Medicare lingo is one of the main sources of confusion when it comes to Medicare. Not knowing these words and how they work is the main reason people get unexpected bills from doctors’ offices.
Today I want to show you some of the key Medicare words you need to know.
The number one and by far the most important is Assignment.
What does assignment mean?
Always ask all Medicare providers, do you accept Medicare “assignment”? Assignment is an agreement by your doctor, provider, or supplier to be paid directly by Medicare, to accept the payment amount Medicare approves for the service, and not to bill you for any more than the Medicare deductible and coinsurance.
This primarily applies to people with Original Medicare. If you are on a Medicare Advantage plan you will need to ask other questions to determine if the doctor will accept your health insurance.
What is coinsurance?
Coinsurance is an amount you may be required to pay as your share of the cost for services after you pay any deductibles. Coinsurance is usually a percentage like 20%.
If you have supplement insurance it will usually cover this 20%. However, if you are on Medicare Advantage, your plan will have its specific rules about your coinsurance.
What is a copayment?
A copayment is an amount you are required to pay as your share of the cost for medical service or supply, like a doctor’s visit, hospital outpatient visit, or prescription drug. A copayment is usually a set amount, rather than a percentage. For example, you might pay $10 or $20 for a doctor’s visit or prescription drug.
Your copayment will depend on the supplement, prescription plan or Medicare Advantage plan you are on.
What is creditable prescription drug coverage?
This is one of the most overlooked items whenever Medicare beneficiaries decide to keep working and remain on group coverage after they turn age 65. It’s important to know if your group coverage is “CREDITABLE”, meaning as good as or better than what Medicare’s standard prescription program offers.
The only way to know is to ask your human resource person at work. If it is not creditable, you will be assessed a monthly penalty until such time as you enroll in Medicare prescription drug coverage.
What does Medicare-approved amount mean?
In Original Medicare, this is the amount a doctor or supplier that accepts assignment can be paid. It may be less than the actual amount a doctor or supplier charges. Medicare pays part of this amount and you are responsible for the difference.
What are “excess charges”?
Providers who don’t participate in Medicare can charge you up to 15% more than the Medicare allowable amount. This extra charge is at the doctor’s discretion. This additional amount above the Medicare allowable amount is considered a Part B excess charge. You will have to pay it out-of-pocket unless you have a Supplement plan that covers Part B excess charges.
These keywords will get you started with Medicare.