The Health Care Terms Older Adults Need to Know

From copays to coverage gaps, understanding these definitions matters more than you might think. 

It’s not surprising that health care terms cause a fair amount of confusion. The medical world is chock-full of acronyms and labels that might sound similar but could have very different meanings.  

Many people struggle to understand even the most common insurance terms, such as copay, premium, and deductible. In fact, only 38 percent of Americans with health insurance could correctly explain all three of those terms, according to Policygenius’s 2020 Health Insurance Literacy Survey.  

That’s bad news, because there’s a direct connection between understanding health care concepts (a.k.a. health care literacy) and better health outcomes.   

A United Health Group study found that people with Medicare who live in the counties with the highest health literacy levels had fewer avoidable hospitalizations, fewer hospital readmissions, and fewer emergency room visits, compared with people living in the counties with the lowest health literacy levels.  

“For older adults and caregivers in particular, some health care and insurance-related terms are vital for improving your quality of life through appropriate decision-making,” says Lisa Hollis-Sawyer, Ph.D., an associate professor of psychology and gerontology program coordinator at Northeastern Illinois University in Chicago.   

With that in mind, here are some of the most important health care terms you should know, from A to Z.  

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Acute: A health event that is severe and happens suddenly, such as breaking a bone.  

Advance coverage decision: A notice from a Medicare Advantage plan that tells you in advance whether a medical service will be paid for by insurance or not. For instance, if you want to see an out-of-network doctor, you might want to get an advance coverage decision before scheduling your appointment. If you’re ever unsure whether something is covered by your plan, contact your Medicare Advantage provider.  

Benefit period: A period used for Original Medicare that starts the day you’re either admitted to a hospital or a skilled nursing facility. The benefit period ends when you haven’t gotten any inpatient care for 60 days in a row. If you go into a hospital or a skilled nursing facility again after the benefit period has ended, a new benefit period begins. You must pay the inpatient hospital deductible for each benefit period. But you don’t have to pay the deductible twice if you receive inpatient care on separate occasions in the same benefit period.  

Biopsy: A procedure that takes a tissue sample to test for disease or damage.  

Copay: A flat fee you pay for a medical procedure, provider visit, prescription drug, or medical supplies. There may be different copay fees depending on the service.  

Coinsurance: The percentage of your health care costs that you are responsible for after you meet your deductible and until you meet your out-of-pocket maximum. (Remember: Original Medicare doesn’t have an out-of-pocket limit.)  

For example: Let’s say you have a 20 percent coinsurance cost (the typical amount for Medicare Part B) and a $2,000 deductible. On a $10,000 medical bill, you would be responsible for paying the $2,000 deductible and then 20 percent (your coinsurance) of the remaining $8,000. 

Some or all of those coinsurance costs might be covered by a MediGap insurance plan, if you have one. What’s a MediGap insurance plan? Scroll down to find out.   

Coverage gap: This gap is found in Medicare Part D prescription plans. Once you and the insurer have spent a certain amount of money on prescription drugs ($4,130 in 2021), you enter a coverage gap where you’re responsible for up to 25 percent of the cost of covered prescription drugs.  

You get out of the coverage gap once you pay a certain amount in out-of-pocket drug expenses ($6,550 in 2021). After that, you’re only responsible for paying your coinsurance or copay for the rest of the year.  

Deductible: How much you pay for medical expenses before your health insurance begins to cover the cost.   

Discharge plan: A plan that outlines how a patient will transition from one level of care to the next, either within the hospital or from the hospital to home.  

Durable medical equipment: Equipment or supplies that a doctor might order for you to use at home. That could include blood sugar meters, crutches, a hospital bed, a wheelchair, oxygen, or a walker, for example.  

Electronic health record: The electronic version of a patient’s health chart. It often contains items such as a patient’s medical history, diagnoses, allergies, and lab results.   

Formulary: A list of prescription drugs that is covered by your insurance plan. When you enroll in a plan, you’ll receive a list of prescription drugs that are covered by your plan. You can also use this online search tool to see if a prescription drug is covered by your plan.  

Home health care: Health care services that a person receives at home as prescribed by a doctor. This could include wound care or general illness monitoring, for instance.  

Living will: A legal document that spells out how someone wants to be treated medically if they can’t make their own health care decision in an emergency. Everyone over the age of 60 should have a living will. You generally don’t need a lawyer to write the will, but depending on where you live you will need to have two people witness your signature and sign the document themselves.   

Each state has different living will requirements, so contact a local senior center, hospital, your doctor, or a state medical association to ask for a free living will form.  

Long-term care: Medical and non-medical services provided to people who can’t do things like feed, bathe, and dress themselves on their own. This might take place in the person’s home, an assisted living facility, or a skilled nursing facility.  

Long-term care insurance: Insurance that covers some or all of the cost of long-term care.  

Medicaid: A government insurance program that offers free or low-cost insurance for people who meet certain low-income requirements. “You might be eligible for dual coverage under both Medicare and Medicaid,” Hollis-Sawyer says. “If that’s the case, most of your health care costs would be covered.”  

Eligibility requirements for dual coverage vary by state, but usually if you receive Supplemental Security Income, meaning you have a disability or little or no income, you qualify. You might qualify for partial dual coverage based on having a disability or making less than a certain amount of income each month.  

Medically necessary: The health care services and supplies that are deemed necessary to treat an illness, injury, or disease and meet the standards of good medical care in your area. If something is not deemed medically necessary by the insurance provider, it might not get covered.  

Medicare Advantage Plan (Part C): An alternative to Original Medicare, Medicare Advantage is offered through private insurance companies that contract with Medicare. The plan typically includes prescription drug coverage, hospital insurance, and medical insurance.  

MediGap insurance policy: A supplement to an Original Medicare policy that fills gaps in Medicare coverage. Because Original Medicare does not have an out-of-pocket limit (defined below), you might want a MediGap policy to help cover the 20 percent coinsurance for some services.   

Network: The facilities, medical professionals, and medical suppliers who have a contract with your insurance provider to provide services. Your insurer might cover services from out-of-network providers at a lower percentage or not at all. 

Noninvasive: This describes a procedure that doesn’t require tools to enter the body or a disease that hasn’t spread to other organs or tissue. 

Out-of-pocket maximum: A limit to how much of your own money you have to spend (including your deductible) before your insurance plan will begin covering your costs. It’s important to know that Original Medicare does not have an out-of-pocket limit, which is why people often have a MediGap plan to make up the difference. 

Outpatient: This describes a procedure that can be done in one day and generally doesn’t require a hospital stay.  

Premium: The regular, often monthly, payments you make to pay for your health insurance plan.  

Skilled nursing facility: Facilities with trained staff and equipment where people can receive long-term or rehabilitative care.  

Telemedicine or telehealth: Medical services provided virtually, such as via live video, by phone, or through wearable devices that track and report health information like blood pressure or heart rate. Medicare reimburses telehealth visits the same way they would an in-person visit.  

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