Common Medicare Terms

Copay

This is the fixed amount you owe (for example, $30) for certain covered healthcare services, such as a doctor office visit or filling a prescription.

Coinsurance

Coinsurance is the percentage you owe for certain covered services. For example, the coinsurance for Medicare Part B is 20%. So, if an approved Medicare Part B service costs $100, and you’ve met your annual deductible, Medicare will pay $80 and you’ll pay $20.

Coverage Gap (The Donut Hole)

The coverage gap, sometimes known as the donut hole, is a gap in prescription drug coverage. When you are in the donut hole, you’ll pay a little more for your medication. You’ll stay there until you reach a certain amount of out-of-pocket cost (for example, $6,500). You’ll then exit the gap, and your plan will pay most of your drug costs for the rest of the year.

Learn more about the donut hole here

Deductible

“Meeting your deductible” means you pay 100% until you reach a set dollar amount. This set amount is your deductible. After you’ve met your deductible, Medicare will start paying a part of your health services.

Deductibles must be met every year. Premiums and copays do not count toward your deductible.

Formulary

A formulary is the list of prescription drugs covered by the Medicare Part D or Medicare Advantage plan you select. If you don’t see your medications on the formulary, you may be able to take a similar medication that does the same thing. Or, you can ask your doctor to apply for an exception to have the medication covered.

Medical Supplement Insurance

Medicare Supplement plans help pay the 20% of your medical costs not covered by Medicare Parts A and B, including copays, coinsurance or deductibles.

Original Medicare

Original Medicare refers to Medicare Part A and Part B.

Premium

This is how much you pay each month for Medicare. A premium is a fixed amount. But it can change from year to year.

Get an estimate of your premium amount

Out-of-Pocket Maximums

This is the maximum amount (for example, $6,700) you can spend each year on deductibles, copayments and coinsurance for in-network services. If you reach your out-of-pocket maximum, you will pay nothing for your care for the rest of the year.

Get help with more health insurance terms with our health insurance glossary, or learn more about your options for Medicare coverage.