.

B

Balance Billing

When a healthcare provider bills you for the difference between their charge and what your insurance plan pays. Balance billing is not allowed if the provider accepts your plan's rates.

Beneficiary

A person who is eligible for and receives benefits from a health insurance plan or government program like Medicare or Medicaid. It may also refer to a person named in an estate or account who receives funds or benefits.

Benefit Period

The span of time during which your health plan covers services and you can use your benefits. For Medicare, the benefit period runs from January 1 through December 31 each calendar year.

Benefit Year

The 12-month period for which health insurance coverage and benefits are in effect. Most plans use the calendar year (January–December), but some may use different periods.

C

Capitation

A fixed monthly payment a health plan pays a healthcare provider for each patient, regardless of how many services that patient receives. The provider is responsible for most care costs within that payment.

Catastrophic Coverage

A low-premium health insurance plan (often for young adults under 30) that covers essential health benefits after a very high deductible is met. It may also refer to a Medicare drug coverage tier with low premiums but high deductibles.

Claim

A request submitted to your health insurance company for payment of a medical service or procedure. Claims include details about the provider, the service, the date, and the cost.

Clean Claim

A claim submitted to an insurance company that contains all required information and is free of errors or omissions. Clean claims must be processed within a specific timeframe set by law or regulation.

Coinsurance

The percentage of a medical service's cost you pay after meeting your deductible, while your health plan pays the remainder. For example, you might pay 20% and your plan pays 80%.

Centers for Medicare & Medicaid Services (CMS)

The federal agency within the U.S. Department of Health & Human Services that administers Medicare, Medicaid, and the Children's Health Insurance Program (CHIP). CMS sets rules and standards for these programs.

Coordination of Benefits (COB)

A process that determines the order in which two or more health insurance plans pay benefits when you are covered by more than one plan. The primary plan pays first, then the secondary plan pays up to its limits.

Copayment (Copay)

A fixed amount you pay out of pocket for a specific healthcare service, such as a doctor's visit or prescription medication. Copays are set by your plan and do not count toward your deductible.

Cost Sharing

The portion of medical expenses you are responsible for paying. Cost sharing includes deductibles, copayments, and coinsurance and is separate from your premium.

Coverage Gap (Donut Hole)

Under Medicare Part D (drug coverage), the temporary gap in coverage that occurs after you and your plan have spent a certain amount on prescription drugs. You pay more out of pocket until you reach catastrophic coverage limits.

Creditable Coverage

Health insurance coverage that is considered adequate under Medicare and Medicaid standards. If you have creditable coverage, you may delay enrolling in Medicare Part D (drugs) without a penalty.

D

Deductible

The amount of money you must pay out of pocket for covered healthcare services before your insurance plan begins to pay. Higher deductibles usually mean lower premiums, and vice versa.

Denial (Claims Denial)

When a health insurance company refuses to pay for a service, procedure, or medication, often because it does not meet the plan's coverage rules or was deemed not medically necessary.

Dual Eligible

A person who is enrolled in both Medicare and Medicaid. Dual eligible individuals are entitled to coverage from both programs and often qualify for additional assistance programs.

Durable Medical Equipment (DME)

Reusable medical equipment, such as wheelchairs, walkers, oxygen supplies, and hospital beds, prescribed by a doctor for use at home. Medicare Part B covers certain DME items.

E

Explanation of Benefits (EOB)

A document your health insurance plan sends you after you receive a healthcare service. It shows what the provider charged, what your plan paid, what you owe, and why any services were denied or partially covered.

Enrollment

The process of signing up for or registering with a health insurance plan. Enrollment happens during open enrollment periods or qualifying life events.

Extra Help (Low-Income Subsidy / LIS)

A federal program that helps people with limited income and resources pay Medicare Part D premiums, deductibles, and copayments for prescription drugs. You must apply for Extra Help through Social Security.

F

Fee-for-Service (FFS)

A healthcare payment model in which providers are paid a set amount for each service or procedure they deliver, rather than a fixed monthly amount per patient. Original Medicare uses fee-for-service.

Formulary

The list of prescription medications covered by your health plan or drug plan. Drugs on the formulary usually cost less; off-formulary drugs may not be covered or may cost significantly more.

G

Grievance

A formal complaint you file with your health plan when you are dissatisfied with the care you received, a decision made by the plan, or how you were treated. A grievance differs from an appeal in that it may not involve a coverage denial.

Guaranteed Issue

A rule that requires a health insurance company to sell you coverage and not deny you, charge you more, or exclude pre-existing conditions based on your health status. Medigap policies include guaranteed-issue rights.

