Disclaimer (read first): This article is educational, not medical, legal, insurance, or financial advice. Talk with your doctor, pharmacist, State Health Insurance Assistance Program (SHIP), Social Security, your state Medicaid office, or a licensed advisor about your situation.

Health insurance language shouldn’t get in the way of your care. This senior-friendly glossary explains Medicare, Medicaid, drug coverage, privacy, bills, notices, and veterans’ benefits in plain English—so you can make confident choices, avoid surprise costs, and know exactly what to ask next.

Medicare basics (Parts, Medigap, Advantage)

Medicare Part A (Hospital Insurance). Helps cover inpatient hospital stays, skilled nursing facility (SNF) care, hospice, and some home health. Coverage is tied to “benefit periods.” (See SNF section for 3-day rule nuances.) Medicare

Medicare Part B (Medical Insurance). Covers doctor visits, outpatient care, preventive services, lab work, durable medical equipment (DME), and more. Each year CMS sets the standard Part B premium and deductible (for 2025 the standard premium is $185; deductible $257). Source: CMS, last checked: September 14, 2025. CMS

Medicare Part C (Medicare Advantage). Private plans that bundle Part A and B (and usually Part D). You can’t have Medigap and Medicare Advantage at the same time. Many MA plans use HMO or PPO networks and require prior authorization for certain services. Medicare

Medicare Part D (Prescription Drugs). Optional coverage for outpatient prescriptions, available as a stand-alone plan (with Original Medicare) or embedded in many MA plans. Plans must cover a broad range of drugs; each plan has a formulary (drug list). Medicare+1

Medigap (Medicare Supplement Insurance). Private policies that help pay Part A/B out-of-pocket costs (like coinsurance). Works only with Original Medicare, not Medicare Advantage. Medicare

Bottom line: Medicare has four parts, two main paths (Original + optional Medigap + optional Part D or Medicare Advantage), and different rules for networks and authorizations. Medicare

Costs 101 (speak the language of your bill)

Premium. What you pay monthly to keep coverage active. (Example: the CMS-set Part B standard premium.) CMS

Deductible. What you pay first each year before your plan pays for covered services. CMS

Copayment (copay). A fixed amount (like $20) you pay for a service or drug. CMS

Coinsurance. A percentage of the bill you pay (for example, 20% of the approved amount). CMS

Out-of-pocket (OOP) maximum. The most you’ll pay in a plan year before the plan pays 100% of covered costs (Original Medicare has no OOP max; many MA plans do). For Marketplace plans, federal caps apply and are set annually. Source: HealthCare.gov, last checked: September 14, 2025. HealthCare.gov

Allowed/approved amount. What a plan considers reasonable for a service; your share is based on this, not the provider’s “list price.” CMS

Bottom line: Know which costs are fixed (premiums, copays) and which vary with use (deductibles, coinsurance). That’s the fastest way to predict—and reduce—medical bills. CMS

Drug coverage terms (Part D & plan rules)

Formulary (drug list). The plan’s list of covered drugs, organized in tiers (generics to specialty). Drugs may change during the year with required notices. Always check your plan’s current formulary. Medicare

Prior authorization. Approval required before the plan will cover a drug or service. CMS uses prior authorization programs to ensure proper use in specific cases. CMS

Step therapy. You must try a lower-cost or clinically preferred drug first; if it doesn’t work, you can “step up.” (See your plan’s rules.) Medicare

Quantity limits. Caps on how much medication is covered within a time frame. Medicare

Bottom line: For any new prescription, ask: “Is it on my formulary, do I need prior auth, and is there step therapy?” That one question can prevent surprise pharmacy bills. Medicare

Enrollment windows & penalties (mini-definitions)

IEP (Initial Enrollment Period). A 7-month window around your 65th birthday to enroll in Parts A and/or B. CMS

GEP (General Enrollment Period). If you missed IEP and don’t qualify for SEP, you can sign up Jan 1–Mar 31; coverage starts the month after you enroll and late penalties may apply. Medicare

SEP (Special Enrollment Period). Life events (moving, losing employer coverage, gaining Extra Help/Medicaid) may let you join/switch MA or Part D plans outside standard windows. Medicare

Medicare Advantage OEP. If you’re already in an MA plan, you can switch MA plans or go back to Original Medicare Jan 1–Mar 31. Medicare

Creditable coverage (Part D). Other drug coverage (e.g., from an employer, VA, TRICARE) that’s at least as good as Medicare’s; having it helps you avoid Part D late penalties. Medicare

IRMAA (Income-Related Monthly Adjustment Amount). An extra amount higher-income beneficiaries pay in addition to Part B and/or Part D premiums; you can appeal after certain life-changing events (use SSA-44). Social Security Administration+1

Bottom line: Put your birthday and Jan–Mar on your calendar, and keep proof of creditable coverage—that’s how you sidestep penalties and delays. Medicare

Key documents & notices (know these when mail arrives)

EOB (Explanation of Benefits). A summary, not a bill, showing what was charged, what the plan allowed, what it paid, and what you may owe. CMS

