What is Medicare?

The average cost of health insurance can be very high. Medicare is one potential solution to those high costs.

What is Medicare? Medicare is a federal health insurance program that provides coverage to those 65 or older, certain younger people with disabilities, and individuals with end-stage renal Disease (ESRD). It has four parts: A, B, C, and D – each covering different healthcare services. 

This guide will define Medicare, look at what each part covers, and explain how to enroll in Medicare. 

Understanding Medicare Coverage

What is Medicare? Medicare is the federal government’s healthcare program that covers people 65 and older and those with certain disabilities, irrespective of income.

President Lyndon B. Johnson enacted the program in 1965 as part of his Great Society initiatives. However, its roots in the country stretch back to President Franklin D. Roosevelt’s Social Security Act of 1935.

As mentioned earlier, Medicare has four parts:

• What is Medicare Part A? (hospital insurance): It covers inpatient hospital care, hospice care, home health care, and skilled nursing facility care for beneficiaries who have paid into the Medicare system through taxes on their wages.
• What is Medicare Part B? (medical insurance): It covers physicians’ services, outpatient hospital care, and other medical services not covered under Part A, such as lab tests, physical therapy, and durable medical equipment like wheelchairs and oxygen tanks for those recipients who qualify for these benefits.
• What is Medicare Part C? (Medicare Advantage): It is an alternative method for beneficiaries to receive their Medicare benefits. Medicare Advantage is provided by private companies approved by the Centers for Medicare & Medicaid Services (CMS). The coverage includes all of the benefits available under Parts A & B, with additional coverage such as vision, dental, and hearing aids, depending on the plan chosen.
• What is Medicare Part D? (prescription drug coverage): It covers prescription drugs not covered under either Parts A & B or otherwise available through another insurance provider, including employer-sponsored or union plans. 
• What is Medigap? (Medicare supplement insurance plans): It is a supplemental health insurance policy purchased by an individual that helps fill in any gaps left uncovered between Original Medicare Parts A & B. It covers copays, deductibles, and other out-of-pocket expenses.

How to Qualify for Medicare

The Centers for Medicare and Medicaid Services (CMS), which is part of the United States Department of Health and Human Services, determines Medicare eligibility.

The most common way to qualify for Medicare is to be age 65 or older. Once you reach this milestone, you are automatically eligible to enroll in traditional Medicare, including Part A and Part B coverage. You can enroll three months before your 65th birthday and continue until you turn 65. 

If you are under 65 but have a disability, you may still be eligible for Medicare coverage. To qualify, you must meet these three criteria:

• Have been receiving Social Security disability benefits for at least 24 months. If you are receiving SSDI benefits, your coverage will begin automatically.
• Have end-stage renal disease (ESRD). If you have ESRD, you can enroll in Medicare even if you don’t receive disability benefits.
• Have amyotrophic lateral sclerosis (ALS). If you have ALS, your Medicare coverage begins the month after you start receiving Social Security disability benefits.

You’ll also need to be a legal permanent resident of the U.S. for at least five years.

What Medicare Covers

Now that you know who is eligible for Medicare let us look at what each part of Medicare covers and its costs.

Medicare Part A Coverage

Medicare Part A helps cover hospital services, including:

• Inpatient hospital care
• Skilled nursing facility care
• Hospice and home healthcare

It also covers certain preventive services, such as flu and pneumonia shots.

Medicare Part A does not cover long-term care, cosmetic surgery, concierge care, massage therapy, or any medical care that is not medically necessary.

Here are the costs associated with Part A:

• Premium: $0 if your spouse or parent worked for at least ten years in Medicare-covered employment
• Deductible: $1,600 per benefit period
• Coinsurance: $0 for the first 60 days of a hospital stay, then coinsurance charges may apply

Medicare Part B Coverage

Part B helps cover medically necessary and preventative services. It includes:

• Doctor visits
• Diagnostic tests ( X-rays, MRIs)
• Ambulatory care
• Mental health services
• Durable medical equipment
• Transplants and immunosuppressive drugs

This type of Medicare covers chemo and radiation, but Part B will not cover medical care that is not deemed medically necessary, including elective cosmetic surgeries and alternative medical care such as acupuncture. 

