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.

Verify with your plan: These definitions are general and educational. Rules, limits, and procedures vary by program, state, and individual plan. Always check your plan documents or call your insurer to confirm how a term applies to your specific coverage.

Advance Beneficiary Notice (ABN): A form your doctor gives you before a service, warning you that Medicare might not pay for it. You sign to agree you'll pay if it's not covered.
Allowable Amount (Allowed Amount): The most your plan will pay for a service. If your doctor charges more, you might have to pay the difference.
Appeal: A way to ask your plan to reconsider if they say no to paying for something. You can appeal if you disagree with their decision.
Assignment (Medicare Assignment): When your doctor agrees to accept Medicare's payment as full payment. Your doctor won't bill you for any extra cost.
Balance Billing: When your doctor bills you for the difference between what they charge and what your plan pays. It's not allowed if your doctor accepts your plan's rates.
Beneficiary: Someone who gets benefits from a health plan or program like Medicare or Medicaid. It can also mean someone named to receive money from an account.
Benefit Period: The time period when your plan covers services. For Medicare, this is January 1 through December 31 each year.
Benefit Year: The 12-month period when your health plan is in effect. Most use the calendar year (January–December), but some use different dates.
Capitation: A fixed monthly payment your plan pays a doctor for each patient, no matter how many services they give. The doctor pays for most care from that payment.
Catastrophic Coverage: A plan with a low monthly fee but a very high deductible (often for adults under 30). It covers essential health benefits once you meet the deductible.
Claim: A request to your insurance company to pay for a medical service. It includes who provided the service, what it was, when it happened, and how much it cost.
Clean Claim: A claim with all the right information and no mistakes. Your plan must process it within a set timeframe by law.
Coinsurance: The percentage of a bill you pay after your deductible. For example, you might pay 20% and your plan pays 80%.
Centers for Medicare & Medicaid Services (CMS): The federal agency that runs Medicare, Medicaid, and CHIP. It sets the rules for these programs.
Coordination of Benefits (COB): When you have two plans, this decides which pays first. The first plan pays, then the second plan pays what's left.
Copayment (Copay): A flat amount you pay for a service like a doctor's visit or prescription. Your plan sets this amount, and it doesn't count toward your deductible.
Cost Sharing: The amount you pay toward medical costs, not including your monthly premium. This includes deductibles, copays, and coinsurance.
Coverage Gap (Donut Hole): A gap in Medicare Part D drug coverage where you pay more out of pocket. It starts after you and your plan spend a certain amount and ends at catastrophic coverage.
Creditable Coverage: Insurance coverage that meets Medicare and Medicaid standards. If you have it, you can delay enrolling in Medicare Part D drugs without a penalty.
Deductible: The amount you must pay for care before your plan starts paying. Higher deductibles usually mean lower monthly fees.
Denial (Claims Denial): When your plan refuses to pay for a service. This usually happens because it doesn't meet the plan's rules or isn't medically necessary.
Dual Eligible: Someone enrolled in both Medicare and Medicaid. You get coverage from both programs and may qualify for extra help.
Durable Medical Equipment (DME): Reusable medical tools like wheelchairs, walkers, oxygen, and hospital beds that your doctor prescribes for home use. Medicare Part B covers some of these.
Explanation of Benefits (EOB): A document your plan sends after you get care. It shows what was charged, what your plan paid, what you owe, and why anything was denied.
Enrollment: Signing up for a health plan. This happens during open enrollment periods or when you have a major life change.
Extra Help (Low-Income Subsidy / LIS): A program that helps people with low income pay for Medicare Part D drugs. You apply through Social Security.
Fee-for-Service (FFS): A payment model where your doctor gets paid for each service they give, not a flat monthly amount. Original Medicare uses this model.
Formulary: The list of drugs your plan covers. Drugs on this list cost less; drugs not on it may not be covered or cost more.
Grievance: A complaint you file with your plan if you're unhappy with the care you got, a plan decision, or how you were treated. This is different from an appeal.
Guaranteed Issue: A rule that says an insurance company must sell you a plan and can't deny you, charge you more, or exclude anything based on your health. Medigap policies have this protection.
Health Maintenance Organization (HMO): A plan that requires you to use doctors and hospitals in its network. You usually need a referral to see a specialist. Out-of-network care isn't covered except in emergencies.
Initial Enrollment Period (IEP): A seven-month window around your 65th birthday when you can first sign up for Medicare. Your coverage starts the first day of the month you turn 65.
In-Network: Doctors, hospitals, and facilities that have a contract with your plan. Their services cost 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 if your income is high enough. Higher income means higher premiums.
Long-Term Services and Supports (LTSS): Help with daily activities over a long time, like nursing home, assisted living, home care, or day programs. Medicaid covers some; Medicare covers less.
Managed Care Organization (MCO): An insurance company that manages your healthcare through a network of doctors. It controls costs through planning and care coordination.
Medicaid: A health program for low-income people run by the federal government and states. Rules and benefits differ by state.
Medically Necessary: Care or services that are needed to diagnose, treat, or manage your health condition. Your plan only covers services it deems medically necessary.
Medicare: A federal health program for people 65 and older, some younger disabled people, and people with end-stage renal disease. It has four main parts: A, B, C, and D.
Medicare Advantage (Part C): A private insurance plan approved by Medicare as an alternative to Original Medicare. It usually includes hospital (Part A), medical (Part B), and drug coverage (Part D) in one plan.
