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Glossary


The process by which a beneficiary may challenge a health plan's decision regarding coverage of benefits and/or services. The process and timeframes for appeal vary depending on the type of coverage and benefits in question.

An item of financial value such as cash, deposit accounts, IRAs, stocks, bonds, mutual funds, or the cash-surrender-value of either "whole life" or "universal life" insurance policies.

Within the Medicare program, a beneficiary is an individual, age 65 and older or under 65 with a qualifying disability, who receives Medicare insurance benefits.

Benefit is sometimes used to refer to insurance coverage as a whole or a feature of the insurance coverage.

Any drug or medication marketed under a proprietary trademark-protected name.

A government program that protects beneficiaries in Medicare Part D and Medicare Advantage plans from paying exceedingly large out-of-pocket expenses for medications. The minimum amount of out-of-pocket expenses to qualify for catastrophic coverage is set on an annual basis. Once this amount is reached, beneficiaries are only responsible for a small co-insurance or co-payment for covered drugs.

Also known as CMS, the federal agency that administers Medicare and Medicaid services and promotes awareness of the programs among beneficiaries, health care professionals, and the general public.

A fixed percentage of the price of a medication or health care service, paid by the beneficiary for a medication that is included in the plan's formulary or a service that is performed in the plan's network. The plan covers the remaining amount.

A fixed dollar amount paid by the beneficiary for a medication or health care service that is covered in either the beneficiary's plan formulary or plan network.

Out-of-pocket expenses that are paid by a participant within an insurance plan. Examples of cost sharing include co-payments, co-insurance, and deductibles.

Special conditions that an insurance plan places on individual medications covered by the plan's formulary. These restrictions include quantity limits, prior authorization, and step therapy.

Creditable coverage is a term used by Medicare to describe a non-Medicare health plan that is considered to be at least as good as the coverage offered by a standard Medicare prescription drug plan. Beneficiaries who have creditable coverage instead of Medicare Part D coverage will not face a penalty if they decide to enroll in a Medicare Prescription Drug Plan or Medicare Advantage Prescription Drug Plan at a later date.

The dollar amount a beneficiary must pay before an insurance plan will begin to make payments for medication or health care.

Most Medicare Prescription Drug Plans have a coverage gap, or "donut hole," that begins after a beneficiary and their plan spend a certain amount on covered drugs. In this gap, the beneficiary is responsible for all out-of-pocket costs associated with their medications up to a certain limit. There is currently a 52.5% discount on brand-name drugs, and beneficiaries are only responsible for 72% of the cost of covered generic drugs in the coverage gap. Once the beneficiary reaches the maximum out-of-pocket limit, they then enter the catastrophic coverage period, during which they only pay a small co-payment or co-insurance for their prescription drugs. The donut hole is predicted to be phased out by the year 2020.

A specific quantity of a medication to be taken by a patient within a specified period or interval.

The portion of the total expense of a prescription drug that is paid by a beneficiary. This amount can include co-payments, co-insurance, and/or deductibles.

A person who is eligible to receive benefits from both the Medicare and Medicaid programs.

Money received in the form of wages, salary, self-employment, tips, commissions, and bonuses.

Times when an individual is eligible to enroll in a Medicare Prescription Drug Plan, Medicare Advantage plan, or Medicare Supplement plan.

Certain government subsidies and manufacture rebates are applied to the costs of generic and brand name drugs in the Medicare coverage gap, or "donut hole." Additionally, some plans offer coverage that extends beyond these standard subsidies and rebates, which is known as Enhanced Gap Coverage.

Out-of-pocket expenses that the beneficiary is expected to pay in a calendar year given a specific insurance plan's monthly premium, annual deductible, and co-payments (or co-insurance fees) for the medications entered within our Medicare plan comparison tool.

The process by which a beneficiary may request that his or her health plan cover a medication that is not on the plan's formulary. A beneficiary may also request an exception if the medication is a non-preferred drug on the formulary, but is medically necessary and, therefore, should be treated as a preferred drug. If the plan does not grant an exception, the beneficiary has the right to appeal the decision.

Also known as the Low-Income Subsidy (LIS), this program covers out-of-pocket expenses such as monthly premiums, annual deductibles, and co-payments for eligible beneficiaries enrolled in a Medicare Part D plan. Extra Help is administered by Social Security.

Health insurance provided to federal employees. Also known as FEHB, this program qualifies as "creditable coverage" for someone eligible for a Medicare Part D plan. In many cases, switching from FEHB drug coverage to a Medicare Part D plan would not result in increased benefits for the enrollee.

Also known as the FPL, the Federal Poverty Level is the income level set by the federal government to identify individuals who are impoverished and may qualify for various forms of assistance. This income level may change each year.

The system where a payment is made to a health care provider for each service provided, including office visits, tests, and procedures.

A list of preferred medications, both generic and brand name, covered by a particular health plan. If a medication is listed within a plan's formulary, that plan will pay a portion of the medication's expense. Medications not included in a plan's formulary will typically not be eligible for payment by the plan.

A medication with the same active ingredients in the same amounts as the brand name medication for which it substitutes. The FDA requires a variety of tests and procedures to ensure that a generic may be substituted for a brand name medication. Generic medications typically cost less than their brand name counterparts.

A professional (e.g. a doctor) or an organization (e.g. a hospital or clinic) that provides a health care service.

Also known as a Health Maintenance Organization, HMOs are a type of insurance plan. In HMOs, members pay a monthly premium for access to a specified group of health care professionals. Members are limited to these professionals for health care services, except in certain emergencies. A member must also consult his or her primary physician within the HMO to obtain authorization for a specialized medical service. Certain specialized services such as mammograms do not require a physician referral.

