Making Sense of Common Medicare Terms

By Inter Valley Health Plan

As you sort through Medicare information, it can feel like you are learning a whole new language. Coverage gap. Copay. Out-of-pocket. What does it all mean? And how will it affect what you pay and what you are covered for?

You are not alone; most people find Medicare confusing. And with open enrollment approaching October 15, now is the time to do your homework. Let us clear up a little of the fog by defining a few of the most common Medicare terms.

Premiums 

You can consider this to mean ‘payments’ which you are expected to make to your health plan. Many plans differ in their premiums and many increase each year. It best to calculate what your premium will be in advance of your coverage start date, and you can always lean on experts, such as Medicare Specialists to help.

Out-of-Pocket Expenses

Out-of-pocket is money that YOU pay for health care service and prescription drug costs because they are not covered by your health plan. These costs can pop up suddenly, for a new prescription for example, so you will want to plan ahead so there are no surprises.

Coverage Gap

Once you have exceeded the annual limit of your plan’s prescription drug coverage, you will move to the next stage of cost coverage.  This next stage, called the “coverage gap,” or “donut hole,” requires that you pay full price for your medication.  If the total cost of your expenditure of medications reaches the next stage, known as “catastrophic coverage,” the cost of your drugs will be covered again.

Copay

A copay is your share of cost you pay when you visit the doctor or purchase covered medications.  Copays vary depending on your plan coverage and the services you receive. Think about how often you go to the doctor for a check up or see a specialist and pick up prescriptions each month. Make sure those copay costs are in line with what fits in your budget.

Formulary

This is a complete list of medications covered by the health plan. This is important because the medication you need may not be on the plan-approved list (otherwise known as ‘non-formulary’ drugs). Non-formulary drug means you will pay full price for a medication.  And those can be very pricey.

Network

This refers to a group of healthcare providers, including pharmacies, who are contracted with a health plan. If you have long-standing relationships with your doctors, you definitely want to look into this before deciding or switching your health plan. Check to see if your doctor is a member of the health plan’s network.  This network may also change at any time, so be sure to stay in communication with your health plan if already enrolled. Health care providers that belong to your plan’s network will be stated as an ‘in-network provider.’

Annual Enrollment Period

Medicare’s annual enrollment period, from October 15th through December 7th, is a set time when you get to choose which healthcare plan you sign up with for your Medicare Advantage coverage. This happens every year and you can sign up or if you are already enrolled on Medicare you can switch plans during this time.

At the end of the day, you just want to understand Medicare basics to ensure all of your health needs are covered and fits in your budget.

Talking to an expert is always best, especially before signing the dotted line as a new or continuing member to Medicare. Inter Valley Health Plan offers the ability to speak one-on-one with a Medicare Specialist and they work specifically with people to help answer questions on all things Medicare. Call 800-251-8191 (TTY 711) 7 days a week, Monday – Friday, for more information.

Inter Valley Health Plan offers  regular online classes that walk you step-by- step through the mysteries of Medicare. They also provide a full glossary of Medicare terms from A-Z here.

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