Medicare Glossary — The Retiree Report

A

Annual Enrollment Period (AEP)

The window each fall — October 15 through December 7 — when you can switch, join, or drop a Medicare Advantage or Part D drug plan. Changes take effect January 1. This is the main enrollment window most people think of, but it is not the only one.

Annual Notice of Change (ANOC)

A document your plan must send you each September. It details any changes to your plan's costs, coverage, or network for the coming year. Read it every fall before AEP. If you toss it without reading it, you may be surprised by new costs in January.

B

Benefit Period

A Medicare measure for hospital and skilled nursing facility stays. A benefit period begins the day you're admitted and ends when you haven't received inpatient care for 60 consecutive days. There is no limit to the number of benefit periods you can have, but each new one comes with a new Part A deductible.

Benchmark

The maximum amount Medicare will pay toward a Medicare Advantage plan's premium in a given county. Plans priced at or below the benchmark may offer $0 premiums. Plans above the benchmark pass the difference to you as a monthly premium.

C

Catastrophic Coverage

The final phase of Part D drug coverage. Once your out-of-pocket drug costs reach a set threshold in a year, you enter catastrophic coverage and pay significantly less for drugs for the rest of the year. There is now a $2,100 annual out-of-pocket cap for Part D in 2026.

Coinsurance

Your share of the cost for a covered service, expressed as a percentage. For example, if Medicare covers 80% of a doctor visit, you pay the remaining 20% coinsurance. This is different from a copay, which is a flat dollar amount.

Copay (Copayment)

A fixed dollar amount you pay for a covered service — for example, $20 for a primary care visit. Common in Medicare Advantage plans. Original Medicare uses coinsurance rather than copays for most services.

Coverage Gap ("Donut Hole")

Historically a Part D coverage phase where you paid more for drugs. The Inflation Reduction Act effectively eliminated the donut hole as of 2025 by capping annual out-of-pocket drug costs (cap is $2,100 in 2026).

Creditable Coverage

Drug or health coverage that is at least as good as Medicare's. If you have creditable coverage from an employer or union when you turn 65, you can delay Medicare enrollment without a late penalty. Your employer is required to notify you annually whether your coverage is creditable.

CMS (Centers for Medicare & Medicaid Services)

The federal agency that runs Medicare, Medicaid, and the Children's Health Insurance Program. When you see Medicare rules, regulations, or official communications, they come from CMS.

D

Deductible

The amount you pay for covered services before your insurance kicks in. Medicare has separate deductibles for Part A (hospital), Part B (medical), and Part D (drugs). Medicare Advantage plans may have their own deductibles.

Dual Eligible

Someone who qualifies for both Medicare and Medicaid. Dual-eligible individuals may qualify for extra help with premiums, copays, and drug costs. There are special plans designed specifically for dual-eligible beneficiaries.

E

Evidence of Coverage (EOC)

The full document from your Medicare Advantage or Part D plan that explains exactly what is and isn't covered, and what you'll pay. Plans must provide this annually. It's the authoritative source — more detailed than any summary brochure.

Exclusion Period

The time before a pre-existing condition is covered under a new insurance plan. Medicare Supplement (Medigap) plans can impose a 6-month exclusion period for pre-existing conditions if you enroll outside your Open Enrollment Period, though Original Medicare itself has no exclusion periods.

Extra Help (Low Income Subsidy)

A federal program that helps people with limited income and resources pay for Part D drug costs — premiums, deductibles, and copays. Eligibility is based on income and assets. If you qualify, apply — the savings are significant.

F

Formulary

The list of prescription drugs covered by a Part D or Medicare Advantage plan. Drugs are organized into tiers — lower tiers cost less, higher tiers cost more. Your drugs need to be on the formulary for your plan to cover them. Always check the formulary before enrolling.

Free Look Period

After purchasing a Medigap policy, you typically have 30 days to review it and return it for a full refund if you change your mind. Rules vary by state.

