Medicare Glossary of Terms

Navigating through Medicare can be difficult. This glossary will help you find the Medicare definitions you need. A comprehensive explanation of Medicare topics can also be found in the Medicare & You handbook, which is updated annually.

Browse these common Medicare terms, listed in alphabetical order: 

A

Advance beneficiary notice of noncoverage (ABN)

An advance beneficiary notice of noncoverage (ABN) is when a healthcare professional, home health agency, or medical supplier believes that original Medicare will not cover a service, technology, or durable medical equipment (DME) that you’ve recently received. You receive this notice before a claim is filed because the healthcare professional or supplier believes Medicare is likely to deny payment — usually because the item or service won’t be considered medically necessary. You won’t receive an ABN for items and services original Medicare never covers.

Advantage (see Medicare Advantage)

This is another name for Medicare Advantage or Medicare Part C. Medicare Advantage plans are sold by private insurance companies to replace original Medicare.

Annual notice of change

You should receive the annual notice of change (ANOC) if you are enrolled in a Medicare Advantage or Part D prescription plan. The ANOC should arrive by September 30. (The annual Medicare open enrollment period begins on October 15.) This notice will alert enrollees about plan changes for the coming coverage year.

Appeal

Your Medicare plan might deny coverage for a healthcare service, supply, item, or prescription medication. You can file an appeal if you disagree with a coverage or payment decision. You can also file an appeal if your plan stops providing or paying for all or part of a service or item you still need. (Original Medicare, Medicare Advantage, and Part D plans have different appeals processes.) You have the right to ask for a fast appeal if you think you may be discharged from a hospital, a skilled nursing center, or hospice too soon.

Assignment

An assignment means a healthcare professional or supplier wants to work with Medicare. They must agree to accept the Medicare-approved amount as full payment for covered services. Those who “accept assignment” submit claims directly to Medicare. And they can’t charge you for processing the payment request.

B

Benefit period

A benefit period is how Medicare Part A measures hospital and nursing facility use. The benefit period begins the day a person is admitted. It ends when the individual has not received inpatient care for 60 consecutive days. Enrollees are responsible for paying the Part A deductible for each benefit period.

C

Catastrophic coverage phase

Catastrophic coverage is the last phase for Part D prescription plans during a calendar year. You begin this phase once you’ve reached your Part D out-of-pocket cap for the year. At this point, your plan pays for 100% of your covered medications. 

EXPERT PICKS: WHAT TO READ NEXT

• When is Medicare open enrollment? You can join, drop, and switch coverage from October 15 to December 7. Medicare Advantage has another open enrollment period from January 1 to March 31.

• How much does Medicare cost? In addition to the Part B monthly premium with original Medicare and Medicare Advantage plans, most enrollees pay a share of the charges when they receive care.

• Choosing a Medicare Advantage plan: Consider a plan’s network of healthcare professionals and facilities — and prescription coverage — along with extra perks such as dental and vision benefits.

Centers for Medicare & Medicaid Services (CMS)

CMS is the government agency that administers the Medicare and Medicaid programs.

Coinsurance

Coinsurance is the amount you’re responsible for paying for a service or medication. You’re responsible for coinsurance after you meet your deductible. Coinsurance is typically a percentage of the charges.

Copay

A copay is a fixed amount your insurance plan expects you to pay when you access healthcare services. Copays are usually charged after you’ve met your deductible.

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Coverage determination

A coverage determination is the process a health plan uses to decide whether to pay for a service, an item, or a prescription medication.

Coverage gap

The coverage gap (aka donut hole) was a pause in Part D benefits before enrollees reached the catastrophic phase. After December 31, 2024, this phase was eliminated as a part of Part D coverage.

Creditable coverage

Creditable coverage refers to a prescription drug plan that equals or exceeds what Medicare considers standard. When you join Medicare, you must have creditable coverage for prescriptions within a certain timeframe. If not, you’ll face a Part D late enrollment penalty. If you have medication coverage from an employer, a union, or another group health plan, you should get a Notice of Creditable Coverage every year. That will tell you whether your plan qualifies as creditable.

