Glossary

Annual Election Period (AEP)
November 15 through December 31, which is generally the only time of each year that you can change plans (unless you meet certain special exceptions, such as moving out of your plan's service area or you are covered by Medicaid).

Coinsurance
The percent that you pay for a covered drug. With some plans, you do not pay coinsurance until you have first paid a deductible.

Copay
This is the set amount you pay for each covered drug. Different copays may apply depending on the type of drug (brand or generic) or days supply (30 or 90). See "Drug Tiers".

Coverage Gap
Amount you pay for Medicare prescription drug coverage after the initial coverage limit and until the amount you pay out of your pocket for covered prescription drugs reaches $5,726.25 for 2008. This amount changes each year and is also known as the "true out-of-pocket" or "TrOOP" limit. The Coverage Gap is sometimes referred to as a "Donut Hole."

Creditable Coverage
Drug coverage that is at least as good as Medicare prescription drug coverage.

Deductible
A set amount of dollars you must pay before you receive coverage for your benefits.

Donut Hole
See "Coverage Gap."

Drug Tiers
Drug tiers allow plans to group different types of drugs together on their preferred drug lists (such as generic drugs, brand-name drugs, or preferred brand-name drugs). For example, a two-tier pharmacy plan will have two different copay options. The lower copay may apply to generic drugs, and the higher copay may apply to brand-name drugs.

Formulary
A list of drugs covered by a health insurance plan. This list must always meet Medicare's requirements and is sometimes called a "Preferred Drug List."

Monthly Plan Premium
The payment you make to a health insurance company for your health plan.

Non-Preferred Drug
A drug that typically requires a higher copay than a preferred drug.

Penalty
The increased amount you may pay if you do not apply for Part D (Medicare prescription drug coverage) when you are first eligible.

If you don't join when you are first eligible, and you don't currently have a drug plan that is at least as good as Medicare prescription drug coverage, you may pay a penalty that increases the cost of the monthly premium by one percent for every month you wait to join.

Preferred Drug
A drug that typically requires the lowest copay.

Preferred Drug List
See "Formulary."

True Out-of-Pocket (TrOOP)
Amount you pay during the "Coverage Gap." This amount changes each year and may be paid by another person, or a qualified State Pharmaceutical Assistance Program (SPAP), on your behalf.