Know your Medicare Terms

Out-of-pocket costs: An out-of-pocket cost is the amount a person must pay for medical care when Medicare does not pay the total cost or offer coverage. These costs can include deductibles, coinsurance, copayments, and premiums.

Deductible: This is an annual amount a person must spend out of pocket within a certain period before an insurer starts to fund their treatments.

Coinsurance: This is the percentage of treatment costs that a person must self-fund. For Medicare Part B, this is 20%.

Copayment: This is a fixed dollar amount a person with insurance pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.

Health maintenance organization plans: HMO plans, cover services from providers in the plan’s network and sometimes certain out-of-network services.

Preferred provider organization plans: PPO plans can use in or out-of-network services, though in-network services cost less.

Private fee-for-service plans: PFFS plans limit how much a person pays to any given service provider, and it removes the requirement of a referral to see a specialist.

Special needs plans: This type is only available to people with specific health conditions, and the company tailors the benefits to meet certain needs.