2025 Medicare Glossary

Prescription Drug Plan Terms and What They Mean

Annual Election Period (AEP):

The annual election period for Medicare coverage is October 15, through December 07, for coverage beginning January 1.

Appeal:

Any of the procedures that deal with the review of adverse coverage determinations made by the Part D plan sponsor on the benefits under a Part D plan the enrollee believes he or she is entitled to receive. The Evidence of Coverage (EOC) Chapter 7, tells you how to make an appeal.

Automatic Bank Withdrawal:

An option for paying your monthly premium by giving permission for the plan to automatically withdraw money from your bank account. It can take up to three months for the automatic payment to be in effect. Until then, you must keep paying your premiums each month to avoid being disenrolled from the plan.

Biological Product:

A prescription drug that is made from natural and living sources like animal cells, plant cells, bacteria, or yeast. Biological products are more complex than other drugs and cannot be copied exactly, so alternative forms are called biosimilars. (See also “Original Biological Product” and “Biosimilar”).

Biosimilar:

A biological product that is very similar, but not identical, to the original biological product. Biosimilars are as safe and effective as the original biological product. Some biosimilars may be substituted for the original biological product at the pharmacy without needing a new prescription (See “Interchangeable Biosimilar”).

Brand-Name Drug:

A drug that has a trade name and is protected by a patent (can be produced and sold only by the company holding the patent). When the patent protection for the brand-name drug expires, FDA approved generic versions with the same active-ingredient formula can be sold by other manufacturers.

Catastrophic Coverage:

The stage in the Part D Drug Benefit that begins when you (or other qualified parties on your behalf) have spent $2,000 for Part D covered drugs during the covered year. During this payment stage, you pay nothing for your covered Part D drugs.

Centers for Medicare & Medicaid Services (CMS):

Formerly known as the Health Care Financing Administration (HCFA), CMS is the federal agency that administers the Medicare, Medicaid and several other health-related programs. CMS sets standards for Part D insurance plans.

Chronic-Care Special Needs Plan:

C-SNPs are SNPs that restrict enrollment to MA eligible individuals who have one or more severe or disabling chronic conditions, as defined under 42 CFR 422.2, including restricting enrollment based on the multiple commonly co-morbid and clinically linked condition groupings specified in 42 CFR 422.4(a)(1)(iv).

Coinsurance:

Cost-sharing, where costs are split on a percentage basis. For example, a Blue MedicareRx plan might pay 80 percent and you would pay 20 percent.

Complaint:

The formal name for making a complaint is filing a grievance. The complaint process is used only for certain types of problems. This includes problems related to quality of care, waiting times, and the customer service you receive. It also includes complaints if your plan does not follow the time periods in the appeal process.

Copayment (or copay):

Cost-sharing where you pay a pre-determined, flat amount for each prescription. In a Blue MedicareRx plan, for example, you might pay $15 for each prescription you receive and the plan would pay the remaining cost of the drug.

Cost-Sharing:

Cost-sharing occurs when members pay for a portion of health care costs not covered by the plan. The "out-of-pocket" payment varies by drug, and also depends on whether or not the member chooses to use a pharmacy that is contracted with the plan's network.

Cost-Sharing Tier:

Drugs on the formulary belong to a cost-sharing tier. Typically, the higher the Tier number, the higher your share of the cost of the drug will be.

Coverage Determination (or Coverage Decisions):

The decision the Plan makes about the prescription drug benefits you are entitled to get under the plan, and the amount that you are required to pay for a drug. The Evidence of Coverage (EOC), Chapter 7, tells you how you can ask for a coverage determination.

Covered Drugs:

A Part D drug that is included in a Part D plan’s formulary, or “Drug List”, and is covered by the plan.

Creditable Prescription Drug Coverage:

Prescription drug coverage (for example, from an employer or union) that is expected to pay, on average, at least as much as Medicare’s standard prescription drug coverage. People who have this kind of coverage when they become eligible for Medicare can generally keep that coverage without paying a penalty, if they decide to enroll in Medicare prescription drug coverage later.

Customer Care:

The team within our plan that can answer your questions regarding enrollment, benefits and other questions you may have as a member.

Daily cost sharing rate:

A daily cost-sharing rate may apply when your doctor prescribes less than a full month’s supply of certain drugs for you and you are required to pay a copayment. A daily cost sharing rate is the copayment divided by the number of days in a month’s supply. Here is an example: If your copayment for a one-month supply of a drug is $30, and a one-month’s supply in your plan is 30 days, then your daily cost-sharing rate is $1 per day.

Deductible:

The amount you must pay before our plan begins to pay its share of your covered drugs. Depending on your plan, you will either have no deductible or a $590 annual deductible on drugs in the following tiers (Tier 3 Preferred Brand, Tier 4 Non-Preferred Drug & Tier 5 Specialty Tier).

Disenroll or Disenrollment:

The process of ending your membership in our Plan. Disenrollment can be voluntary (your own choice) or involuntary (not your own choice).

Dispensing Fee:

Pharmacists receive a dispensing fee for filling your prescription(s). This fee covers services such as: talking about your treatment with you, maintaining and checking your medication record, and providing drug information to your doctors.

Dual Eligible Special Needs Plans (D-SNP):

D-SNPs enroll individuals who are entitled to both Medicare (Title XVIII of the Social Security Act) and medical assistance from a state plan under Medicaid (Title XIX). States cover some Medicare costs, depending on the state and the individual’s eligibility.