D

Deductible

A deductible is the amount you must pay toward covered healthcare services every year before your insurance begins cost sharing. After you meet your deductible, your Medicare plan pays its part for covered services.

Donut hole

Donut hole is another term used to describe the coverage gap — a defunct phase of Part D coverage.

Dual eligibility

A person with dual eligibility qualifies for Medicare and Medicaid. People generally receive coverage from both programs because of age, condition, and income — or a combination of these factors. Medicare is the primary coverage, and Medicaid supplements with services and financial assistance. Dual eligibles also qualify for Extra Help, the Part D subsidy that covers most prescription costs.

Durable medical equipment (DME)

DME describes medically necessary items that help individuals manage health conditions at home. Medicare covers a wide range of DME, including hospital beds, oxygen equipment, scooters, and wheelchairs. DME does not include stair lifts, which are considered home modifications.

E

Elective surgery

Elective surgery is a procedure that can be planned in advance. An example is knee replacement, which is not emergency surgery.

Enrollment

Enrollment is the process of signing up for Medicare coverage. This includes a health plan (original Medicare or Medicare Advantage), a Part D prescription plan, or a Medigap supplement plan if you have original Medicare. After your initial enrollment period, you can join, switch, or drop your health plan or Part D coverage during Medicare open enrollment or Medicare Advantage open enrollment if you have a private plan. Supplement plans have a separate 6-month Medigap open enrollment period.

End-stage renal disease (ESRD)

ESRD is another name for end-stage kidney disease or permanent kidney failure. This chronic condition requires a regular course of dialysis or a kidney transplant. Individuals with ESRD can qualify for Medicare or a Medicare Advantage plan at any age.

Evidence of Coverage

Evidence of Coverage is a document that details what your plan covers and how much you should expect to pay if you have a Medicare Advantage or Part D plan. This notice typically arrives in September ahead of the annual Medicare open enrollment period. It can help you decide whether to keep, drop, or switch plans.

Extra Help

Extra Help is also known as the Medicare Low Income Subsidy (LIS). This program helps Medicare enrollees with limited resources pay for Part D prescription coverage. Having Extra Help eliminates premiums and deductibles. You pay very low out-of-pocket costs for prescriptions.

F

Formulary

A formulary is a list of prescription medications and supplies covered by Part D. Often, formularies are organized in tiers. Generic drugs are in the lower-cost tiers, and brand-name or specialty drugs are in the higher-cost tiers. A treatment you need can be dropped from your formulary or moved to another tier anytime.

G

Grievance

A grievance, or complaint, can be filed if you have concerns about the quality of services you receive from Medicare or how you’re being treated by a Medicare plan. A grievance is different from an appeal. An appeal is filed when you disagree with a coverage or payment decision.

Guaranteed issue rights

Guaranteed issue rights, or “trial rights,” protect you from being turned down if you want to buy a Medigap plan. Having them also means that you can’t be subject to medical underwriting or charged more. You have guaranteed issue rights during your onetime 6-month Medigap open enrollment period. You also may have that status under other special circumstances.

H

Home healthcare

Home healthcare services covered by Medicare include skilled nursing care and physical therapy.

Hospice

Hospice care includes end-of-life services for someone who is terminally ill. Medicare covers all hospice care costs. Hospice services may be provided in an institutional environment or at home. The hospice benefit requires a hospice physician or healthcare professional to certify that you have a life expectancy of 6 months or less.

I

Income-related monthly adjustment amount (IRMAA)

The IRMAA is a premium surcharge paid by Medicare enrollees with high incomes. The IRMAA can increase your Part B premium and your Part D premium. You can have the IRMAA added to premiums whether you have original Medicare or Medicare Advantage. You’re subject to the IRMAA based on your modified adjusted gross income from 2 years before the coverage year.