H

Health Maintenance Organization (HMO)

A health insurance plan that requires you to use doctors and hospitals within its network and typically requires a referral from your primary care provider to see a specialist. Out-of-network care is usually not covered except in emergencies.

I

Initial Enrollment Period (IEP)

The seven-month period when you first become eligible for Medicare, centered on your 65th birthday month. If you enroll during this period, your coverage begins the first day of the month you turn 65 or become eligible.

In-Network

Healthcare providers, hospitals, and facilities that have a contract with your health plan to provide services at negotiated rates. In-network care typically costs you less than out-of-network care.

Income-Related Monthly Adjustment Amount (IRMAA)

An extra amount added to your Medicare Part B and Part D premiums based on your income. If your income is above a certain threshold, you pay higher premiums than other beneficiaries.

L

Long-Term Services and Supports (LTSS)

Healthcare and support services for people who need assistance with daily activities over an extended period, including nursing home care, assisted living, home care, and adult day services. Medicaid covers some LTSS; Medicare coverage is limited.

M

Managed Care Organization (MCO)

A health insurance company that manages and delivers healthcare services to its members through contracted networks of providers. MCOs control costs through utilization management and care coordination.

Medicaid

A joint federal and state health insurance program for low-income individuals and families. Medicaid is administered by each state, so eligibility, benefits, and procedures vary by state.

Medically Necessary

Healthcare services or procedures that are appropriate and necessary to diagnose, treat, or manage your health condition, as determined by your doctor and your health plan. Plans only cover services deemed medically necessary.

Medicare

A federal health insurance program for people age 65 and older, some younger people with disabilities, and people with end-stage renal disease. Medicare is divided into four main parts: A, B, C, and D.

Medicare Advantage (Part C)

An alternative way to receive Medicare benefits through a private insurance company approved by Medicare. Medicare Advantage plans typically include Part A, Part B, and drug coverage (Part D) in one plan.

Medicare Savings Program (MSP)

A Medicaid program in each state that helps people with limited income and resources pay their Medicare premiums, deductibles, and coinsurance. Eligibility varies by state.

Medigap (Medicare Supplement)

Private health insurance designed to fill the gaps in Original Medicare coverage. Medigap policies pay some of your costs that Original Medicare does not, such as copayments and coinsurance.

Metal Tiers

Four categories of health insurance plans (Bronze, Silver, Gold, and Platinum) based on how the cost of care is split between the plan and you. Bronze has the lowest premiums and highest costs when you use care; Platinum has the highest premiums and lowest costs when you use care.

Maximum Out-of-Pocket (MOOP)

The limit on the total amount you have to pay out of pocket for covered healthcare services in a given year. Once you reach your MOOP, your plan covers 100% of covered services for the rest of the year.

N

Non-Emergency Medical Transportation (NEMT)

Medicaid-funded transportation services for eligible beneficiaries to and from Medicaid-covered medical appointments when they cannot provide their own transportation.

Network

The group of healthcare providers, hospitals, and facilities that have contracted with your health plan to provide services to plan members. Using in-network providers typically costs less than using out-of-network providers.

O

Open Enrollment

An annual period when you can enroll in a health insurance plan or make changes to your existing coverage without having a qualifying life event. For Medicare beneficiaries, the annual open enrollment period is generally October 15 through December 7.

Original Medicare

The fee-for-service health insurance program that includes Medicare Part A (hospital) and Part B (medical). Beneficiaries can see any participating provider and are not restricted to a network.

Out-of-Network

Healthcare providers, hospitals, and facilities that do not have a contract with your health plan. You typically pay more out of pocket for out-of-network care, and sometimes must meet a separate deductible.

Out-of-Pocket Maximum

See also: Maximum Out-of-Pocket (MOOP).

P

Programs of All-Inclusive Care for the Elderly (PACE)

A Medicare and Medicaid program for frail seniors age 55 and older. PACE provides comprehensive medical and social services, including adult day care, through community-based teams and aims to keep people living in the community rather than in institutions.

Medicare Part A

The part of Original Medicare that covers hospital care, including inpatient hospital stays, skilled nursing facility care, hospice, and home health services. Part A is typically premium-free for people age 65 and older.

Medicare Part B

The part of Original Medicare that covers outpatient medical services, including doctor's visits, outpatient hospital care, medical equipment, and preventive services. Most people pay a monthly premium for Part B.

Medicare Part C

See also: Medicare Advantage (Part C).

