Glossary and Acronyms

Learn about common terms and acronyms frequently used in Medicare and insurance policies.

Glossary of Acronyms and Terms

The insurance world is full of acronyms and the alphabet soup can be confusing. Below are many of the acronyms you will encounter, in alphabetical order:

ACA: Affordable Care Act. This law provides set benefits and no pre-existing condition exclusions for those needing to purchase non-Medicare Health Insurance.
ADL: Activity of Daily Living. These are the things you do every day. Transferring (getting in and out of bed/chair, toileting, bathing, dressing, feeding yourself and continence (the ability to control your bowels/urine).
AEP: Annual Enrollment Period. October 15th to December 7th. This is the only time you can change your Part D drug plan or enroll into a Medicare Advantage plan. The plan effective date is January 1st.
ANOC: Annual Notice Of Changes. This is information sent to you from your current Part D or Part C plan every year in September. You are to receive that by Sept 30th, so if you don't get one by that date, call your company. The ANOC states any changes to the benefits for the next year, including premium! It is important to read it to avoid being stuck in a plan that doesn't suit you. Plans can change every year.
CMS: Center for Medicare Services. This is Medicare's official government name.
EFT: Electronic Funds Transfer. Another name for an automatic bank draft. For paying insurance premiums. Also known as ACH, Automatic Clearing House. The company will automatically deduct the monthly premiums from your checking or savings account.
EOB: Explanation of Benefits. You receive an EOB for each claim that is generated, or a monthly summary for drug plans showing what all you have filled last month. It shows the total charge, how much insurance paid and how much you might be billed for. The EOB is not a bill. Most of the time, the "Amount You May Be Billed" is then sent to your secondary insurance (Supplement/Medigap) for full or partial payment. After you get the EOB, then the bill from the doctor/hospital will arrive with all insurance adjustments made. Do not panic until you get an actual bill from the doctor.
FPL: Federal Poverty Level. This is determined each year and sets the baseline for income for Medicaid and Extra Help qualification.
HMO: Health Maintenance Organization. This is a type of network where you can only see doctors that are in-network. If you go out-of-network, you have no coverage unless it is a life-threatening emergency.
IEP: Initial Enrollment Period. This refers to the 7 months surrounding your 65th birthday when you can sign for Medicare Part A & B. It is the 3 months before your birth month, your birth month and 3 months after your birth month. Part A & B will start the first of your birth month (unless you are born on the 1st, then it begins the month before). If you sign up in your birth month or the 3 months after, Your Part A will backdate to the first of your birth month and your Part B will be effective the 1st of the next month.
IRA: Inflation Reduction Act. Law that made some significant changes to Medicare drug coverage. It reduced the catastrophic level to $2,000 and introduced the Medicare Prescription Payment Program (M3P) among other things.
LIS: Low Income Subsidy. Also known as Extra Help, this is financial help for those with limited income/assets and reduces the cost of prescriptions. The income and asset limit is higher than for Medicaid. You apply for this through Social Security.
LTC: Long-term Care. Long-term care refers to needing help with your activities of daily living that is expected to last longer than 90 days or if you have a cognitive impairment.
MA-OEP: Medicare Advantage Open Enrollment Period. January 1st to March 31st. During this period, if you have Part C, you can make one change to another Part C, or go back to Original Medicare and enroll in a Part D drug plan. The effective date is the 1st of the next month.
MAPD: Medicare Advantage-Prescription Drug also known as Part C. Alternative to Original Medicare where you get your Medicare coverage completely from private insurance. There are also MA-Only plans that do not include drug coverage. Typically, these work if you have Veterans Administration (VA) coverage. The plans are network-based and are HMOs or PPOs.
MOOP: Maximum Out of Pocket. If you have health insurance or Medicare Advantage plan, this is the most you will pay in copays or co-insurance during the plan year. Once you have paid the MOOP, you will have no more charges for the rest of the plan year.
M3P: Medicare Prescription Payment Plan. Also called "smoothing". This is an opt-in program where you can spread the costs of your medication over the remaining months of the year. You pay nothing at the pharmacy and your drug plan bills you monthly for the cost of the medication.
MSP: Medicare Savings Program. This is the state program for people with Medicare AND Medicaid. You must apply through your state Medicaid office. If you are already on Medicaid when you get Medicare, you must reapply for Medicaid via the MSP.
PA: Prior Authorization. This is a limiting mechanism for drug coverage and means a drug needs approval by your insurance company before they will allow you to take it. The doctor will need to call your plan for approval and request authorization before the plan will cover the drug. The doctor must show the plan that the drug is medically necessary for it to be covered. This approval is not guaranteed as you must meet the requirements set by the insurance company. A PA for a medical service refers to the requirement of the plan to approve a treatment/test/surgery before they will pay for it. Any service that requires a PA and does not get one prior to treatment may not be covered.
PCP: Primary Care Physician. Sometimes known as your family doctor.
PDP: Prescription Drug Plan. Also known as Part D. Used with Original Medicare to get prescription drug coverage.
PPO: Preferred Provider Organization. This is an open type of network where you also have coverage for doctors that are out-of-network, but you pay higher costs.
QI1: Qualifying Individual. This is the designation for partial Dual-Eligible Medicare-Medicaid. This level of Medicaid only pays your Part B premium. Your income and assets are between 120-135% of FPL. You apply with your state Medicaid office.
QL: Quantity Limit. A limiting mechanism for drug coverage where the company can limit how many pills they will cover per month. The doctor will need to call your plan for approval if you need more. This approval is not guaranteed.
QMB: Qualified Medicare Beneficiary. This is the designation for full Dual-Eligible Medicare-Medicaid; those with limited income and assets that receive the highest level of Medicaid and will pay the Part B premium and all your Medicare deductibles and co-insurance. Your income and assets are 100% or less of the FPL. You apply with your state Medicaid office.
RFI: Request For Information. When you apply for an insurance plan, the carrier may need more information to process your application. You may get an RFI letter telling you what they need and where to send it. You must reply to RFIs or your applications will be voided.
SSA: Social Security Administration. In relation to insurance, this is where you sign up for Medicare Part A & B. They collect the Part B premiums on behalf of Medicare.
SEP: Special Enrollment Period. Outside of AEP and MA-OEP, you can change your plan if you have an event like moving out of your service area, loss of other credible coverage, or if you have any level of Extra Help/Medicaid. You have a limited amount of time to pick a plan. The effective date is typically the 1st of the next month.
SLMB: Specified Low-income Medicare Beneficiary. This is the designation for partial Dual-Eligible Medicare-Medicaid. This level of Medicaid only pays your Part B premium. Your income and assets are between 100-120% of FPL. You apply with your state Medicaid office.
SNC: Skilled Nursing Care. Medical duties that can be performed only by a licensed, registered nurse like wound-dressing/changing, IV/catheters/tubes. It can also mean you need 24-hour skilled nursing assistance like being in a skilled nursing facility for rehab.
SNF: Skilled Nursing Facility. This is a nursing home or rehab facility where you reside while you are getting better. If you need long-term care, it means you need 24-hour skilled nursing care.
SOA: Scope of Appointment. This is the form that you must sign every time you want us to review your drug plan or Advantage plan. It is required by the government prior to all conversations about benefits of plans other than the one you have. It does not oblige you to do anything, but we must have one signed to talk about benefits.
SOB: Summary of Benefits. These are standardized documents that detail what your out-of-pocket costs/coverage will be for various types of medical services. It tells you what you pay and what other benefits you might have (like dental, vision, OTC, etc.) for your plan. It is important for you to pay attention to changes in during renewal periods. It also holds helpful phone numbers and access points to help you use your plan.
ST: Step Therapy. A limiting mechanism for drug coverage where you will need to have tried one or more lower-cost drugs before the costlier drugs are covered. The doctor will need to call your plan for approval. The doctor will detail what other medications you have taken and why they are not effective for you. This approval is not guaranteed.
VA: Veterans Administration. Federal insurance if you served in the military. Thank you for your service.

