“Deductible”...“copay”...”coinsurance”...”prior authorization”...you’ve heard these words before, but do you understand what they mean? Today, we will walk you through common insurance “lingo” we use when discussing Medicare insurance. There are so many terms we could mention, so this post will focus on the main items you’ll see on a regular basis. Keep reading or click the video for a complete understanding of the most commonly used insurance terms.
PARTS OF MEDICARE
Coverage from Medicare
Part A (hospital) -- Covers inpatient care in a hospital, skilled nursing facility care, and hospice care.
Part B (medical) -- Covers medically necessary services and preventive services in an outpatient setting (i.e. doctor visits, medical treatments, lab tests, outpatient surgery, ambulance services).
Coverage from Insurance Companies
Part D (drug) -- An insurance plan that covers medications on a formulary list of drugs prescribed by a doctor.
Medicare Supplement (Medigap) -- An insurance plan that helps pay some of the health care costs allowed by Original Medicare, but not fully paid by Original Medicare. Medigap works in conjunction with Original Medicare and wherever Original Medicare is accepted.
Part C (Medicare Advantage) -- An insurance plan that can include Parts A, B, and D combined into one plan (like a PPO or HMO).
See a visual description on our Parts of Medicare page
MEDICAL COVERAGE
Premium -- The periodic payment made to Medicare or an insurance company to be covered by a medical insurance or prescription drug plan.
Deductible -- The amount you must pay for medical care before Original Medicare or your other insurance begins to pay.
Coinsurance -- The amount you may be required to pay for medical care after you pay your deductible (usually a percentage of the cost).
Copay -- The amount you may be required to pay as your portion of the medical care you receive (usually a set dollar amount).
Referral -- The transfer of care for a patient from one medical provider to another (some Medicare Advantage plans require referrals to see specialists). Original Medicare does not require referrals.
Medicare-Approved Services -- The list of medical services Medicare will pay a certain portion of when deemed medically necessary.
Medicare Approved Amount -- The amount a medical provider or supplier can be paid when they accept Medicare Assignment.
Medicare Assignment -- An agreement between your medical provider or supplier with Medicare to be paid directly by Medicare. Your medical provider or supplier must accept the Medicare-approved amount and Medicare must not bill beyond the approved amount.
Excess Charges -- The excess amount a medical provider can potentially charge beyond the Medicare-approved amount. This can happen only when a provider does not have a Medicare Assignment contract.
Prior Authorization (medical) -- The process by which an insurance company verifies whether a particular medical service is medically necessary and appropriate for a policyholder.
PRESCRIPTION DRUG COVERAGE (PART D)
Formulary -- The approved list of medications allowed by a Part D plan.
Quantity Limit -- A restriction on the amount or quantity of a medication that can be purchased during a specific period of time (i.e. no more than 60 pills every 30 days).
Prior Authorization (prescription) -- The process by which an insurance company verifies whether a particular medication is medically necessary and appropriate for a policyholder.
Step Therapy -- A requirement that a policyholder must try certain formulary medications first before possibly being approved to use another medication.
These are just some of the terms you will see floating around when researching Medicare insurance plans online or reviewing information from insurance companies. If you get in the Medicare mindset with these words and phrases, you will better understand how the insurance plans handle things like referrals, prior authorization, deductibles, and more. While you might get the insurance “lingo” down, be sure to utilize Medicare Mindset as your resource for all things Medicare. Contact us HERE.
Reference Links
Neither Medicare Mindset LLC nor its agents are connected with the Federal Medicare program.
