When you first sign up for Medicare, it can feel like you're learning a whole new language. There are a lot of terms that describe different parts of your health coverage, and it can be confusing. If you want clear explanations for enrollment periods and the different types of Medicare coverage, below is a helpful list of common Medicare definitions and what they mean:
Annual Open Enrollment Period (OEP)
Medicare's Annual Open Enrollment Period is the period when you can enroll or change your health care plan for the upcoming year. The open enrollment period runs from Oct. 15 through Dec. 7 of every year. Coverage is effective Jan. 1 of the following year.
Benefit Period
Under Medicare Part A, which covers hospital stays and care in a nursing facility, a benefit period starts the day you go into the hospital or nursing facility. It ends when you haven’t received care for 60 days in a row. You must pay a deductible each time a new benefit period starts.
Coinsurance
Coinsurance is a percentage of the health care cost you pay after you’ve met your deductible. For example, if a doctor’s visit costs $100 and your coinsurance is 20%, you pay $20 and your insurance pays $80.
Copayment
A copayment is a fixed amount you pay for a covered service. For example, you might pay $10 for a doctor’s visit or a prescription, and your insurance pays the rest.
Creditable prescription drug coverage
Under certain circumstances, to avoid a penalty, you must show proof of having drug coverage that is as "good as" Medicare’s plan. This coverage might come from your job or your spouse’s job. Each year, you should get a letter saying your drug coverage meets Medicare’s standards. If you have this kind of coverage, you need to provide proof to Medicare. If this coverage ends—like if you stop working—you can sign up for Medicare drug coverage without paying a penalty.
Custodial care
Custodial care is the type of care that helps people with everyday tasks like bathing, getting dressed, or moving from a bed to a chair. It can be given at home, in a nursing home, or in assisted living. The care is often provided by helpers who are not licensed nurses. Original Medicare usually does not pay for this kind of care.
Deductible
A deductible is the amount you must pay first for a covered service, hospital stay, or medicine before Medicare or your insurance begins to pay its part.
Extra Help/Low-Income Subsidy
Extra Help is a Medicare program that helps pay for Part D drug costs, like monthly premiums, deductibles, and coinsurance. People with low income may qualify. If you are enrolled in Medicaid, a Medicare Savings Program (MSP), or Supplemental Security Income (SSI), you are automatically enrolled in Extra Help. If not, you can apply through the Social Security Administration.
Formulary
A formulary is the list of prescription drugs covered by your drug plan. Before you sign up for a plan—and every year after—you should check this list to make sure your medicines are included. You can get the list from the company that provides your drug plan. It’s also on the Medicare Plan Finder tool at Medicare.gov. Your plan can change the list, but they must tell you before making any changes.
General Enrollment Period
Medicare's general enrollment period is between Jan. 1 and March 31 of each year. You can sign up for Medicare Part A and/or Part B during this period if:
- You didn’t sign up when you first became eligible, and
- You don’t qualify for a Special Enrollment Period.
You will have to pay monthly costs (called premiums) for Part A and/or Part B. If you sign up during this time, your coverage will begin on July 1. You may have to pay more each month because you signed up late.
Initial Enrollment Period (IEP)
Your initial enrollment period is the time when you can first sign up for Medicare. It includes:
- The three (3) months before your 65th birthday,
- The month of your 65th birthday, and
- The three (3) months after your birthday.
So, you have seven (7) months total to sign up when you first become eligible for Medicare.
Lifetime reserve days
Medicare Part A covers 90 days of hospital care for each benefit period. A new benefit period doesn’t start until you’ve been out of the hospital for 60 days in a row. If you stay in the hospital longer than 90 days, you’ll need to use your lifetime reserve days. You get 60 of these days, and you can only use them once in your life.
Long-term care hospital
Long-term care hospitals are hospitals that offer long-term care, usually for people who are leaving intensive care or other critical care hospitals.
Medicaid
Medicaid is a program paid for by both the federal government and states that gives health insurance to low-income people and families. It covers 1 in 5 Americans and helps pay for many types of medical care.
Medically necessary
If something is considered "medically necessary" it means a doctor has required it to be done in order to diagnose or treat a condition or injury.
Medicare
Medicare is a health insurance program for people 65 and older, and some younger people with disabilities. It has four parts: A, B, C, and D, which cover different health care services and prescriptions. You need to choose how you want to get your Medicare benefits, either through Original Medicare or a private plan that works with Medicare.
Most people get Part A for free based on their work history. The other parts of Medicare cost money, and the price depends on the plan you choose and your income (people with higher incomes pay more for Part B).
Medicare Advantage Annual Open Enrollment Period
People who are enrolled in a Medicare Advantage (MA) Plan can switch to a different MA Plan or switch to Original Medicare (and join a separate Medicare drug plan) once a year, from January 1st to March 31st.