EOC (Evidence of Coverage). Your plan’s contract-level booklet detailing costs, benefits, and rules for the upcoming year—usually mailed in the fall. Medicare

ABN (Advance Beneficiary Notice of Noncoverage). A notice Original Medicare patients may be asked to sign before a service that Medicare is likely to deny; it shifts financial liability to you if you choose to proceed. CMS

Bottom line: Open and read EOBs/EOCs, and pause at ABNs—ask the provider why Medicare may deny and about alternatives. CMS+2Medicare+2

Care settings & equipment (where status matters)

Inpatient vs. observation (outpatient). If the hospital admits you as inpatient (generally when your doctor expects ≥2 midnights), Part A rules apply. Observation stays are outpatient under Part B—even if you stay overnight. This can affect SNF eligibility. Medicare

SNF (Skilled Nursing Facility) 3-day rule. Original Medicare generally requires a 3-consecutive-day inpatient hospital stay for SNF coverage; some waivers (e.g., in certain ACOs) and some MA plans may not require it—ask your plan. CMS+1

DME (Durable Medical Equipment). Equipment that’s durable, used for a medical reason, in your home, and expected to last ≥3 years (e.g., walkers, oxygen equipment). Covered under Part B when medically necessary and prescribed. Medicare

Bottom line: Always ask the hospital “Am I inpatient or observation?” and, before rehab, verify you meet SNF requirements—or know your MA plan’s waiver rules. Medicare+1

Programs that can save you money

Extra Help (LIS). Helps people with limited income/resources pay Part D premiums, deductibles, and copays; it also waives the Part D late-enrollment penalty while you get Extra Help. Apply via SSA. Medicare+1

Medicare Savings Programs (MSPs: QMB, SLMB, QI). State Medicaid programs that may pay your Part B premium and sometimes your deductibles and coinsurance depending on the MSP. Apply through your state Medicaid office. Medicare
Tip: CMS updates income/resource thresholds annually—check a current CMS fact sheet. Source: CMS, last checked: September 14, 2025. CMS

Medicaid spend-down (Medically Needy). In participating states, people whose income is above Medicaid limits can “spend down” with medical expenses to qualify. Rules vary by state. Medicaid

PACE (Program of All-Inclusive Care for the Elderly). Team-based, community-anchored care for certain frail seniors (often dual-eligible); designed to help you avoid nursing home placement. Medicare

SHIP (State Health Insurance Assistance Program). Free, unbiased Medicare counseling—plan comparisons, billing help, Extra Help/MSP applications, appeals. ACL Administration for Community Living+1

Bottom line: If the math is tight, check Extra Help, an MSP, and ask SHIP to help you apply—they can unlock thousands in annual savings. Medicare+1

Privacy, rights & end-of-life planning

HIPAA/PHI. HIPAA’s Privacy Rule protects your protected health information (PHI) held by covered entities and their business associates. You have rights to access and request corrections. HHS.gov

Advance directive. Umbrella term for legal documents stating your care preferences if you can’t speak for yourself (e.g., living will and durable power of attorney for health care). National Institute on Aging+1

DNR (Do Not Resuscitate). A medical order stating no CPR if your heart/breathing stop. It’s not the same as an advance directive (which is a legal document). Cancer.gov

POLST. Portable medical orders for people with serious illness/frailty that specify treatments (CPR, ventilation, feeding tubes) and travel across settings; name varies by state (MOLST/POST/MOST). POLST

Bottom line: Consider completing both an advance directive (legal) and, if appropriate, a POLST (medical orders). Share copies with your proxy and doctors. National Institute on Aging+1

eterans & military-connected programs (quick hits)

TRICARE For Life (TFL). Medicare wraparound coverage for TRICARE-eligible beneficiaries with Part A & B; TFL generally pays after Medicare. Tricare

CHAMPVA. Coverage for certain spouses/dependents of Veterans who are permanently and totally disabled or deceased due to service-connected conditions. Some Medicare coordination rules apply. Veterans Affairs

VA health care. Separate system with its own eligibility, copays, and long-term care programs; some care can occur in the community. Veterans Affairs

Bottom line: If you or a family member served, check TFL/CHAMPVA/VA—coordination with Medicare can reduce costs. Tricare+2Veterans Affairs+2

Comparison table: Common plan/network types

Plan type	Do I pick doctors from a network?	Specialist referrals?	Out-of-network coverage?	Typical trade-off
HMO	Yes	Usually required	Emergencies only	Lower costs, less choice
PPO	Yes	Usually not	Often, at higher cost	More choice, higher premiums
EPO	Yes	Usually no	Generally no, emergencies excepted	Mid-range costs, limited OON
Original Medicare + Medigap	Any provider who accepts Medicare	No	Not applicable (national acceptance)	Broad access; separate drug plan (Part D)

Definitions & network rules: HealthCare.gov; Medicare advantage plans may be HMOs or PPOs. Source: HealthCare.gov & Medicare.gov, last checked: September 14, 2025. HealthCare.gov+1

