Premium
What you pay every month just to have the coverage, whether you use it or not.
For example: Most people pay $202.90 a month for Part B in 2026. If you draw Social Security it comes straight out of that check.
Medicare, without the jargon.
Most people are not confused about Medicare. They are confused about the words. Here is every term you are likely to run into, in plain English, with a real example and a simple picture of who pays what.
What you pay
Deductible
The amount you pay yourself first, before the plan starts paying its share.
For example: Part B has a $283 deductible in 2026. Your first doctor bills of the year come out of your pocket until you have paid $283. After that, the plan starts helping.
Copayalso called copayment
A flat dollar amount for a visit or a prescription. You know the number before you walk in.
For example: $20 every time you see your primary care doctor. Not 20 percent of the bill. Twenty dollars, whatever the bill turns out to be.
Coinsurance
A percentage of the bill instead of a flat amount. The bigger the bill gets, the bigger your share gets.
For example: Original Medicare pays 80 percent of a Part B bill and leaves you 20 percent. On a $100 bill that is $20. On a $100,000 cancer treatment it is $20,000. Same percentage, very different number.
Out-of-pocket maximumalso called MOOP, max out of pocket
The most you can be made to pay in one year. Once you hit it, the plan pays everything covered for the rest of the year.
For example: This is the safety net, and Original Medicare on its own does not have one. Every Medicare Advantage plan does. It is the single biggest reason people add a Supplement or choose an Advantage plan.
Allowed amountalso called Medicare-approved amount
The price Medicare has decided a service is worth. Your share is worked out from this number, not from the sticker price on the bill.
For example: A clinic bills $300. Medicare says the service is worth $180. Your 20 percent is $36, not $60.
Assignmentalso called accepts assignment
A doctor who accepts assignment has agreed to take Medicare's price as full payment and not bill you extra.
For example: Almost all doctors accept assignment. It is worth asking once at a new office, because it is the difference between a predictable bill and a surprise one.
Excess chargesalso called Part B excess charges
The small number of doctors who have not agreed to Medicare's price can add up to 15 percent on top.
For example: A $180 service could come with an extra $27. Some Supplement plans cover this and some do not, which is one of the real differences between plan letters.
Benefit period
How Part A counts a hospital stay. It starts the day you go in and ends once you have been out for 60 days in a row.
For example: The Part A hospital deductible is $1,736 per benefit period in 2026, not per year. Go in twice in one year with more than 60 days between, and you pay it twice.
The parts of Medicare
Original Medicare
Part A and Part B together, run by the federal government. This is what you get when you first sign up.
For example: It covers a lot, but it has no cap on what you can owe and no drug coverage. That gap is what everything else is built to fill.
Part Aalso called hospital insurance
Anything inside the hospital. Inpatient stays, skilled nursing after a stay, hospice, some home health.
For example: For most people over 65 it costs nothing each month, because you already paid for it through payroll taxes while you worked.
Part Balso called medical insurance
Anything outside the hospital. Your primary care doctor, specialists, tests, scans, outpatient surgery.
For example: This is the part with the monthly premium, $202.90 for most people in 2026.
Part Calso called Medicare Advantage
A private plan that takes over running your Medicare, usually bundling drugs, dental, vision and hearing into one card.
For example: Think C for complete. One card everywhere. The trade is a network of doctors and, often, referrals and prior authorization.
Part Dalso called prescription drug plan, PDP
Drug coverage. It is either bought on its own to sit alongside Original Medicare, or built into a Medicare Advantage plan.
For example: If you go the Supplement route, a separate Part D plan has to go with it. A Supplement does not cover drugs.
Medigapalso called Medicare Supplement
A private policy that pays the share Original Medicare leaves you. No networks, and generally no referrals.
For example: You pay a premium every month whether you use it or not. In return you can see any doctor in the country who takes Medicare, and your share of the bill is largely handled.
Doctors and hospitals
Networkalso called in network, out of network
The list of doctors and hospitals a plan has agreed to pay for. Stay inside it and you pay the plan's normal share. Go outside and you pay more, or everything.
For example: This is the question to settle before you enroll, not after. Check your own doctors and your own hospital by name.
HMO
A plan type that keeps you inside its network and usually asks you to pick a primary care doctor who refers you onward.
For example: Often the lowest premium. The right fit if your doctors are all in the network and you do not travel much.
PPO
A plan type that still has a network but will pay something toward doctors outside it.
For example: Usually costs more than an HMO. Worth it if you split time between states or want fewer rules about who you see.
Referral
Permission from your primary care doctor before the plan will pay for a specialist.
For example: Original Medicare and Supplements generally do not need one. Many Advantage plans do, though some carriers are dropping the requirement.
Prior authorizationalso called pre-auth
The plan has to approve a test, procedure or drug before it will pay. Your doctor sends the request and you wait.
For example: This is one of the real day-to-day differences between plan types. It is worth asking how often a plan uses it before you enroll.
Star rating
A one to five score CMS gives each Advantage and Part D plan for things like customer service and how well members are cared for.
For example: Useful as a tiebreaker, not as a reason to pick. A four-star plan your doctor is not in is still the wrong plan.
Prescriptions
Formularyalso called drug list
The list of drugs one plan covers. Every plan has its own, and they change every January.
For example: Two plans with the same premium can price your exact medication very differently. This is why the drug list matters more than the premium.
Tier
The price step a plan puts each drug on. Lower tiers are the cheap generics, higher tiers are brand and specialty drugs.
For example: The same pill can sit on tier 2 with one plan and tier 4 with another. That is a real difference in what you pay.
