AHIP Medicare Prescription Drug Plan Guide

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Glossary

Annual Election Period – The annual election period runs from November 15 to December 31 of each year. During this period, you may enroll in or disenroll from a Medicare health plan or a Medicare Prescription Drug Plan (PDP).

Brand-Name Drug – Generally refers to a prescription drug that is marketed by the company that was first to receive FDA approval to sell the drug. The FDA will allow this company to exclusively sell this drug for a number of years before allowing other companies to sell generic versions of the same drug.

Catastrophic Coverage – In 2010, this is the period after your total out-of-pocket costs for your Part D prescription drugs exceed $4,550. Medicare and your health plan together will cover about 95% of the cost of your drugs for the remainder of the year after you have reached the catastrophic coverage threshold.

Class of Drugs – Drugs that are grouped together because they are composed of similar ingredients and/or are used to treat the same medical conditions.

Coinsurance – The cost-sharing amount you pay for services after you pay any plan deductible. It is generally a percentage of the total cost of a service or prescription. For example, for individuals enrolled in Original Medicare, the coinsurance on Part B (doctor) services is generally 20%. See also copay.

Copay (Copayment) – The cost-sharing amount you pay for each medical service, such as a doctor visit or a prescription. It is usually a set amount. For example, your copay might be $10 or $20 for a doctor visit or a prescription. See also coinsurance.

Cost-Sharing – The portion of a Medicare enrollee's Medicare-related health care costs that the enrollee is responsible for paying. A Medicare enrollee's cost-sharing might be in the form of copays, coinsurance, premiums, or deductibles. These will vary from plan to plan. Persons with lower incomes may not have to pay as much cost-sharing.

Coverage Gap – In the Medicare prescription drug benefit, this is the gap between the initial coverage limit and the catastrophic coverage threshold. You may pay 100% of your drug costs in the coverage gap. In 2010 you enter the coverage gap when your total drug costs—both what you have paid and what has been paid by your Medicare drug plan on your behalf—goes above $2,830. You reach the catastrophic coverage threshold when your total out-of-pocket costs for Part D prescription drugs in 2010 exceeds $4,550, excluding what your Medicare plan has paid on your behalf. Some plans provide some coverage in the coverage gap.

Creditable Coverage – Prescription drug coverage, generally from an employer or union, that has been determined to be, on average, at least as good as the Medicare standard prescription drug coverage.

Deductible – The amount you must pay for health care or prescriptions before Original Medicare, your Medicare drug plan, or other insurance begins to pay. For example, in Original Medicare, you pay a new deductible for each benefit period for Part A, and each year for Part B. These amounts can change every year.

Excluded Drug – A drug that is not covered under the Medicare prescription drug benefit. Examples include over-the-counter drugs, vitamins and mineral supplements, drugs for weight loss or gain, and some tranquilizers (known as benzodiazepines). Some Medicare drug plans provide some coverage for excluded drugs as an extra benefit for their enrollees.

Formulary – A list of the specific prescription drugs that a drug plan will cover subject to limits and conditions. Every Medicare prescription drug plan must include on its formulary at least two drugs in every class of drugs, unless there are not two drugs in the class or the drugs are excluded from coverage under Part D.

Generic Drug – A prescription drug that has the same active ingredient formula as a brand-name drug. Generic drugs are rated by the Food and Drug Administration (FDA) to be as safe and effective as brand-name drugs and usually cost less than brand-name drugs.

Health Maintenance Organization (HMO) – A type of Medicare Advantage (MA) plan or Medicare Cost Plan. Medicare HMOs must cover all Medicare Parts A & B benefits and services. Some HMOs provide additional benefits, such as caps on your out-of-pocket costs for Parts A & B services. In most HMOs, in most cases you are covered only when you go to doctors, specialists, or hospitals on the plan's list except in an emergency. Your costs may be lower than in Original Medicare.

Initial Coverage Limit – In 2010, the initial coverage limit is $2,830. When your total drug costs exceed $2,830, including costs you pay and what is paid on your behalf by your plan, you are in the coverage gap.