Independent reviewer

An independent reviewer is a Medicare contractor who reviews appeals.

Initial coverage phase

The initial coverage phase is the middle phase of the Part D plan design. After you meet your deductible for your prescription plan — and leave the deductible phase — you enter the initial coverage phase. At this point, you’re responsible for copays and coinsurance for all covered prescriptions until you reach the out-of-pocket maximum ($2,000 in 2025 and $2,100 in 2026). After you meet the threshold, you enter the catastrophic phase. At this stage, all covered medications are paid at 100% by your plan.

L

Lifetime reserve days

Lifetime reserve days are counted under original Medicare when you’re in the hospital for more than 90 days. You have a total of 60 reserve days that can be used during your lifetime. The daily coinsurance is highest when you reach reserve days. After you use all your lifetime reserve days, you pay all costs if you remain in the hospital longer than 90 days during a Part A benefit period.

Long-term care

Long-term care consists of medical and nonmedical services provided to people who are unable to perform activities of daily living, such as dressing or bathing. Medicare doesn’t cover long-term custodial care, such as nursing homes, if that’s the only care you need. 

M

Medicaid

Medicaid is a public health insurance program. It provides comprehensive coverage for eligible adults and children with low incomes. There are 56 distinct programs, including all states, Washington, D.C., and five territories: American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands. The program is jointly funded by the federal government alongside states and territories. As of September 2025, 40 states and Washington, D.C., expanded their Medicaid programs to include nearly all adults with incomes up to 138% of the federal poverty level. This has reduced the nation’s uninsured rate and improved access to care. It’s also possible to be dually eligible for Medicaid and Medicare coverage.

Medical underwriting

Medical underwriting is a health rating process used by insurance companies to decide whether to approve you for coverage and what you’re charged. This type of health review isn’t allowed for Affordable Care Act (ACA) plans and most commercial plans, which are regulated by the ACA. Medical underwriting is also prohibited when an enrollee has guaranteed issue rights, such as during the onetime 6-month Medigap open enrollment period.

Medicare Advantage

Medicare Advantage (Part C) is a private alternative to original Medicare. It replaces Part A and Part B. There are six types of Medicare Advantage plans. Most Medicare Advantage plans include Part D prescription coverage. They are also popular for perks not offered by original Medicare. (Advantage plans often provide vision, dental, and hearing benefits.) Some Medicare Advantage plans also provide transportation to medical appointments.

Medicare Part A (hospital insurance)

Medicare Part A is part of original Medicare. It covers inpatient hospital stays for physical and mental healthcare. Part A also covers care provided in skilled nursing facilities as well as hospice care and some home healthcare.

Medicare Part B (medical insurance)

Medicare Part B is part of original Medicare. It covers costs for outpatient care, preventive care, medical supplies, and certain vaccines.

Medicare Part C (see Medicare Advantage)

Medicare Part D (prescription drug plans)

Medicare Part D prescription coverage is included in many Medicare Advantage plans. Part D stand-alone plans are also sold by private insurance companies. These can pair with original Medicare or Medicare Advantage plans that don’t include prescription medication benefits.

Medicare Plan Finder

The Medicare Plan Finder is a tool that can help you find a Part D plan that covers the medications you need. You can compare coverage options using your ZIP code to search plans in your area.

Medigap (Original Medicare supplement insurance)

Medigap is offered by private insurance companies as an optional supplement. It’s available to people enrolled in original Medicare. There are 10 Medigap plan types, and each set has specific benefits (though two types are not available to people new to Medicare). It’s best to enroll during your onetime 6-month Medigap open enrollment period. This will avoid medical underwriting or being turned down for coverage. You cannot buy a Medigap plan if you’re enrolled in a Medicare Advantage plan.

Medicare Prescription Payment Plan

The Medicare Prescription Payment Plan allows Part D enrollees to spread prescription costs over 12 months (if you begin participating in January) or over the rest of the year (if you join later). The plan gives you the option to make payments for prescription out-of-pocket costs instead of paying up front at the pharmacy. This plan doesn’t save you money, but it can be helpful for Part D enrollees who face high costs early in the year.