Medicare Part A
Medicare Part A covers hospital stays, care in skilled nursing facilities, nursing home care, and home health care. It also covers hospice care for people who are terminally ill and meet certain conditions. Most people get Part A without having to pay premiums based on their work history.
Medicare Part B
Medicare Part B covers services you get in a doctor’s office, like lab tests, screenings, and other preventive care services. It also covers tests, therapy, mental health services, and medical equipment like walkers and hospital beds.
Medicare Part B Premium
People enrolled in Medicare must pay a monthly premium for Part B coverage. In 2025, most people will pay $185 per month. People with an income over $106,000, or couples filing jointly with an income over $212,000, will pay more for Part B, based on how much they earn.
Medicare Part C
Also known as Medicare Advantage (MA) plans, these Medicare Part C combines services offered under Original Medicare Parts A and B, and often Part D prescription drug coverage. MA plans are available from private companies who are approved by Medicare.
Medicare Part D
Part D is Medicare's prescription drug coverage. You can choose a separate drug plan from a private insurance company or pick a Medicare Advantage plan that includes drug coverage. If you do not buy a drug plan or have good drug coverage from another source (like a spouse's job), you may have to pay a penalty if you buy a plan later.
Medicare Savings Programs (MSPs)
Medicare Savings Programs (MSPs) are special Medicaid programs that help pay for Medicare Part B premiums and other costs. Eligibility depends on your income and resources. These programs are run by state Medicaid agencies.
Medigap
Medigap plans, also called Medicare Supplements, are offered by private insurance companies. They help pay for costs that Medicare does not cover, like some costs for Parts A and B. Some plans also offer extra benefits, like coverage for travel outside the U.S.
There are different Medigap plans from A to N available in each state, and their benefits and costs depend on your coverage level and where you live. After Jan. 1, 2020, new Medicare members cannot buy Plans C and F, but if you already have one of these plans, you can keep it. Enrollment rules are different if you live in Massachusetts, Minnesota, or Wisconsin.
Medigap Guarantee Issue Period
The six-month Medigap open enrollment period starts when you first sign up for Medicare, usually when you turn 65. During this time, you can enroll in any Medigap plan available in your state, no matter your health. After this six-month period ends, you may not be able to get the Medigap plan you want, and insurance companies can consider your health when deciding whether to sell you a plan.
Medicare out-of-pocket expenses
Medicare out-of-pocket expenses are the amount of money you pay for Medicare-covered services, including monthly premiums, copayments, and deductibles.
Original Medicare
Original Medicare, also called traditional Medicare or Fee for Service Medicare, includes Medicare Parts A and B.
Part D Late Enrollment Penalty
A Part D late enrollment penalty is an extra amount added to your Medicare Part D premium if you wait to sign up after your Initial Enrollment Period ends and there's 63 days or more in a row where you don't have Medicare drug coverage, or other drug coverage that is as "good as" Medicare’s drug program.
The penalty is 1% of the national base premium cost for each month you don’t have coverage. The drug plan you choose will tell you if you owe a penalty and you can appeal if you think the penalty is wrong.
Premium
A premium is the amount you are charged each month for insurance coverage.
Preventive services
Medicare offers many preventive services for people who have Part B. These services include a free annual wellness visit, flu shots, pneumonia and hepatitis B shots, certain cancer screenings, and other prevention services.
Skilled nursing facility (SNF) care
Skilled nursing facility (SNF) care is care that must be given in a nursing home by a nurse or skilled professional, like a physical therapist. Medicare Part A covers this care in certain situations, but only after you stay in the hospital for three days. The care includes physical, occupational, and speech therapy, skilled nursing, and other services ordered by a doctor.
Supplemental Nutrition Assistance Program (SNAP)
The Supplemental Nutrition Assistance Program (SNAP), formerly called Food Stamps, is a federal program that helps people buy the food they need to stay healthy. To qualify for this help, people must meet certain income and resource limits.
Social Security Administration
You can enroll in Medicare and Medicare Part D Extra Help through the Social Security Administration. To learn more, visit the Social Security website at ssa.gov or call them at 1-800-772-1213.
Social Security Disability Insurance (SSDI)
Social Security Disability Insurance (SSDI) helps people who are disabled and have a qualifying work history, either through their own employment or a family member.
Special Enrollment Period (SEP)
A Special Enrollment Period (SEP) lets you make changes to your Medicare plan due to certain situations, even if it's not during the regular enrollment periods. Some ways you may qualify for an SEP include:
- You signed up for Medicare after the initial period because you lost employer coverage
- You moved
- You lost other coverage
- You became eligible for Medicaid