Step therapy
The plan wants you to try a cheaper drug first, and only covers the one your doctor asked for if the cheaper one does not work.
Quantity limit
A cap on how much of a drug the plan will cover at one time, like 30 pills a month.
Out-of-pocket drug capalso called catastrophic coverage
Once your own spending on covered drugs hits $2,100 in 2026, you pay nothing more for them for the rest of the year.
For example: This is new and it is a big deal. Before 2025 there was no ceiling at all on what a Part D year could cost you.
Donut holealso called doughnut hole, coverage gap
Gone. It was eliminated in 2025 and replaced by the $2,100 out-of-pocket cap. If someone is still explaining the donut hole to you, their information is out of date.
For example: People still search for this, which is exactly why it is worth saying plainly: there is no longer a gap phase where your costs jump.
Creditable coverage
Drug coverage at least as good as Part D. Having it means you can delay Part D without a penalty later.
For example: Employer plans usually count, and they send you a letter each year saying so. Keep that letter.
Medicare Prescription Payment Planalso called M3P
An option to spread your drug costs over the year in monthly instalments instead of paying a large amount at the pharmacy at once.
For example: It does not lower the total. It smooths it out, which helps if one expensive month would be the problem.
Timing and enrollment
Initial Enrollment Periodalso called IEP
Your seven-month window around your 65th birthday: three months before, your birthday month, and three months after.
For example: Sign up in the first three months and coverage starts the first day of your birthday month. Wait until after and it starts later.
Annual Enrollment Periodalso called AEP, open enrollment
October 15 to December 7 every year. Anyone can change their Advantage or Part D plan, and the change starts January 1.
For example: This is the one window everybody gets. It is also when plans publish their changes for the coming year, so it is the time to check the drug list again.
Medicare Advantage Open Enrollmentalso called MA OEP
January 1 to March 31, for people already in an Advantage plan. One change allowed.
For example: This is the safety valve if January arrives and the plan you picked is not working out.
Special Enrollment Periodalso called SEP
A window that opens because something happened: you moved, you lost employer coverage, your plan left the county.
For example: These are the exceptions that let you act outside the normal calendar. If something changed, ask, because you may have a window you do not know about.
General Enrollment Periodalso called GEP
January 1 to March 31, for people who missed their first window entirely.
For example: It works, but a late enrollment penalty usually comes with it.
Medigap open enrollment
The six months starting when your Part B begins. During it, no Supplement can turn you down or charge you more for your health.
For example: This is the most valuable six months in Medicare and most people do not know it is running.
Medical underwriting
Health questions. An insurer reviewing your history and deciding whether to accept you, and at what price.
For example: This is the catch nobody mentions when you first choose. Leaving an Advantage plan for a Supplement later can mean answering these questions, and the answer can be no.
Guaranteed issuealso called GI rights
Situations where a Supplement has to accept you, no health questions asked.
For example: Your first six months on Part B is the big one. Kentucky also gives you a window around your birthday each year.
Late enrollment penalty
A permanent addition to your premium for signing up late without other coverage. It does not go away.
For example: The Part B penalty is 10 percent for every full year you could have had it and did not, and you pay it for as long as you have Medicare.
Help paying for it
Extra Helpalso called Low Income Subsidy, LIS
A federal program that pays most of your Part D costs if your income and savings are modest.
For example: Applying is free and takes about twenty minutes at ssa.gov. A lot of people who qualify never apply.
Medicare Savings Programalso called MSP
A state program that can pay your Part B premium for you.
For example: In Kentucky this is worth over $200 a month back in your pocket in 2026. You apply through kynect.
QMBalso called Qualified Medicare Beneficiary
The most generous level of Medicare Savings Program. It pays your premiums and protects you from most cost sharing.
For example: If you have QMB, providers are not allowed to bill you for Medicare deductibles and coinsurance.
Dual eligible
Someone who has both Medicare and Medicaid.
For example: There are special plans built only for people in this situation, and they usually cover far more.
IRMAAalso called income-related monthly adjustment amount
An extra charge on Part B and Part D if your income is above the threshold. It is based on your tax return from two years ago.
For example: Two years ago matters. If you have retired since then and your income dropped, you can ask Social Security to use the newer figure.
Mail you will get
Annual Notice of Changealso called ANOC
The letter every Advantage and Part D plan sends each September saying exactly what is changing in January.
For example: It is the most ignored important letter in Medicare. The changes to look for are the drug list and your doctors.
Evidence of Coveragealso called EOC
The long booklet with the full rules of your plan. The ANOC is the summary of what changed; this is the detail.
Explanation of Benefitsalso called EOB
Not a bill. A summary from your plan of what was billed, what it paid, and what you may owe.
For example: The words 'this is not a bill' are usually printed on it, and people still panic. Read the bottom line, then wait for the actual bill.
Medicare Summary Noticealso called MSN
The Original Medicare version of an Explanation of Benefits, sent every three months.
Denial and appeal
A plan refusing to pay, and your right to challenge it. There are several levels and deadlines at each one.
For example: A lot of denials are paperwork problems, not real refusals. Do not assume the first no is final.
Non-renewalalso called plan termination
Your plan telling you it will not be offered in your county next year. The letter arrives in early October.
For example: It is not a cancellation of your Medicare. It does open a special window, and doing nothing usually means being moved somewhere you did not choose.
No match for that one.
Try a shorter word, or just call and read us the sentence. We will tell you what it means, free, at (859) 618-6443.
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Dollar figures are the 2026 amounts, verified against CMS. Definitions are general Medicare education, not advice about any one plan.