A doctor, pharmacy, or medical service provider that has entered into an agreement with a health plan and provides products and services according to that plan's policies.

Medications that are obtained through mail as opposed to in-person at a pharmacy.

A joint state/federal program that assists low-income individuals and families with medical costs.

Non-medication health care items, such as bandages, that are covered by the Medicare program.

A federal health insurance program for people 65 years old or older and individuals younger than 65 with certain qualifying disabilities or illnesses.

A Medicare program that offers health plans through private insurance companies contracted by Medicare. These plans may be available with or without prescription drug coverage, and must offer at least the same benefits as Original Medicare (Part A and Part B), with the exception of hospice care.

A collection of programs that help cover the out-of-pocket Medicare expenses for eligible beneficiaries. To qualify, beneficiaries must be eligible for or be enrolled in Medicare Part A and have income and resource levels that fall below a certain limit.

Also known as Medigap and Medicare Supplement plans, Medicare Supplemental Insurance covers various out-of-pocket costs not covered by the insurance coverage of Medicare Part A and Part B. 47 states have 10 standardized Medigap plans while Massachusetts, Minnesota, and Wisconsin have unique plans in their states.

Private insurance policies that cover gaps in Medicare's coverage of medical expenses. Also known as Medicare Supplement plans or Medicare Supplemental Insurance.

The monthly cost that a beneficiary must pay to be covered by an insurance plan.

This label is displayed on plans when the total annual cost spent on premiums and expenditures under the plan (at plan preferred pharmacies) for medications entered by the user is projected to be a larger sum than would be the case for the user's existing drug coverage.

A group of health care professionals (e.g. doctors) and facilities (e.g. hospitals and pharmacies) that are contracted to provide health care to a specific insurance plan's members.

A health care professional or facility that is not contracted to provide health care services to members of a specific insurance plan.

Medical expenses paid directly by the individual as opposed to a health insurance plan. Examples of out-of-pocket expenses include premiums, deductibles, and co-payments.

The name for the Medicare program that provides hospitalization insurance.

The name for the Medicare program that provides medical insurance.

The name for the Medicare program that provides prescription drug coverage.

The name of the insurance company's plan as well as its identification code.

A payment, often monthly, to an insurance plan that enables the individual to receive insurance coverage.

A type of private insurance plan that provides prescription drug coverage (Part D) to enrolled Medicare beneficiaries.

A health plan restriction where an on-formulary medication must be approved by the plan before the prescription may be filled. If prior authorization is not obtained, the beneficiary may be responsible for the full cost of the medication.

A health plan restriction where the quantity of a prescription medication must remain below the maximum quantity allowed by the plan over a certain period of time.

Savings are calculated given the user's input regarding prescription medications and the user's input regarding existing Medicare Part D or Part C (Medicare Advantage) plan. The baseline expenditure from which savings are calculated is based on the annual monthly premiums paid for the user's existing Part D/Part C coverage along with the associated annual cost-sharing for the medications entered by the user purchased at a preferred pharmacy. This cost sharing includes deductibles, co-payments, and co-insurance payment information calculated from the monthly purchase of the entered medications in the same form, dosage, and quantity. Prescription drugs not covered by an insurance plan's formulary are assigned an estimated retail drug price. If no medications were entered by the user, then only the annual cost of the existing Part D/Part C plan's monthly premium was used for the baseline expenditure. End users who did not enter existing prescription drug coverage were assumed to pay retail prices for the drugs that they entered based on estimated average retail prices. An analogous calculation to the baseline expenditure is performed for the displayed plan containing the savings value. The savings amount was derived from subtracting the annual cost estimate for the displayed plan from the baseline expenditure described above. No savings were calculated when the user did not select an existing Part D/Part C plan and also did not enter any medications.

A Special Needs Plan (SNP) is a Medicare Advantage plan that provides targeted care for individuals with "special needs" that fall into one of the following categories: individuals with severe or disabling chronic conditions, individuals living in certain institutions such as nursing homes, and individuals who are enrolled in both Medicare and Medicaid.

Also known as SHIP, the State Health Insurance Assistance Program is administered by the state and provides free health insurance counseling to Medicare beneficiaries.

A health plan restriction similar to prior authorization, in which beneficiaries must try a less expensive drug and prove it to be ineffective before the plan will cover a more expensive drug.

The Centers for Medicare & Medicaid Services (CMS) monitors Medicare Advantage plans and Prescription Drug Plans for a variety of attributes including customer service. Plans that received the highest rating for this measure scored 90% or higher on giving members the information or help they needed, treating members with courtesy and respect, and providing forms that were easy to fill out.

The Centers for Medicare & Medicaid Services (CMS) monitors Medicare Advantage for a variety of attributes including improving/maintaining the physical health of members. Plans that received the top rating for this measure had at least 68% of members whose physical health was the same, or better than expected, after two years.

This is one of the many submeasures within the government's star rating system. It is used to assess the overall view the members have about their Medicare Advantage health plan. Members were asked, "Using any number from 0 to 10, where 0 is the worst health plan possible and 10 is the best health plan possible, what number would you use to rate your health plan?" Top rated plans received scores of 88% or higher.

A collection of Department of Defense health care programs serving active and retired military personnel as well as their family members.

Money you receive from sources other than employment such as Social Security checks, veteran's benefits, pensions, interest and dividends from investments, or income from rental property.

Abbreviation for the U.S. Department of Veterans Affairs.



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Medicare Advantage Plans, sometimes called "Part C" or "MA Plans," are offered by private companies approved by Medicare and provide Medicare Part A and Part B coverage. Medicare prescription drug coverage is insurance run by an insurance company or other private company approved by Medicare. A Medicare Supplement plan is a health insurance plan provided by a private company that fills in the "gaps" in original Medicare coverage.

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