Medicare is a government-run health care program designed to help care for the elderly, certain younger individuals with disabilities, and people with permanent kidney failure requiring dialysis or a transplant. Citizens pay for Medicare, an entitlement program, through Social Security contributions that are deducted from paychecks (a component of what are often called "payday taxes").
Medicare is divided into the following four parts:
- Part A - Hospital insurance
- Part B - Medical insurance
- Part C - Medicare Advantage managed care (provided through private insurers)
- Part D - Prescription drug coverage
This article provides a general overview of Medicare and its main components, with information about eligibility, coverage, and enrollment.
Medicare Part A: Eligibility and Coverage
Most people 65 or older are entitled to free Medicare coverage based on their work record or that of their spouse. If you're 65 or older and don't qualify for free Medicare coverage, you can enroll in it and pay a monthly fee for the coverage. If you enroll and pay for Part A hospital insurance, you must also enroll and pay for Part B medical insurance (for an additional monthly fee).
For a benefit period, also known as a "spell of illness," Medicare Part A covers most of the costs of a hospital stay, nursing facility, and home health care costs that follow a hospital stay. The benefit period begins the day an individual enters the hospital or skilled nursing facility and continues until the individual is out for 60 consecutive days.
If an you're in and out of the hospital or nursing facility several times during a specific period but haven't been out for 60 consecutive days, all of the inpatient bills for that time will be considered part of the same benefit period. Medicare Part A hospital insurance contains a deductible (increased each year on Jan. 1), which must be paid before Medicare will pay anything.
Medicare Part B: Eligibility and Coverage
If you're eligible for premium-free Part A coverage, then you're also eligible for Part B. But if you're required to pay a premium for Part A, you also must meet these requirements in order to get Part B coverage:
- Be a U.S. resident; AND
- Be either a U.S. citizen, or
- Be a legal permanent resident who's been residing in the U.S. for 5 continuous years prior to your Medicare application.
Medicare medical insurance covers basic medical services provided by doctors, clinics, and laboratories. Nonetheless, when you add up your bill, you will note that Medicare pays, on average, for only half the total. Moreover, Medicare usually pays only about 80 percent of what it decides are the approved charges for medical services (you're responsible for the remaining 20 percent).
Medicare Part B pays for:
- Physician services (surgery included) whether at a hospital, physician's office or in your home;
- Basic women's health tests including mammograms, pelvic exams, PAP smears, and bone density tests;
- Services provided by nurses, surgical assistants, or certain technicians;
- Outpatient hospital treatment;
- An ambulance, if the trip is required;
- Medicine and drugs administered at a hospital or physician's office;
- Medical equipment and supplies;
- Certain types of oral surgery;
- Part of the cost of outpatient speech and physical therapy;
- Certain limited services provided by podiatrists and optometrists;
- Counseling and care by psychologists, social workers, and daycare personnel;
- Certain preventative cancer screening;
- Certain chiropractic services; and
- Certain home care services such as part-time skilled nursing care, and physical therapy.
You'll automatically be enrolled in Medicare Part A at age 65 if you're receiving Social Security, Railroad Retirement, or disability benefits. Approximately three months prior to your 65th birthday, you'll receive an Initial Enrollment Package that contains information about Medicare. If you want Medicare Part B, you must enroll in the program and have the premiums for this coverage deducted from your Social Security check.
Medicare Advantage Managed Care (Part C): Eligibility and Coverage
Medicare Part C, called Medicare Advantage (or "MA"), is a managed care program offered through private insurers that contract with Medicare. These plans provide the Part A and Part B benefits described above and most offer prescription drug coverage. In addition, most Medicare Advantage plans also offer vision, hearing, dental, and other forms of coverage not provided by "Original Medicare" (Parts A and B).
But while MA plans offer more coverage, this comes with an additional out-of-pocket costs for the patient. Also, you may need a referral before seeing a specialist. Generally, since these are private insurers, the rules, procedures, and costs are subject to change each year.
Medicare Part D (Prescription Plan): Eligibility and Coverage
If you're eligible for Medicare Part A or Part B, then you're also eligible for prescription coverage under Medicare Part D. Keep in mind, however, that you'll have to pay penalty if you decide to join Part D at a later date (instead of enrolling once you're eligible). There is no health screening requirement prior to enrolling in a Part D prescription drug plan and you can't be denied coverage for any reason.
Prescription drug coverage under Part D is provided through private insurance plans approved by Medicare, with premiums that vary by plan. Keep in mind that some Medicare Advantage plans (Part C) don't charge extra premiums for prescription coverage. The medications covered are based on the plan's formulary; non-covered drugs must be paid for out-of-pocket (unless there's an approved generic version).
Confused About Your Medicare Options? Talk to a Health Care Attorney
Taking care of your current and future medical needs is of utmost importance to your well-being, so you don't want to rush your decision. Depending on your particular situation, you may have additional questions about regulations and coverage. Talk to a health care attorney near you if you need legal or regulatory guidance.