Initial Coverage Period – In 2010, this is the period after you meet your Medicare drug plan's deductible and before you reach $2,830 in total drug expenses, including what you pay and what your plan pays on your behalf. During this period, Medicare covers about 75% of your drug costs.

Initial Eligibility Period – The period during which an individual who is newly eligible for Medicare may enroll in a Part D plan without penalty. For 2010 and beyond, the initial eligibility period for Part D is the same as for Part B: the seven month period that begins three months before the month an individual meets the eligibility requirements and ends three months after the month of eligibility.

Medical Savings Account (MSA) – See Medicare Advantage Medicare Savings Account

Medicare Advantage Medical Savings Account (MSA) – In an MSA, many of your medical (doctor and hospital) expenses will be covered initially through a tax-free, interest-bearing account funded by Medicare. If you spend all of the money in your account, you must pay out of your pocket until you reach the plan’s high deductible amount. If your expenses go above the high deductible, your health plan will cover all Medicare-covered services. You may have a copay or coinsurance. Amounts in the account not used in one year, remain in the account for you to use in the future. An MSA does not include prescription drug coverage. Individuals who enroll in MSAs also must enroll in a stand-alone Medicare Prescription Drug Plan if they want drug coverage.

Medicare Advantage (MA) – Another name for Medicare Part C. MA plans are private companies that contract with Medicare to cover the full range of hospital and doctor services covered in Original Medicare. Many MA plans will help you coordinate your health care. Some MA plans cap your out-of-pocket costs for Medicare Parts A & B services. Some MA plans cover additional preventive care, dental, and/or eye benefits. Medicare Advantage Prescription Drug (MA-PD) Plans cover prescription drugs in addition to the other medical services. A Medicare Advantage Prescription Drug Plan can be an HMO, PPO, or a Private Fee-for-Service (PFFS) Plan.

Medicare Advantage Prescription Drug (MA-PD) Plan – A plan offered by a private company under contract with Medicare to provide you with all your Medicare Parts A & B benefits, as well as your Part D prescription drug coverage. A Medicare Advantage Prescription Drug (MA-PD) Plan can be an HMO, PPO, or a Private Fee-for-Service (PFFS) Plan.

Medicare Cost Plan – A Medicare Cost Plan is one of several types of Medicare health plans. Medicare Cost Plans are a type of HMO. In a Medicare Cost Plan, if you get services outside the plan's network without a referral, your Medicare-covered services will be paid for under Original Medicare, except your plan pays for emergency services and urgently needed services outside the service area. Many Medicare Cost Plans provide prescription drug coverage, but some do not. If you enroll in a Medicare Cost Plan that offers a prescription drug benefit, you may get your prescription drug coverage from the Medicare Cost Plan or a stand-alone Medicare Prescription Drug Plan.

Medicare Prescription Drug Plan (PDP) – A stand-alone drug plan offered by a private company under contract with Medicare to provide the Medicare prescription drug benefit. If you want to add prescription drug coverage to Original Medicare or to a Medical Savings Account, you must enroll in a stand-alone drug plan. You can also enroll in a stand-alone plan to add prescription drug coverage to a Private Fee-for-Service Plan that does not offer prescription drug coverage, or a Medicare Cost Plan.

Medicare Supplement Plan (Medigap) – Medicare supplement insurance (Medigap) sold by private insurance companies to fill “gaps” in Original Medicare coverage. Except in Massachusetts, Minnesota, and Wisconsin, there are 12 standardized plans labeled Plan A through Plan L. In 2010, two new plans, M and N, will be available with effective dates on or after June 1, 2010. Medigap policies only work with Original Medicare with or without a stand-alone Medicare Prescription Drug Plan (PDP). You may no longer buy a Medigap policy that covers prescription drug costs. However, if you have a Medigap policy that covers prescription drug costs and you enroll in a stand-alone Medicare Prescription Drug Plan (PDP) or Medicare Advantage Prescription Drug (MA-PD) Plan, you will need to contact your Medigap insurance company to tell them you have enrolled in a Medicare drug plan. They will remove the drug portion of your Medigap coverage and adjust your Medigap insurance premium downward.

