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Medicare Resources

Glossary

Coinsurance
The percentage of covered health services (for example, 20%) that you must pay out of your own pocket. Your health insurance pays the rest of the covered service.

Co-pay
The fixed dollar amount you must pay out of your pocket for a service (such as $10 for a doctor's visit or a prescription). Normally, you are responsible for payment at the time of service.

Deductible
The amount you must pay before your health insurance plan will pay benefits.

Exclusive formulary status
The status given to drugs that are the only brand name products available or covered on a specific level (tier) of a tiered formulary.

Formulary
The approved list of prescription drugs your health plan will cover.

Generic drugs
Drugs that have the same formulation as a branded drug, but are offered under a different name at a lower cost by a different manufacturer. Generics become available after the patent for the branded drug has expired.

Open-access formulary
A type of formulary that allows your doctor to prescribe what he or she believes is the appropriate drug for your condition, whether it's listed on the formulary or not. With this plan, you may pay higher costs for medicines in the higher tiers of the formulary.

Prior authorization
The process of getting approval from your Medicare Prescription Drug Plan for some services or drugs before they are provided. Also known as pre-certification, this helps make sure the drugs are used the way they are supposed to be used to get the best outcome at the best cost.

Step care/step-therapy guidelines
A requirement some drug plans have in which certain drugs can be prescribed only after a lower-cost or over-the-counter product has been tried but shown to be ineffective or inappropriate for safety reasons.

Tiered formulary
A formulary that offers different types of drugs that are covered on different, or tiered, levels. Each tier has a different co-pay, which is the amount of money you pay out of your pocket. The higher the tier, the higher your co-pay. The most common types are 2-tier and 3-tier prescription plans.

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