Medicare Savings Program (MSP): A program in each state that helps low-income people pay Medicare premiums, deductibles, and coinsurance. Eligibility varies by state.
Medigap (Medicare Supplement): Private insurance that fills gaps in Original Medicare. It pays costs like copays and coinsurance that Medicare doesn't.
Metal Tiers: Four types of plans (Bronze, Silver, Gold, Platinum) based on how costs are split between your plan and you. Bronze has the lowest monthly fee but highest costs when you use care; Platinum has the highest fee but lowest costs when you use care.
Maximum Out-of-Pocket (MOOP): The total most you'll pay for covered care in a year. After you reach this limit, your plan pays 100% for the rest of the year.
Non-Emergency Medical Transportation (NEMT): Free Medicaid-funded rides to and from medical appointments if you can't get there on your own.
Network: The group of doctors, hospitals, and facilities that work with your plan. Using them costs less than going to providers outside the network.
Open Enrollment: A yearly window when you can sign up for a plan or change your coverage without a life event. For Medicare, this is usually October 15 through December 7.
Original Medicare: Medicare's fee-for-service program, which includes hospital care (Part A) and medical services (Part B). You can see any participating provider without network restrictions.
Out-of-Network: Doctors, hospitals, and facilities without a contract with your plan. You pay more for their services and might need to meet a separate deductible.
Out-of-Pocket Maximum: See also: Maximum Out-of-Pocket (MOOP).
Programs of All-Inclusive Care for the Elderly (PACE): A Medicare and Medicaid program for frail seniors 55 and older that provides medical and social services, including day care. It helps people stay in their community instead of a facility.
Medicare Part A: The hospital part of Original Medicare. It covers hospital stays, nursing facility care, hospice, and home health. It's usually free for people 65 and older.
Medicare Part B: The medical services part of Original Medicare. It covers doctor visits, outpatient care, medical equipment, and preventive services. Most people pay a monthly fee for Part B.
Medicare Part C: See also: Medicare Advantage (Part C).
Medicare Part D: The drug coverage part of Medicare. You usually need Part D or other drug coverage, or you'll face a penalty if you enroll later.
Preauthorization (Prior Authorization): Permission you must get from your plan before a service for it to be covered. Without it, your plan may deny your claim or only pay part.
Preferred Drug: A drug on your plan's list that costs you less than non-preferred drugs. Your plan approves it as a cost-effective option.
Premium: The monthly fee you pay for insurance, whether you use services or not. This is separate from copays and deductibles.
Premium Tax Credit: Federal help that reduces your monthly insurance payment through healthcare.gov or your state. Your eligibility depends on your income and family size.
Primary Care Provider (PCP): Your main doctor, usually a family medicine doctor or internist. In HMO and POS plans, you usually need a referral from your PCP to see specialists.
Provider: Anyone or any place that delivers healthcare, like doctors, nurse practitioners, hospitals, labs, and pharmacies.
Preferred Provider Organization (PPO): A plan that lets you see any doctor, but costs less if you use in-network providers. You don't need a referral to see a specialist, and out-of-network care is covered (but costs more).
Qualifying Life Event (QLE): A major life change like getting married, having a baby, losing coverage, or changing jobs that lets you enroll in or change your plan outside open enrollment.
Redetermination: A formal process to review a decision about your eligibility for a program like Medicaid or Medicare savings. You can request this if you think the decision was wrong.
Referral: Permission from your main doctor (usually in an HMO or POS plan) to see a specialist. Your plan may require this for the visit to be covered.
Special Enrollment Period (SEP): A limited time outside normal open enrollment when you can enroll in or change Medicare or Medicaid coverage due to a life event or special circumstance.
Skilled Nursing Facility (SNF): A facility that provides 24-hour nursing care and rehabilitation for people recovering from illness or injury. Medicare Part A covers up to 100 days per benefit period if conditions are met.
Special Needs Plan (SNP): A Medicare Advantage plan designed for people with specific chronic conditions or situations, like dual eligible, severely disabled, or in a facility. D-SNP, C-SNP, and I-SNP are different types.
Star Ratings: A system on Medicare.gov that rates Medicare Advantage and Part D plans from one to five stars based on quality and service. More stars usually means a better plan.
Step Therapy: When your plan requires you to try a cheaper drug first before covering a more expensive one, even if your doctor recommends the expensive one. Also called "fail first."
Subsidy: Government help to reduce your healthcare costs. This includes premium discounts, copay help, drug assistance, and Medicare savings programs.
Summary of Benefits and Coverage (SBC): A standard document your plan must give you that shows what's covered, what it costs, and what's not included. It makes it easier to compare plans.
Supplemental Benefits: Extra benefits some plans offer beyond basic coverage, like dental, vision, hearing, fitness, or meal delivery. These vary by plan and are often in Medicare Advantage plans.
Third-Party Liability (TLP): When someone else is responsible for payment, like another insurance company or someone at fault in an accident. Your plan or Medicaid may try to recover costs from that party.
Tiers (Drug Tiers): Categories of drugs on your plan's list based on cost. Lower tiers (generics and preferred drugs) cost less; higher tiers cost more.
Utilization Management (UM): Tools your plan uses to manage costs and make sure care is appropriate, like requiring approval before services or testing cheaper drugs first. It tries to balance cost with quality.
Waiting Period: A time period your plan sets before certain benefits start or you can use certain services. It may apply to new members or specific services like mental health or dental care.

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