G

General Enrollment Period (GEP)

January 1 through March 31 each year. If you missed your Initial Enrollment Period for Part B and don't have a qualifying Special Enrollment Period, this is when you can sign up. Coverage starts July 1. You may face a late enrollment penalty.

Guaranteed Issue

Your right to buy a Medigap policy without being denied or charged more based on your health. Guaranteed issue rights are strongest during your Medigap Open Enrollment Period (the 6 months after you first enroll in Part B at 65). Outside that window, insurers can generally use medical underwriting.

H

HMO (Health Maintenance Organization)

A type of Medicare Advantage plan that requires you to use a network of doctors and hospitals, and typically requires referrals to see specialists. Usually lower premiums than PPOs, but less flexibility.

HMO-POS (Point of Service)

A variation of an HMO that allows you to go out of network for some services, usually at a higher cost. More flexible than a standard HMO but typically more expensive.

I

Initial Coverage Election Period (ICEP)

The window when you can first enroll in a Medicare Advantage plan. It runs from 3 months before to 3 months after your Part B effective date, typically aligned with your Initial Enrollment Period.

Initial Enrollment Period (IEP)

Your 7-month window to enroll in Medicare for the first time. It begins 3 months before the month you turn 65, includes your birthday month, and ends 3 months after. Missing this window without qualifying coverage elsewhere triggers late enrollment penalties.

IRMAA (Income-Related Monthly Adjustment Amount)

A surcharge added to your Part B and Part D premiums if your income exceeds certain thresholds. It's based on your income from two years prior. If your income drops significantly (retirement, death of spouse), you can appeal the IRMAA determination.

L

Late Enrollment Penalty

A permanent premium increase for enrolling in Part B or Part D late without qualifying coverage. Part B penalty: 10% for each full 12-month period you delayed. Part D penalty: 1% of the national base beneficiary premium per month you went without creditable drug coverage. These penalties last for as long as you have Medicare.

Low Income Subsidy (LIS)

See Extra Help. The terms are used interchangeably.

M

Medicaid

A joint federal and state program that provides health coverage to people with limited income and resources. Different from Medicare. Medicaid rules and benefits vary by state. Some people qualify for both Medicare and Medicaid — called dual eligibles.

Medicare

The federal health insurance program for people 65 and older, and for some younger people with disabilities or specific conditions like end-stage renal disease. Medicare has four parts: A, B, C (Advantage), and D.

Medicare Advantage (Part C)

An alternative to Original Medicare offered by private insurance companies approved by Medicare. Plans must cover everything Original Medicare covers, but can include extra benefits like dental, vision, and hearing. Most plans include drug coverage. See also: HMO, PPO.

Medicare SELECT

A type of Medigap policy that requires you to use specific hospitals and, in some cases, specific doctors to get full benefits. Usually less expensive than standard Medigap plans. If you use providers outside the network, your benefits may be reduced.

Medicare Supplement (Medigap)

Private insurance that helps cover what Original Medicare doesn't — primarily deductibles, coinsurance, and copays. Medigap plans are standardized by letter (Plan G, Plan N, etc.), so the same plan letter offers the same benefits regardless of which insurer sells it. Price is the main differentiator. Medigap does not work with Medicare Advantage.

Medigap Open Enrollment Period

A one-time 6-month window that begins when you enroll in Part B at age 65. During this window you have guaranteed issue rights — insurers cannot deny you or charge more based on health. This is the best time to buy a Medigap plan. After it closes, medical underwriting typically applies.

MSA (Medicare Medical Savings Account)

A type of Medicare Advantage plan that combines a high-deductible plan with a savings account. Medicare deposits money into the account to help cover healthcare costs. Complex — best understood with guidance from a licensed agent.

O

Open Enrollment Period (OEP) — Medicare Advantage

January 1 through March 31. If you are already enrolled in a Medicare Advantage plan, you can switch to a different Advantage plan or return to Original Medicare (and add a Part D plan). You cannot use this period to enroll in Advantage for the first time.

Original Medicare

The traditional fee-for-service version of Medicare, run directly by the federal government. Includes Part A (hospital) and Part B (medical). Accepts any provider who accepts Medicare nationwide. Often paired with a Medigap supplement and a Part D drug plan.