Here’s what you can expect to pay for Medicare Part B in 2023:

• Premium: $164.90 per month, with some people paying more or less depending on their income
• Deductible: $226 annually
• Coinsurance: 20% of the Medicare-approved amount for most services and supplies

Medicare Part C coverage

Medicare Part C, also known as Medicare Advantage (M.A.), offers the same coverage as Original Medicare (Parts A and B), plus additional benefits and services. Part C plans are run by private insurance companies that Medicare has approved. 

Most Medicare Advantage plans include prescription drug coverage (Part D) at no additional cost. Many offer supplemental coverage such as vision, hearing, dental care, and health and wellness programs. 

Depending on your plan, you may also receive additional benefits such as access to fitness centers or discounts on certain medical services.

Some Part C plans may not cover routine dental and vision care, hearing aids, or a private room in a hospital.

Premiums, deductibles, and coinsurance amounts vary by plan. Most Medicare Advantage plans have monthly premiums and a maximum out-of-pocket limit, the most you will pay each year for services covered by the plan.

Medicare Part D Coverage

Medicare Part D (Drug Prescription) is a prescription drug benefit offered through private companies for those enrolled in Original Medicare or as a set of benefits included with your Medicare Advantage Plan. 

It covers most outpatient prescriptions, and each plan has its formulary, which lists all the drugs covered under the plan. These drugs must include at least two from most categories. 

They should cover all drugs in categories such as HIV/AIDS treatments, antidepressants, antipsychotics, anticonvulsant treatments for seizure disorders, and immunosuppressants. 

It’s worth noting, however, that Part D does not cover over-the-counter and weight loss/gain drugs. 

In most cases, you’ll only need to pay a monthly premium for Medicare Part D. The premium will vary depending on your chosen plan. Read our guide on the most expensive Medicare drugs to save money on prescription costs.

Medigap Coverage

Medigap is a private insurance policy that helps to fill the gaps in Original Medicare. It pays for copayments, coinsurance, and deductibles that Original Medicare does not cover. Medigap may also provide coverage when you travel abroad. (For more information, read our “Can you have private insurance and Medicare?“).

However, Medigap does not cover vision or dental services, long-term care, eyeglasses, hearing aids, or private-duty nursing. Also, note that you must already have Medicare Parts A and B to be eligible for Medigap coverage.

The cost of Medigap coverage will vary depending on your location, the plan you choose, your age, and the insurer you use, among other factors. 

Generally, younger buyers pay lower premiums that don’t change, so always shop around and compare plans and prices to find the one that fits your needs.

How to Enroll in Medicare

Enrolling in Medicare can seem complicated and overwhelming, but it doesn’t have to be. Here are five tips to help make the process easier:

Determine Your Eligibility

The first step in enrolling in Medicare is determining whether you’re eligible for coverage. If you’re 65 or older and already receiving Social Security benefits, you automatically qualify for Medicare Parts A and B and don’t need to take action. 

Get Informed About Different Parts of Medicare

Once you determine that you’re eligible for coverage, it’s important to understand the different parts of Medicare, including Parts A and B, Part C (Medicare Advantage), and Part D (Prescription Drugs). Knowing which parts are right for you can help you make an informed decision.

Check When Your Enrollment Period Begins and Ends

The Medicare enrollment dates are as follows:

• Initial enrollment: This is the period when you are first eligible for Medicare. Generally, this period begins three months before your 65th birthday and ends three months after your 65th birthday.
• General enrollment: This period is for people who did not enroll during their initial enrollment but wish to do so now. The general enrollment period runs from January 1 to March 31 of each year.
• Special enrollment: This is for people who experience certain life changes, such as moving to a new area or losing other insurance coverage.
• Medigap enrollment: This period starts the first month you’re 65 or older and enrolled in Part B, and it lasts for six months.
• Open enrollment: This period runs from October 15 to December 7 annually. During this time, you can switch, join, or drop a plan.