Medigap – See Medicare Supplement Plan

Network – Medicare health plans contract with providers (e.g., hospitals, doctors) to provide services to plan members. In most HMOs, in most cases, you are covered only when you go to doctors, specialists, and hospitals on the plan's list, except in an emergency. In some other plans, such as PPOs, you may have coverage for providers that aren't on the list, but it is often less expensive to go to a provider in the plan's network. See also pharmacy network.

Non-preferred Brand-Name Drug – A brand-name drug that is covered by a prescription drug plan at a higher-cost formulary tier than a preferred brand-name drug.

Open Enrollment Period – During the open enrollment period, from January 1 through March 31, you may generally make ONE CHANGE in how you receive your Medicare medical benefits. This may have implications for your prescription drug coverage. The types of changes you may make during this period are:

•	If you are enrolled in a Medicare health plan with prescription drug coverage, you may disenroll from your current plan by enrolling in a different Medicare health plan with drug coverage, or by enrolling in a stand-alone Medicare Prescription Drug Plan in combination with Original Medicare.
•	If you are in a stand-alone Medicare Prescription Drug Plan, you may disenroll from your current plan by enrolling in a Medicare health plan that includes the drug benefit. During this period, you may NOT change to a different Stand-alone drug plan or to a Medicare health plan that does NOT have drug coverage.
•	If you are enrolled in Original Medicare but not in a stand-alone Medicare Prescription Drug Plan, you may change to a Medicare health plan that does not have drug coverage, but you may NOT change to a Medicare health plan that includes prescription drug coverage or to a Stand-alone drug plan.

Original Medicare – Fee-for-service health coverage that lets you go to any doctor, hospital, or other health care provider that accepts Medicare and is accepting new Medicare patients. Medicare pays its share of the Medicare-approved amount for each service, and you pay your share known as cost-sharing (deductible, coinsurance, and premium). In some cases, you may be charged more than the Medicare-approved amount. Original Medicare has two parts: Part A (hospital insurance) and Part B (medical insurance covering doctor and other related services).

Pharmacy Network – Medicare health plans and Stand-alone drug plans contract with pharmacies where plan members may have their prescriptions filled. Some networks are broad, others are more limited. Generally, plan members must get their prescriptions filled at a pharmacy in the plan's network in order for the plan to pay for the prescription. Many pharmacy networks include a mail-order option.

Preferred Brand-Name Drug – A brand-name drug that is covered by a Medicare drug plan at the lowest-cost brand-name drug tier.

Preferred Provider Organization (PPO) – A type of Medicare Advantage plan in which you pay less if you use doctors, hospitals, and providers that belong to the network. You can use doctors, hospitals, and providers outside of the network for an additional cost.

Premium – The monthly payment to Medicare, an insurance company, or a health care plan for health care or prescription drug coverage.

Private Fee-for-Service (PFFS) Plan – A type of Medicare Advantage plan in which you may go to any Medicare-approved doctor or hospital that accepts the plan’s term and conditions of payment. A Medicare Advantage Private Fee-for- Service plan works differently than a Medicare Supplement Plan. The insurance plan, rather than the Medicare program, decides how much it will pay and what you pay for the services you get. You may have extra benefits Original Medicare doesn’t cover.

Your doctor or hospital must agree to accept the plan’s terms and conditions prior to providing health care services to you, with the exception of emergencies. If your doctor or hospital does not agree to accept the plan’s payment terms and conditions, they may not provide health care services to you, except in emergencies. Doctors and hospitals may, on a patient-by-patient and visit-by-visit basis, decide whether to accept your coverage. Some doctors or hospitals that accept Original Medicare may not accept Private-Fee-for-Service Plan enrollees. Doctors and hospitals can find the plan’s terms and conditions of payment on the plan’s website.

State Health Insurance Assistance Program (SHIP) – A state program that gives free local health insurance counseling to people with Medicare.

Stand-Alone Drug Plan – See Medicare Prescription Drug Plan (PDP).

Stand-Alone Medicare Prescription Drug Plan (PDP) – See Medicare Prescription Drug Plan (PDP).