Medicare Savings Programs (MSPs)

Medicare Savings Programs (MSPs) help people with limited resources save on Medicare costs. These are federal programs run by your state Medicaid program. You must be approved to join an MSP. Income and assets limits vary by state. Depending on the MSP you’re approved to join (there are 4 programs), you may be able to get help with Part A premiums, Part B premiums, deductibles, copays, and coinsurance for services Medicare covers.

Medicare special needs plans (SNPs)

Special needs plans (SNPs) are Medicare Advantage plans designed to address specific populations with tailored benefits and coordinated care plans. There are three types of SNPs: chronic condition, dual eligibility, and institutional.

Medicare summary notice (MSN)

A Medicare summary notice (MSN) is a report you receive at least 2 times a year about your use of Part A and Part B services. It’s not a bill. The MSN details services and supplies billed to Medicare on your behalf, what Medicare paid, and the most you may owe. You may get an MSN as often as every 4 months if you’re receiving services. People enrolled in Medicare Advantage don’t receive MSNs.

Modified adjusted gross income (MAGI)

Your modified adjusted gross income (MAGI) is based on your adjusted gross income, a number that appears on your tax return. MAGI from 2 years ago is used to determine if your income is high enough to pay a surcharge on your Part B and Part D premiums called the IRMAA. MAGI is also used to determine Medicaid eligibility.

O

Open enrollment

Open enrollment for Medicare refers to two different periods. Annual Medicare open enrollment is October 15 to December 7, and Medicare Advantage open enrollment is the first three months of the year. Enrollees with original Medicare, Medicare Advantage, and Part D plans can join, drop, or switch plans during the fall open enrollment period. Only people with Medicare Advantage plans can make changes during the first-of-the-year open enrollment period.

Original Medicare

Original Medicare — also known as fee-for-service — describes two parts of the program: Part A (hospital insurance) and Part B (medical insurance). You can have either Part A or Part B, but most people with original Medicare are enrolled in Part A and Part B.

Out-of-pocket costs

Out-of-pocket costs are your part of the expenses for your health insurance plan. These costs include deductibles, copays, and coinsurance.

Out-of-pocket maximum (out-of-pocket limit)

An out-of-pocket maximum is the most you spend on covered care in a year. After that, your health plan begins paying at 100%. This is also sometimes called the maximum out of pocket. Medicare Advantage plans have out-of-pocket limits, but original Medicare does not. Medigap supplement insurance can help cover original Medicare’s out-of-pocket costs.

P

Premium

A premium is a payment for insurance coverage. For health insurance, it’s typically due monthly. Medicare has a Part A premium and a Part B premium. Most people don’t have to pay the Part A premium. But enrollees pay for Part B whether they have original Medicare or Medicare Advantage. (Most enrollees have their Part B premiums deducted from Social Security benefits.) Your Medicare Advantage plan may have an additional premium. If you have a Part D stand-alone plan, you’ll also have a premium for that coverage. And if you have original Medicare with a Medigap plan, you’ll have a premium for that supplement insurance.

Primary payer

The primary payer is the health insurance that pays first when a person is covered by another health plan (such as retiree insurance or Tricare).

Prior authorization

Prior authorization is a coverage decision by your insurance plan for a service or an item or medication. This extra step can delay or prevent necessary care. Medicare Advantage plans often require prior authorization. These reviews are rare for original Medicare, but that changes in 2026. During a 6-year pilot program, original Medicare will use prior authorization to review some Part B services and supplies in six states.

Q

Quality measures (see star ratings)

R

Referral

A referral is a clearance to seek other healthcare. It typically comes from a primary care provider coordinating your care. Some Medicare Advantage plans, like health maintenance organizations, may require a referral to a specialist or medical services (such as testing) for your care to be covered by the insurance plan.