Be aware that you may be subject to late enrollment penalties if you don’t enroll in a plan during your initial or special enrollment period. 

Research Your Options Carefully Before Signing Up for a Plan

When it’s time to sign up for a plan, there are many things to consider, like copays and deductibles, provider networks, coverage for prescription drugs, etc. 

Make sure that any plan chosen meets all of your needs now and into the future when your healthcare needs may change or become more complex due to age-related issues like diabetes or chronic pain management, etc. 

Enroll in a Plan

Once you have chosen the best plan for your needs, enroll in it. You can do this online using the SSA website or by calling the Social Security Administration at 1-800-772-1213. Always fill out the forms completely and accurately to help ensure a smooth enrollment process.

Once your Medicare application is approved, you’ll have access to its benefits. You can expect to receive a card in the mail about 30 days after approval – though you may be covered as early as the date listed on your award notice.

The Difference Between Medicare and Medicaid

What is the difference between Medicare and Medicaid? As previously stated, Medicare is a federally-funded health insurance program that helps pay for medical expenses for people aged 65 and over, certain individuals with disabilities, and those with end-stage renal disease (ESRD).

On the other hand, Medicaid is a jointly funded state and federal program that provides health care to low-income individuals, including children, pregnant women, and adults. 

Medicaid also covers services that Medicare does not, such as nursing home care and other long-term care. It’s important to note that both Medicare and Medicaid can cover some of the same services and that people can qualify for both programs. 

If you qualify for both, Medicare will be your primary coverage, and Medicaid will be your secondary.

Eligibility for Medicaid can vary from state to state, so check with your local government on eligibility requirements and coverage options.

Exploring Medicare: Case Studies

Case Study 1: John’s Medicare Journey

John, a 67-year-old retiree, recently became eligible for Medicare. He was overwhelmed by the different parts and coverage options available. With the help of a Medicare advisor, he learned about the various parts of Medicare and their associated costs.

After carefully considering his healthcare needs and budget, John enrolled in Medicare Part A and Part B. This case study highlights the importance of understanding Medicare options and making informed decisions based on individual circumstances.

Case Study 2: Sarah’s Medicare Advantage Experience

Sarah, a 72-year-old with multiple chronic conditions, decided to explore Medicare Advantage plans as an alternative to Original Medicare. She wanted additional benefits such as prescription drug coverage and vision care.

After comparing different Medicare Advantage plans, Sarah found one that offered comprehensive coverage at an affordable cost. This case study emphasizes the benefits of Medicare Advantage plans for individuals seeking more comprehensive healthcare coverage.

Case Study 3: Mike’s Prescription Drug Coverage With Part D

Mike, a 68-year-old Medicare beneficiary, needed prescription drug coverage to manage his chronic health condition. He enrolled in Medicare Part D, which provided coverage for his necessary medications. By understanding the formulary and coverage details of his Part D plan, Mike was able to access the medications he needed at an affordable cost.

This case study illustrates the importance of researching and selecting the right Part D plan for optimal prescription drug coverage.

Final Thoughts on Medicare

What is Medicare? Medicare is a government program that provides healthcare coverage for people aged 65 or older and those with certain disabilities. Part A covers inpatient hospital services, skilled nursing facilities, home health care, and hospice care. 

Part B includes doctor services, outpatient hospital care, preventive screenings, durable medical equipment, and home health care services. 

Part C combines parts A and B in one plan and may cover additional services such as prescription drugs. 

Finally, Part D is a stand-alone prescription drug plan that helps cover prescription medications approved by the U.S. Food and Drug Administration (FDA). 

In summary, Medicare is a comprehensive program that provides valuable coverage for many seniors and eligible individuals throughout the United States.