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Medicare terms

Learn more about Medicare. Start with these definitions.


patient protection and affordable care act (PPACA)

The Patient Protection and Affordable Care Act (PPACA) – also known as the Affordable Care Act (ACA) – is the landmark health reform legislation  signed into law by President Barack Obama in 2010. The legislation includes health-related provisions that began taking effect in 2010 and  “continued to be rolled out over the next four years.” Key provisions will extend coverage to millions of uninsured Americans, implement measures that will lower health care costs and improve system efficiency, and eliminate industry practices that include rescission and denial of coverage due to pre-existing conditions.

pre-existing condition

A pre-existing condition is a medical condition that is excluded from coverage by an insurance company because the condition was believed to exist prior to the individual obtaining coverage.

preferred provider organization

A preferred provider organization (PPO) is a Medicare Advantage plan which gives policy holders an incentive use the providers (doctors, hospitals) within the plan’s network of service providers. In return, the plan pays a higher percentage of your health care expenses.

prescription drug coverage

Prescription drug coverage – or Medicare Part D – subsidizes the costs of brand-name and generic prescription drugs for Medicare beneficiaries. Medicare recipients choose the coverage by enrolling in either a stand-alone prescription drug plan (PDP) – which covers only prescription drugs – or a Medicare Advantage plan, which covers prescriptions and other medical expenses.
Regardless of the plan, you’ll pay a co-pay for each prescription, a monthly premium – which will vary by plan – and an annual deductible. Individuals with limited income and resources may qualify for financial assistance.

prescription drug donut hole

Medicare’s “donut hole” refers to the coverage gap in your Medicare Part D prescription drug benefit – the point where your prescription drug expenses exceed the initial coverage limit of your plan, but have not yet reached the catastrophic coverage level.

When you reach this “donut hole,” you’ll no longer have a 25 percent copayment and will instead begin paying more of your costs. In 2016, you enter the donut hole when your out-of-pocket expenses reach $3,310, and you reach the catastrophic coverage level (ie, get out of the donut hole) after you have paid $4,850 out of pocket, including your deductible (which can be no more than $360 in 2016), copays, and the manufacturer discount that you receive while in the donut hole.  At that point, your plan pays most of your prescription drug expenses through the end of the year.

The Patient Protection and Affordable Care Act included a provision to close the donut hole by 2020.  In 2016, while in the donut hole, enrollees pay 45 percent of the cost of brand name drugs and 58 percent of the cost of generic drugs.  By 2020, there will be no donut hole – enrollees will pay 25 percent of all drug costs until they reach the catastrophic coverage level.

prescription drug plan (PDP)

A prescription drug plan (PDP) is one option for individuals who want to enroll in the Medicare Part D prescription drug coverage, which subsidizes the costs of prescription drugs for enrollees. A prescription drug plan (PDP) is a stand-alone plan, covering only prescription drugs. Enrollees who choose the option of prescription drug coverage through a Medicare Advantage plan would also have coverage for other medical expenses as part of that plan.

Enrollees pay a co-pay for each prescription, a monthly premium and an annual deductible.

preventive services

Preventive services are provided to help you avoid becoming sick in the first place. Mammograms, flu shots, Pap tests and pelvic exams are examples of preventive services.

primary care doctor

Your primary care doctor is the physician you turn to first regarding any health care issue that may arise. If you need a specialist, you trust your primary care doctor to give you the best referral for that extra care.

private fee-for-service plan

Private fee-for-service plans are Medicare Advantage plans that allow you to receive care from any hospital or doctor that accepts the plan’s coverage. The plan does not have to follow Medicare guidelines, though, when it comes to paying for the services you receive. (It can cost more or less than Medicare). However, these plans often offer more coverage than Original Medicare.  Private fee-for-service plans sometimes include prescription drug coverage, but if they don’t, you’re allowed to purchase a stand-alone prescription drug plan (that’s not the case with other Medicare Advantage plans).

programs of all-inclusive care for the elderly

Older adults and people over age 55 with disabilities may be eligible for programs of all-inclusive care for the elderly (PACE) – comprehensive care and services from a team of health care professionals using Medicare and Medicaid funds. PACE enrollees must be at least 55, live in the PACE service area, be certified as eligible by the state agency, and be healthy enough to live safely in the community.