What is Medicare?

Medicare is a federal health insurance program created in 1965 to provide affordable healthcare for specific groups in the U.S. It primarily serves:

• Individuals aged 65 and older.
• People under 65 with certain disabilities.
• Individuals with End-Stage Renal Disease (ESRD) requiring dialysis or a transplant.

Medicare consists of several parts, each designed to cover different aspects of healthcare needs. Understanding these parts is crucial for choosing the right coverage.

Medicare Parts Explained

1. Part A: Hospital Insurance

Part A covers inpatient care in hospitals and similar facilities.

• What it Covers:

  • Inpatient hospital stays.
  • Skilled nursing facility care (not long-term care).
  • Hospice care for terminally ill patients.
  • Limited home healthcare services.

• Costs:

  • Most people don’t pay a premium for Part A if they or their spouse paid Medicare taxes while working for at least 10 years.
  • There is an annual deductible and coinsurance for extended hospital stays.

2. Part B: Medical Insurance

Part B covers outpatient and preventive services.

• What it Covers:

  • Doctor visits and specialist consultations.
  • Preventive care (e.g., vaccines, cancer screenings).
  • Diagnostic tests (e.g., X-rays, MRIs).
  • Durable medical equipment (e.g., wheelchairs, oxygen tanks).
  • Mental health services.

• Costs:

  • Monthly premium (amount depends on income).
  • Annual deductible and 20% coinsurance for most services after the deductible is met.

3. Part C: Medicare Advantage Plans

Part C, also known as Medicare Advantage, is offered by private insurance companies approved by Medicare. These plans bundle Part A and Part B and often include additional benefits.

• What it Covers:

  • Everything covered by Parts A and B.
  • Additional benefits like dental, vision, hearing, and fitness programs.
  • Many plans include Part D (prescription drug coverage).

• Costs:

  • Varies by plan but typically includes premiums, copayments, and deductibles.
  • Some plans may have lower out-of-pocket costs than Original Medicare.

• Key Feature:

  • These plans use provider networks (HMO or PPO), which may limit your choice of doctors and hospitals.

4. Part D: Prescription Drug Coverage

Part D helps cover the cost of prescription medications. It is available through private insurance companies as a standalone plan or included in Medicare Advantage.

• What it Covers:

  • A wide range of prescription medications (each plan has its own formulary).
  • Coverage tiers with different cost-sharing for generic vs. brand-name drugs.

• Costs:

  • Monthly premium (varies by plan and income).
  • Annual deductible and copayments/coinsurance for medications.
  • A coverage gap (“donut hole”) exists but has been reduced significantly in recent years.

5. Medicare Supplement Plans (Medigap)

Medigap is not a part of Medicare but works alongside Original Medicare (Parts A and B). It helps cover out-of-pocket costs like deductibles, copayments, and coinsurance.

• What it Covers:

  • Costs not covered by Parts A and B.
  • Some plans offer additional coverage for medical care outside the U.S.

• Key Features:

  • Available only to those enrolled in Original Medicare.
  • Requires a monthly premium, but offers predictable healthcare expenses.

Additional Notes on Medicare

• Eligibility:

  • Automatic enrollment for most people when they turn 65 if they’re already receiving Social Security or Railroad Retirement Board benefits.
  • Younger individuals with certain disabilities or ESRD must apply.

• Enrollment Periods:

  • Initial Enrollment Period (IEP): 7-month window around your 65th birthday.
  • General Enrollment Period (GEP): January 1 – March 31 (for those who missed IEP).
  • Special Enrollment Period (SEP): Triggered by life events like losing employer coverage.

• Key Terms to Know:

  • Deductible: Amount you pay before coverage starts.
  • Coinsurance: Your share of the cost (percentage) after the deductible is met.
  • Premium: Monthly payment for coverage.

Why Medicare is Important

Medicare provides essential healthcare coverage for millions of Americans. However, understanding its parts and limitations is critical for avoiding gaps in coverage and unexpected expenses. Many people choose to enhance their coverage with Medicare Advantage, Part D, or Medigap to better meet their needs.

By knowing how each part works, you can confidently choose the best plan for your health and financial situation.