Insurance Industry Terms Explained

There are many terms in the insurance industry that can be confusing. We will define those here. They are important to understand.

Copay: A fixed dollar amount. When you go to the pharmacy counter and pay a flat $5 for a medicine, that is your copay. When you go to the specialist and pay $35 at the desk, or by way of a bill later, that is your copay. A copay allows you to have an expectation you can budget around.
Co-insurance: Co-insurance is a percentage of the total amount. Like a copay, but not a fixed, knowable amount. Your benefits may have co-insurance instead of a copay, so you may pay 20% co-insurance instead of a flat $20, making it harder to know exactly what you will pay.
Deductible: The amount you have to pay out of your pocket before your insurance will begin to pay. This is either the full cost of a prescription, or the full negotiated rate for an office visit/test/etc. Some plans waive the deductible for certain things like generic medicines or a Primary Care visit.
Formulary: The list of medications a company will cover on their drug coverage. For Part D, companies must cover a certain number of medications in each drug category, but are not required to cover all medications in a category. They can limit the number of brand drugs they cover if they have generic alternatives.
Network: networks are lists of doctors/hospitals that contract with an insurance company and specific plan. It means that both the insurance and the doctor agree on terms and will work together for you, the patient. Your plan may have a network that you must use; if you go to doctors out-of-network, you won't have coverage or your costs will be higher, depending on your plan's benefits.
Tier: Tiers are how an insurance company ranks a prescription drug on their formulary. This determines your out-of-pocket cost. Generally, there are 5 tiers. Tier 1 = preferred generic, Tier 2 = non-preferred generic, Tier 3 = preferred brand, Tier 4 = non-preferred brand, and Tier 5 =specialty. The higher the tier, typically the higher the copay. A company can tier a medicine however they want and this can vary by company and plan.

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