Medicare Part D

The part of Medicare that covers outpatient prescription medications. Most people must have Part D coverage or other creditable drug coverage, or face a late-enrollment penalty if they enroll later.

Preauthorization (Prior Authorization)

Approval you must obtain from your health plan before you receive a service or procedure for it to be covered. If you do not get preauthorization when required, your claim may be denied or only partially paid.

Preferred Drug

A medication on your health plan's drug formulary that requires a lower copayment than non-preferred drugs. Preferred drugs are typically cost-effective options approved by the plan.

Premium

The monthly amount you pay to your health insurance company for coverage, regardless of whether you use services. Premiums are separate from cost sharing (deductibles, copayments, and coinsurance).

Premium Tax Credit

A federal subsidy that reduces the monthly premium you pay for health insurance obtained through the Health Insurance Marketplace (healthcare.gov or state exchanges). Your eligibility depends on your income and household size.

Primary Care Provider (PCP)

Your main healthcare provider, typically a family medicine doctor, internist, or nurse practitioner. In HMO and POS plans, you usually need a referral from your PCP to see specialists.

Provider

Any individual or organization that delivers healthcare services, including doctors, nurse practitioners, hospitals, laboratories, pharmacies, and other medical facilities.

Preferred Provider Organization (PPO)

A health insurance plan that allows you to see any healthcare provider but charges you less if you use in-network providers. You do not need a referral to see a specialist, and out-of-network care is covered (though you pay more).

Q

Qualifying Life Event (QLE)

A major change in your life circumstances, such as getting married, having a baby, losing health coverage, or changing jobs, that allows you to enroll in or change your health insurance outside of open enrollment periods.

R

Redetermination

A formal process to reconsider a decision about your eligibility for a government program like Medicaid or Medicare savings programs. You request redetermination if you believe the eligibility decision was incorrect.

Referral

An authorization from your primary care provider (usually in an HMO or POS plan) directing you to see a specialist. Your plan may require a referral for a specialist's visit to be covered.

S

Special Enrollment Period (SEP)

A limited time period outside the normal annual enrollment window when you can enroll in or change your Medicare or Medicaid coverage due to a qualifying life event or exceptional circumstance.

Skilled Nursing Facility (SNF)

A facility that provides 24-hour nursing care and rehabilitation services for people recovering from an illness or injury. Medicare Part A covers up to 100 days of SNF care per benefit period if certain conditions are met.

Special Needs Plan (SNP)

A type of Medicare Advantage plan designed for people with specific chronic conditions or characteristics, such as dual eligible (Medicaid and Medicare), severely disabled, or institutionalized. D-SNP, C-SNP, and I-SNP refer to specific SNP types based on the population served.

Star Ratings

A quality measure system on Medicare.gov that rates Medicare Advantage and Part D plans from one to five stars based on their performance on specific quality and customer service measures. Higher stars generally indicate better plan quality.

Step Therapy

A utilization management technique in which your health plan requires you to use a lower-cost medication first before covering a more expensive medication, even if your doctor recommends the expensive one. Also called "fail first" or "step protocol."

Subsidy

Financial assistance from the federal or state government to help reduce your healthcare costs. Subsidies may include premium tax credits, cost-sharing reductions, Extra Help for drugs, and Medicare savings programs.

Summary of Benefits and Coverage (SBC)

A standard, easy-to-read document that health plans must provide to prospective and current members showing what the plan covers, what it costs, and limitations or exclusions. The SBC makes it easier to compare plans.

Supplemental Benefits

Additional benefits offered by some health plans beyond the standard covered services, such as dental, vision, hearing, fitness programs, or meal delivery. Supplemental benefits vary by plan and are often offered by Medicare Advantage plans.

T

Third-Party Liability (TLP)

Responsibility for payment that belongs to someone other than you or your health plan, such as another insurance company or a liable party in an accident. Your health plan or Medicaid may recover costs if a third party is responsible.

Tiers (Drug Tiers)

The categorization of prescription drugs on your plan's formulary based on how much you pay for them. Higher tiers usually have higher copayments; lower tiers are less expensive generics and preferred brand-name drugs.

U

Utilization Management (UM)

Practices health plans use to manage costs and ensure appropriate care, including prior authorization requirements, step therapy, and medical necessity reviews. UM aims to balance cost control with quality care.

W

Waiting Period

A time period set by a health plan before certain benefits become effective or before you are eligible to use certain services. Waiting periods may apply to new members or to specific services like mental health or dental care.