S

Secondary payer

A secondary payer is the insurance that provides benefits after the primary payer. A person who has coverage from more than one health plan would have a primary payer, which has most of the coverage responsibility. A second payer typically covers out-of-pocket costs.

Service area

A service area describes the geographic boundaries where you live and a health plan provides coverage. Healthcare professionals and facilities providing care in the service area are part of the insurance plan’s coverage network. Beyond the service area is considered out of network. Having out-of-network care typically results in higher out-of-pocket costs. Original Medicare is accepted nationwide. But most Medicare Advantage and Part D plans have service areas. If you move outside of the service area, you are typically disenrolled from the plan. But then you’d qualify for a special enrollment period, during which you could sign up for a new plan.

Skilled nursing facility

A skilled nursing facility is a medical setting such as a rehab center or a nursing home. The staff and equipment are needed to provide appropriate care after a hospital stay or an injury. Medicare typically covers short-term nursing home costs. This care is covered by Part A.

Skilled nursing facility care

Skilled nursing facility care describes nursing and therapy that can be performed only by healthcare professionals. This care is covered by Part A and is typically provided in a skilled nursing facility, such as a rehab center.

Social Security

The Social Security Administration (SSA) is an independent agency of the federal government that administers Social Security, a social insurance program providing retirement, disability, and survivor benefits. You or a spouse paying into Social Security via taxes on your income for 40 quarters (collectively 10 years) lets you access Part A without paying a monthly premium. The SSA is responsible for enrolling people in Medicare.

Special enrollment period

A special enrollment period for Medicare coverage allows you to join, change, or drop coverage outside open enrollment under certain circumstances called qualifying life events. For instance, you can choose another Medicare Advantage or Part D plan if you move outside of a plan’s service area.

Star ratings

Star ratings are the way Medicare measures the quality of Part D and Medicare Advantage plans, hospitals, and nursing homes. Each system ranges from one star (a poor rating) to five (excellent performance). Health plans with the highest ratings on quality of care and customer service receive bonus payments from CMS. Star ratings are available on the Medicare Plan Finder tool. This can help people compare Medicare Advantage and Part D plans.

State Health Insurance Assistance Program

The State Health Insurance Assistance Program is a national nonprofit organization commonly known as SHIP. It helps Medicare-eligible people, their relatives, and their caregivers navigate health insurance by offering free, unbiased local counseling.

State Pharmaceutical Assistance Programs (SPAPs)

SPAPs help eligible residents with limited incomes and certain conditions (ESRD, HIV) afford prescription medications. Benefits vary. SPAP programs are available in most states, Washington, D.C., and some U.S. territories. 

Step therapy

Step therapy is a type of prior authorization used by prescription plans, including Part D plans. Step therapy requires you to try a certain treatment for your condition that’s preferred by the plan. This is usually a lower-cost option. If the plan’s preferred treatment fails, then your original prescription may be covered.

T

Telehealth, telemedicine

Telehealth refers to the digital technology that delivers care. Telemedicine is the online service provided by a healthcare professional, such as a virtual visit. Medicare covers a range of telehealth and telemedicine services. Technology may be covered if you’re prescribed digital therapeutics — healthcare via a digital app.

Trial right

A trial right or guaranteed issue right involves your access to a Medigap plan without being denied coverage because of preexisting conditions or being charged more. If you drop a Medigap plan (and original Medicare) and join a Medicare Advantage plan for the first time, you’ll have 1 year (your onetime trial right period) to get your Medigap plan back once you return to original Medicare. If your same insurance company no longer offers your previous Medigap plan, you may be able to buy another Medigap plan if you originally joined Medicare on or after January 1, 2020. You also have guaranteed issue rights during your onetime 6-month Medigap open enrollment period. You may have that status under other special circumstances.

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Written by:

Cindy George, MPH

Cindy George, MPH, is the senior personal finance editor at GoodRx. She is an endlessly curious health journalist and digital storyteller.

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