Medicare Terms

Top Five Medicare Terms You Should Know

If you are newly eligible for Medicare, here are some terms you should be aware of to avoid mistakes or mishaps with your Medicare coverage.


Medicare Part A covers hospital inpatient care, among other things. The tricky part of this is that you can be a patient in the hospital without being an inpatient. Ask the hospital staff if you have observation status or are inpatient. This will affect whether your Medicare coverage will kick in.

Late-enrollment penalty

Suppose you do not enroll during your Initial Enrollment Period and do not qualify for a Special Enrollment Period. In that case, you will owe a late-enrollment penalty when you sign up. The Part B late-enrollment penalty adds 10% to your monthly premium for as long as you have Part B coverage. Part D also has a late enrollment fee if you go without creditable prescription drug coverage for more than 63 days before you sign up for Part D. These costs add up for seniors on a fixed income, so it is important to pay attention to your enrollment windows.

Medicare-approved amount

Medicare has standardized amounts that it will pay for services. Facilities that accept Medicare will accept this approved amount. Others that do not take the Medicare-approved amount as full payment can charge up to 15 percent above the Medicare-approved cost as an “excess charge.”

Participating provider

Participating providers are healthcare providers that accept Medicare and accept the Medicare-approved amount as full payment for services.

Work credit

Most people have premium-free Part A because they or their spouse have at least 40 work credits. These credits are from working and paying taxes to Social Security for at least 40 quarters. If you have 30-39 work credits, you will pay a $252 Part A premium in 2020. If you have fewer than 30 work credits, you will pay a $458 Part A premium.

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