Medicare Glossary

Prescription Drug Plan Terms and What They Mean

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Income-Related Monthly Adjustment Amount (IRMAA)

If your income is above a certain limit, you will pay an income-related monthly adjustment amount in addition to your plan premium. For example, individuals with income greater than $85,000 and married couples with income greater than $170,000 must pay a higher Medicare Part B (medical insurance) and Medicare prescription drug coverage premium amount. This additional amount is called the income-related monthly adjustment amount. Less than 5% of people with Medicare are affected, so most people will not pay a higher premium.

Initial Coverage Limit:

The maximum limit of coverage under the Initial Coverage stage. This amount is $3,700 for 2017.

Initial Coverage Stage:

This is the stage after you have met your deductible and before your total drug expenses have reached $3,700, including amounts you’ve paid and what our plan has paid on your behalf.

Initial Enrollment Period (IEP):

Your Medicare Part D IEP is a 7-month period that begins 3 months before the month you turn 65. It continues through the month you turn 65 and ends 3 months after the month you turn 65. For example, if your birthday falls on July 2, your 7-month IEP spans the 7-month period from April through October.

Note: There is an IEP exception: If your birthday falls on the first of any month, your 7-month IEP begins and ends one month sooner. For example, if your birthday is July 1, your 7-month IEP is the same as if you were born in June, beginning in March and ending in September.

Late Enrollment Penalty (LEP):

An amount added to your monthly premium for Medicare drug coverage if you go without creditable coverage (coverage that is expected to pay, on average, at least as much as standard Medicare prescription drug coverage) for a continuous period of 63 days or more. You pay this higher amount as long as you have a Medicare drug plan. There are some exceptions. For example, if you receive Extra Help from Medicare to pay your prescription drug plan costs, the late enrollment penalty rules do not apply to you.

Lawfully Present Individual:

Individuals who are lawfully present in the United States are eligible for Medicare Part D benefits. These individuals include those with a qualified non-citizen immigration status without a waiting period, or individuals with humanitarian status/circumstances, or have valid non-immigrant visas.

List of Covered Drugs (Formulary or “Drug List”):

Drugs listed on a plan’s formulary are considered “covered drugs”. A formulary is a list of the drugs a Part D plan covers. Many Medicare prescription drug plans break drugs into different tiers within the formularies. Drugs in different tiers have different costs to you.

Low Income Subsidy (LIS):

See “Extra Help.

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