Medicare Glossary

Coinsurance

The percentage of costs you pay for a covered health care service after you have paid your deductible. For example, under Original Medicare Part B, you pay 20% of the Medicare-approved amount for most doctor services.

Copay (Copayment)

A fixed dollar amount you pay for a covered health care service at the time of service. For example, a $20 copay for each doctor's visit. The amount can vary by the type of service and whether you are in-network.

Also known as: Copayment, Fixed cost share

Cost-sharing

The share of costs covered by your insurance that you pay out of your own pocket. This term generally includes deductibles, coinsurance, and copays — but not premiums.

Deductible

The amount you must pay out of pocket for covered health care services before your insurance begins to pay. Medicare Part A and Part B each have separate deductibles. Many Medicare Advantage plans have their own deductibles.

Extra Help

A federal program that helps people with limited income and resources pay Part D prescription drug costs, including premiums, deductibles, and copays. Also called the Low Income Subsidy (LIS).

Also known as: Low Income Subsidy, LIS

Grace Period

A set amount of time after a premium due date, typically extending into the following month or two, during which you can still pay a missed Medicare Advantage, Part D, or Medigap premium before losing coverage.

IRMAA (Income-Related Monthly Adjustment Amount)

An extra amount added to your Part B and Part D premiums if your income is above a certain threshold, based on the tax return from two years earlier. IRMAA is reassessed annually and can be appealed after certain life-changing events like retirement.

Also known as: IRMAA

Low Income Subsidy (LIS)

See Extra Help. A federal program that reduces Part D costs for people with limited income and resources, covering most premiums, deductibles, and copays.

Also known as: LIS, Extra Help

Medicare Savings Program

State programs that help people with limited income pay Medicare premiums, deductibles, copays, and coinsurance. The four types are QMB, SLMB, QI, and QDWI, each with different income and eligibility thresholds.

Also known as: MSP

Medicare-Approved Amount

The fee Medicare sets for a medical service or item. Doctors who accept Medicare assignment agree to accept this amount as full payment. You pay your share (copay or coinsurance) based on this approved amount, not the doctor's billed charge.

Also known as: Medicare fee schedule amount

Out-of-Pocket Maximum

The most you will have to pay for covered services in a plan year. After you reach this limit, your plan pays 100% of covered costs. Medicare Advantage plans must have an out-of-pocket maximum; Original Medicare does not have one.

Also known as: Out-of-pocket limit, MOOP

Premium

The amount you pay for your Medicare coverage, typically deducted monthly. Part A is premium-free for most people. Part B has a standard monthly premium (adjusted for income). Medicare Advantage and Part D plans have their own premiums in addition to Part B.

Qualified Disabled and Working Individual (QDWI)

A Medicare Savings Program that helps pay Part A premiums for certain people under 65 with disabilities who returned to work and lost premium-free Part A.

Also known as: QDWI

Qualified Medicare Beneficiary (QMB)

A Medicare Savings Program for people with the lowest incomes. If you qualify as a QMB, your state pays your Part A and Part B premiums, and providers who accept Medicare cannot charge you copays, coinsurance, or deductibles.

Also known as: QMB

Qualifying Individual (QI)

A Medicare Savings Program that helps pay Part B premiums for people with slightly higher income than SLMB allows. Funding is limited each year and applications are approved on a first-come, first-served basis.

Also known as: QI Program

Specified Low-Income Medicare Beneficiary (SLMB)

A Medicare Savings Program that helps pay Part B premiums for people with income modestly above the Qualified Medicare Beneficiary (QMB) limit.

Also known as: SLMB