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Medicare terms

Learn more about Medicare. Start with these definitions.


catastrophic coverage

Catastrophic coverage refers to the point when your total prescription drug costs for a calendar year have reached a set maximum level ($4,700 in 2015). At this point, you are out of the prescription drug “donut hole” and your prescription drug coverage begins paying for most of your drug expenses.  Once you’ve reached the catastrophic coverage threshold for the year, you’ll only pay $2.65 for generic drugs and $6.60 for brand names, or 5 percent of the total drug cost, whichever is higher.

certificate of medical necessity (CMN)

A doctor must sign and submit a certificate of medical necessity before a Medicare enrollee can receive coverage for certain medical equipment.


A claim is an application for benefits provided by your health plan. You must file a claim before funds will be reimbursed to your medical provider. A claim may be denied based on the carrier’s assessment of the circumstance.


Coinsurance refers to a percentage of the Medicare-approved cost of your health care services that you’re expected to pay after you’ve paid your plan deductibles.


Your copayment is a set out-of-pocket dollar amount you are obligated to pay for each medical service you receive, including visits to your doctor and prescriptions.

cost plans

A Medicare cost plan is similar to a Medicare HMO in that enrollees have access to a network of doctors and hospitals approved by Medicare. Unlike other Medicare HMO plans, however, a cost plan offers policy holders the option of receiving coverage outside of the network, in which case the Medicare-covered services are paid for through Original Medicare. Some cost plans may include prescription drug coverage. Enrollees can join a Medicare cost plan when it’s accepting new members, but may decide to return to Original Medicare at any time.

cost tiers

Medicare uses a system of cost tiers to rank prescription drugs according to their out-of-pocket cost to enrollees. Generic drugs are Tier 1 (cheapest), brand-name drugs are Tier 2, and specialty drugs are Tier 3 (the most expensive).

coverage gap

Under Medicare Part D prescription drug coverage, policy holders with significant drug expenses often encounter a coverage gap – or “donut hole” – the point where their prescription drug expenses exceed the initial coverage limit of their Part D coverage but have not yet reached the “catastrophic” level of coverage.

Prior to 2011, enrollees were responsible for all drug costs while in the coverage gap, and didn’t begin receiving drug benefits again until they reached the catastrophic coverage level.  But the Affordable Care Act is slowly closing the coverage gap, and by 2020, Medicare Part D enrollees will only pay 25 percent of the plan’s cost for drugs prior to reaching the catastrophic coverage level.  In 2015, enrollees pay 45 percent of the cost of brand name drugs and 65 percent of the cost of generic drugs while in the coverage gap.

critical access hospital

Critical access hospitals are typically located in rural areas and provide limited inpatient and outpatient services.


A Medicare cross-over is a claim for a dual eligible – someone who is covered by both Medicare and Medicaid. The claims have been approved for payment by Medicare and then sent on to Medicaid, which then pays toward the Medicare deductible and coinsurance.

curative care

Curative care refers to health care practices that treat patients with the intent of curing them, not just reducing their pain or stress. An example is chemotherapy, which seeks to cure cancer patients.

custodial care

Medicare as a general policy does not cover custodial care (activities of daily living like getting in and out of bed, using the toilet facilities, getting dressed, etc.).