Checklist: Decode any medical bill/EOB in 60 seconds

1. Is it a bill or an EOB? (EOB = not a bill.) CMS
2. Service date & provider match your visit? If not, call the number on the document.
3. CPT/HCPCS codes: If unfamiliar, ask the provider to explain what was billed and why.
4. Allowed amount vs. charge: Your share is based on the allowed amount. CMS
5. Copay/coinsurance/deductible applied correctly? Compare against your plan’s EOC. Medicare
6. Prior authorization was required? If denied, ask about appeal steps and alternatives. CMS
7. ABN signed? If you signed an ABN, you may be responsible—ask whether a covered alternative exists. CMS
8. Still unsure? Call your SHIP counselor for free help. Medicare

Bottom line: Separate explanations (EOB/EOC) from actual bills, verify codes and authorizations, and loop in SHIP early for appeals or errors. CMS+2Medicare+2

Quick A–Z glossary (select essentials)

• ABN: Notice you may be asked to sign before a service likely not covered—signals you might pay if you proceed. CMS
• Advance directive: Legal docs (living will, DPOA for health care) sharing your wishes if you can’t speak for yourself. National Institute on Aging
• Coinsurance/Copay/Deductible: See Costs 101 above. CMS
• Creditable coverage (Part D): Other drug coverage at least as good as Medicare’s; keeps you from late penalties. Medicare
• DME: Durable medical equipment used in your home, expected to last ≥3 years (e.g., walker). Medicare
• DNR: Medical order instructing clinicians not to perform CPR. Cancer.gov
• EOB/EOC: Explanation of a processed claim (not a bill)/Evidence of plan coverage terms. CMS+1
• Extra Help (LIS): Helps pay Part D costs; apply via SSA. Social Security
• GEP/IEP/SEP/OEP: Enrollment windows—see Enrollment section. Medicare+3Medicare+3CMS+3
• HIPAA/PHI: Privacy rules that protect your health information. HHS.gov
• IRMAA: Income-based surcharge added to Part B/D premiums; appeals via SSA-44 after life changes. Social Security
• Medicaid (seniors & duals): Safety-net coverage; in some states you can spend down to qualify. Medicaid+1
• Medicare Advantage (Part C): Private plan alternative to Original Medicare; network and prior-auth rules apply. Medicare
• Medigap: Supplement that helps pay A/B cost-sharing (not usable with MA). Medicare
• MSPs (QMB/SLMB/QI): State programs that can pay Part B premium and more. Medicare
• PACE: All-inclusive team-based care to help frail seniors remain at home. Medicare
• POLST: Portable medical orders for seriously ill/frail people, complementing advance directives. POLST
• SNF 3-day rule: Usually need a 3-day inpatient stay for SNF coverage (with some waivers and MA differences). CMS+1
• TRICARE For Life / CHAMPVA / VA care: Military-connected benefits that coordinate with Medicare. Tricare+2Veterans Affairs+2

This glossary is your quick-reference translator. Bookmark it, share it with family, and bring it to appointments. When in doubt, call SHIP and keep your EOC/EOB handy. Medicare

Sensitive facts sources (sample)

• 2025 Part B premium/deductible: Source: CMS, last checked: September 14, 2025. CMS
• OOP limit caps (Marketplace, context): Source: HealthCare.gov, last checked: September 14, 2025. HealthCare.gov

5 takeaways & next steps

Takeaways

1. Learn the cost words (deductible, copay, coinsurance) to predict bills. CMS
2. Always verify inpatient vs observation—it impacts SNF and costs. Medicare
3. Check your formulary/prior auth before filling new prescriptions. Medicare
4. If money’s tight, apply for Extra Help and an MSP; ask SHIP for help. Medicare+2Medicare+2
5. Put your enrollment windows on the calendar to avoid penalties. Medicare

Next steps

• Gather your EOC, recent EOBs, and prescription list.
• Call SHIP (free) to review your coverage and savings opportunities. Medicare
• Complete your advance directive and, if appropriate, discuss a POLST with your clinician. National Institute on Aging+1

FAQ Section

What’s the difference between a copay and coinsurance?
A copay is a fixed dollar amount; coinsurance is a percentage of the allowed charge. CMS

Can I have Medigap and Medicare Advantage at the same time?
No. Medigap only works with Original Medicare; MA plans replace Original Medicare’s structure. Medicare

What is a Medicare formulary and why does it matter?
It’s your plan’s drug list and determines which drugs are covered, their tier, and any rules like prior auth or step therapy. Medicare

What is IRMAA and can I appeal it?
IRMAA is an income-based surcharge on Part B/D premiums. You can appeal after certain life-changing events using SSA-44. Social Security

What’s an ABN and do I have to sign it?
An ABN warns Original Medicare may not pay for a service; by signing, you may accept financial responsibility. Ask about alternatives before proceeding. CMS

Do I still need 3 inpatient days for SNF coverage?
Usually yes, but there are waivers in some programs and some MA plans don’t require it—confirm before discharge. CMS+1

Where can I get free, unbiased help choosing a Medicare plan?
Your local SHIP provides one-on-one counseling at no cost. ACL Administration for Community Living