Glossary of terms.

A

Annual Enrollment Period AEP

October 15 to December 7 each year. You can join, switch or drop a Medicare Advantage or Part D plan, and changes start January 1.

Assignment

An agreement by a doctor or supplier to accept the Medicare-approved amount as full payment for a covered service. It keeps your costs down because they can’t bill you more than your deductible and coinsurance.

B

Benefit period

How Part A measures hospital and skilled nursing care. It starts the day you’re admitted as an inpatient and ends once you’ve gone 60 days in a row without that care. A new benefit period means a new Part A deductible.

C

Coinsurance

Your share of the cost of a covered service, shown as a percentage. For example, after the Part B deductible you usually pay 20% of the Medicare-approved amount.

Copayment Copay

A set dollar amount you pay for a covered service, such as $20 for a doctor visit or $10 for a prescription.

Creditable coverage

Health or drug coverage that’s at least as good as Medicare’s, often through a current employer. Having it lets you delay signing up for Medicare without a late penalty. Your plan sends a yearly notice saying whether its drug coverage is creditable.

D

Deductible

The amount you pay for covered care each year (or each benefit period, for Part A) before Medicare or your plan starts to pay.

Dual eligible

Someone who qualifies for both Medicare and Medicaid. Dual eligibles can often get extra help with costs and may qualify for a Dual Special Needs Plan (D-SNP).

E

Excess charge

An extra amount, up to 15% above the Medicare-approved amount, that a doctor who doesn’t accept assignment can bill you. Some Medigap plans cover it.

Extra Help Low-Income Subsidy

A Medicare program that helps people with limited income and resources pay Part D premiums, deductibles and copays. You apply through Social Security.

F

Formulary Drug list

The list of prescription drugs a Part D or Medicare Advantage plan covers, usually grouped into tiers that set what you pay. Formularies differ from plan to plan, so check yours before you enroll.

G

General Enrollment Period GEP

January 1 to March 31 each year. If you missed your first chance to sign up for Part A or Part B, you can sign up now, and coverage starts the month after you enroll. Late penalties may apply.

Guaranteed issue rights

Situations where a Medigap insurer must sell you a policy and can’t charge more for health conditions, such as when your Medicare Advantage plan leaves your area.

I

Initial Enrollment Period IEP

Your first chance to sign up for Medicare: a 7-month window that starts 3 months before the month you turn 65 and ends 3 months after it.

IRMAA

An extra charge added to your Part B and Part D premiums when your income is above a set level. It’s based on your tax return from two years earlier. You can ask Social Security to lower it after a life-changing event like retirement.

L

Late enrollment penalty

A higher premium you may pay if you don’t sign up for Part B or Part D when you’re first eligible and don’t have creditable coverage. In most cases it lasts for as long as you have that coverage.

M

Medicaid

A joint federal and state program that helps pay medical costs for people with limited income and resources. It’s separate from Medicare, though some people qualify for both.

Medicare Advantage Part C

An all-in-one alternative to Original Medicare offered by private insurers approved by Medicare. Most plans include drug coverage and some extra benefits, and many use a provider network.

Medicare Advantage Open Enrollment Period MA OEP

January 1 to March 31 each year. If you’re in a Medicare Advantage plan, you can switch to another one or go back to Original Medicare, once.

Medicare Savings Program MSP

State programs that help people with limited income and resources pay Medicare premiums, and in some cases deductibles, coinsurance and copays.

Medigap Medicare Supplement

Insurance sold by private companies that works alongside Original Medicare to help pay costs like deductibles and coinsurance. Plans are labeled with letters, such as Plan G and Plan N, and the same letter has the same benefits from any company.

Medigap Open Enrollment Period

A one-time 6-month window that starts the month you’re 65 or older and enrolled in Part B. During it, you can buy any Medigap policy sold in your state without health questions.

N

Network

The doctors, hospitals and pharmacies a plan contracts with. HMO plans generally require you to use the network; PPO plans let you go outside it for a higher cost.

O

Observation status

When you stay in a hospital but haven’t been formally admitted as an inpatient. You’re treated as an outpatient under Part B, which can change what you pay and whether a later nursing facility stay is covered. Always ask the hospital about your status.

Original Medicare

Part A and Part B, the program run by the federal government. You can see any doctor in the U.S. who accepts Medicare, and you can add a Medigap policy and a Part D plan.

Out-of-pocket maximum MOOP

The most you’ll pay for covered services in a year in a Medicare Advantage plan. After you reach it, the plan pays 100%. Original Medicare has no yearly limit.

P

Part A Hospital insurance

Covers inpatient hospital stays, skilled nursing facility care, hospice and some home health care. Most people don’t pay a premium because they or a spouse paid Medicare taxes for at least 10 years.

Part B Medical insurance

Covers doctor visits, outpatient care, preventive services, lab work and medical equipment. Most people pay a monthly premium, usually deducted from their Social Security check.