Out-of-Pocket Maximum

The most you'll pay in a calendar year for covered services before your plan pays 100%. Medicare Advantage plans are required to have an out-of-pocket maximum. Original Medicare has no out-of-pocket maximum — one reason many people add a Medigap plan.

P

Part A

Hospital Insurance. Covers inpatient hospital stays, skilled nursing facility care (under specific conditions), hospice care, and some home health care. Most people get Part A premium-free if they or a spouse worked and paid Medicare taxes for at least 10 years.

Part B

Medical Insurance. Covers doctor visits, outpatient care, preventive services, durable medical equipment, and some home health care. Part B has a monthly premium — the standard amount in 2026 is $202.90. Higher earners pay more via IRMAA.

Part C

See Medicare Advantage.

Part D

Prescription Drug Coverage. Offered through private plans approved by Medicare. Covers outpatient prescription drugs. You can get Part D as a standalone plan (with Original Medicare) or bundled into a Medicare Advantage plan. In 2026, out-of-pocket drug costs are capped at $2,100 per year.

PPO (Preferred Provider Organization)

A type of Medicare Advantage plan that allows you to see any doctor or hospital, in-network or out-of-network, without a referral. Out-of-network care costs more. More flexibility than an HMO, typically at a higher premium.

Premium

The monthly amount you pay for insurance coverage — whether you use your benefits or not. Part B, Part D, and Medicare Advantage plans all have premiums. Many Advantage plans advertise $0 premiums, but you still pay Part B. Medigap premiums are paid separately on top of Part B.

Prior Authorization

Approval required from your plan before you receive certain services, procedures, or medications. Common in Medicare Advantage. Original Medicare has far fewer prior authorization requirements. If a service is denied, you have the right to appeal.

R

Referral

A recommendation from your primary care doctor to see a specialist. Required by most HMO plans. Not required by PPOs or Original Medicare.

Retiree Coverage

Health insurance from a former employer offered to retirees. May work alongside Medicare or instead of it, depending on the plan. Always ask your HR department how your retiree coverage coordinates with Medicare before making decisions.

S

Service Area

The geographic area where a Medicare Advantage plan operates. If you move outside your plan's service area, you may need to switch plans. Original Medicare has no service area restrictions — it covers you anywhere in the U.S.

SHIP (State Health Insurance Assistance Program)

Free, unbiased Medicare counseling offered in every state, funded by the federal government. SHIP counselors can help you compare plans and understand your options. They are not selling anything. Find your state's SHIP at shiphelp.org.

SNP (Special Needs Plan)

A type of Medicare Advantage plan designed for people with specific diseases, conditions, or characteristics — like diabetes, heart disease, or dual Medicare/Medicaid eligibility. SNPs tailor coverage and benefits to the specific population they serve.

Special Enrollment Period (SEP)

A window outside the standard enrollment periods when you can make changes to your Medicare coverage due to a qualifying life event — like losing employer coverage, moving, or losing Medicaid eligibility. SEPs are time-sensitive. Missing one means waiting for the next standard enrollment window.

Step Therapy

A cost-control practice where your plan requires you to try a less expensive drug before covering a more expensive one, even if your doctor prescribed the pricier option. Common in Medicare Advantage drug coverage. You can request an exception if the lower-tier drug won't work for you.

T

Trial Right

A guaranteed issue right that lets you switch back to Original Medicare and buy a Medigap plan if you tried a Medicare Advantage plan and want to return. You have 12 months from the date your Advantage plan started to exercise this right.

Turning 65

The most common Medicare eligibility trigger. Your Initial Enrollment Period starts 3 months before your 65th birthday month. Even if you plan to keep working and stay on employer coverage, it's worth understanding your options — some situations still require Part B enrollment to avoid penalties.

W

Welcome to Medicare Preventive Visit

A one-time visit with your doctor within the first 12 months of having Part B. It includes a review of your medical history, preventive screenings, and referrals. It is free — no cost sharing. Take advantage of it.