Medicare Part D Terms and Definitions
Glossary of terms often used in materials about Medicare Part D.
Annual Deductible: The amount you pay out-of-pocket each year before your insurance coverage pays. In Part D, you may have to pay the first $265 each year ($265 for 2007).
Annual Premium: The amount you pay each year for insurance coverage. The monthly premium multiplied by 12. The Part D annual premium average is $24 per month for 2007. The annual premium average is $288.00. The amount is per person. Premiums vary by state, plan and Part D providers.
Coinsurance: Coinsurance is the term for splitting costs or cost sharing. It is the amount that you pay. For example, in Part D after the $265 deductible you pay 25% coinsurance and the plan pays 75% up to $2,400 worth of prescription drugs.
Formulary: List of prescription drugs that are covered by Part D (may vary by company and plan)
Guaranteed Coverage: Medicare beneficiaries are guaranteed the availability of a Medicare Prescription drug plan (Part D) option and have guaranteed issue rights during open enrollment. This means you cannot be denied access to coverage.
Network: Plans will usually require you to get your prescription drugs from certain pharmacies that participate in the plan. These are called "Network" pharmacies. This means you may not be able to go to the pharmacy of your choice. Check to see if the pharmacy of your choice is included in the network before you choose a plan.
Out-of-Pocket Costs: The cost you must pay for prescription drugs (not including what your insurance pays or the premiums you pay for the insurance coverage).
State Health Insurance Assistance Program (SHIP): A State organization that receives money from the Federal Government to give free health insurance counseling and assistance to people with Medicare.
The Medicare Supplement Insurance Plan is available to both AICPA members and their spouses who are at least 65 years of age. Now, with the AICPA Parents Plan, you have the opportunity to extend coverage to the eligible parents of you and your spouse.
This information has been contributed by Insight, a quarterly AICPA Medicare Supplement Insurance Program publication, F7801, 244767. Last updated 6/5/07.
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