Part D Prescription drug coverage

Drug coverage sold by private insurers, either as a stand-alone plan alongside Original Medicare or built into a Medicare Advantage plan. Part D now has a yearly cap on what you pay out of pocket for covered drugs.

Premium

The amount you pay, usually each month, to have health or drug coverage.

Prior authorization

Approval you or your doctor must get from your plan before it will cover certain services or drugs.

R

Referral

A written order from your primary care doctor to see a specialist. Many HMO plans require one.

S

Special Enrollment Period SEP

A chance to sign up for or change Medicare coverage outside the usual windows because of a life event, such as moving or losing employer coverage. For example, you have 8 months to sign up for Part B after job-based coverage ends.

Special Needs Plan SNP

A type of Medicare Advantage plan for people with certain chronic conditions, people in a nursing home, or people who have both Medicare and Medicaid.

A

Average Indexed Monthly Earnings AIME

Your average monthly earnings over your 35 highest-earning years, adjusted for wage growth. Social Security uses it to figure your Primary Insurance Amount.

C

Combined income

Your adjusted gross income, plus tax-exempt interest, plus half of your Social Security benefits. The IRS uses it to decide how much of your benefits are taxable.

Cost-of-living adjustment COLA

A yearly increase in Social Security benefits to help keep up with inflation. It’s announced each October and starts with January payments.

D

Delayed retirement credits

Increases to your benefit for waiting past your full retirement age to claim. For people born in 1943 or later, your benefit grows 8% for each year you wait, up to age 70.

Disability benefits SSDI

Monthly payments for people who can’t work because of a medical condition expected to last at least a year or result in death, and who have enough work credits. After 24 months of benefits, you get Medicare.

Divorced spouse benefits

Benefits you may get on an ex-spouse’s record if you were married at least 10 years, you’re 62 or older and you haven’t remarried. Your claim doesn’t reduce your ex-spouse’s benefit.

E

Early retirement

Claiming benefits before your full retirement age, as early as 62. Your monthly benefit is permanently reduced, by about 30% if you claim at 62 and your full retirement age is 67.

Earnings test Retirement earnings test

If you collect benefits before full retirement age and keep working, Social Security holds back part of your benefit when your earnings go over a yearly limit. The money isn’t lost: your benefit is raised at full retirement age to make up for it.

F

Full retirement age FRA

The age you can get 100% of your retirement benefit. It’s between 66 and 67 for people born from 1943 to 1959, and 67 for anyone born in 1960 or later.

H

Hold harmless provision

A rule that, for most people, stops a Part B premium increase from making their Social Security check smaller than the year before.

L

Lump-sum death payment

A one-time $255 payment to a surviving spouse or child when a worker dies.

M

Maximum family benefit

The limit on the total benefits a family can get on one worker’s record, usually between 150% and 180% of that worker’s Primary Insurance Amount.

my Social Security

Your free online account at SSA.gov. Use it to see your earnings record and benefit estimates, get a benefit letter, change direct deposit and more.

P

Primary Insurance Amount PIA

The monthly benefit you’d get if you claim at exactly your full retirement age. Claiming earlier lowers it; waiting raises it.

R

Representative payee

A person or organization Social Security appoints to receive and manage benefits for someone who can’t manage their own money.

Retroactive benefits

Benefits paid for months before you applied. If you’re past full retirement age, you can usually get up to 6 months of back payments.

S

Social Security Statement

A personal summary of your earnings history and estimated benefits at different claiming ages. You can view it anytime in your my Social Security account.

Spousal benefits

Benefits based on your husband’s or wife’s work record. You can get up to half of your spouse’s full benefit if you claim at your own full retirement age. Claiming earlier lowers it.

Supplemental Security Income SSI

Monthly payments for people who are 65 or older, blind or disabled and have very limited income and resources. It’s based on financial need, not work history, and is paid from general tax funds.

Survivor benefits

Benefits paid to a deceased worker’s family, including a widow or widower, young children and sometimes dependent parents. A surviving spouse can get up to 100% of the worker’s benefit at full retirement age, or start reduced benefits as early as 60.

Suspending benefits

Once you reach full retirement age, you can ask Social Security to stop your payments so you earn delayed retirement credits, then restart them later, up to age 70.

T

Taxation of benefits

Depending on your combined income, up to 85% of your Social Security benefits may be subject to federal income tax. You can have tax withheld from each payment with IRS form W-4V.

W

WEP and GPO

Rules that used to reduce benefits for people with pensions from jobs that didn’t pay Social Security taxes. Both were repealed by the Social Security Fairness Act for benefits payable after December 2023.

Withdrawing your application

If you change your mind within 12 months of first claiming retirement benefits, you can withdraw your application, but you must pay back everything you and your family received.

Work credits

Credits you earn by working and paying Social Security taxes, up to 4 per year. Most people need 40 credits, about 10 years of work, to qualify for retirement benefits.