Without Medicare, it would be hard for many people to access medical care in the United States due to costs. The program has at times also been a controversial one that political actors use to try and gain popular support.
You have no doubt heard about this program, but how much do you know about it? In this article, we discuss all you may need to know about Medicare, including its parts, coverage, and costs.
What is Medicare?
Medicare is a health insurance program of the U.S. federal government that makes it easier for Americans (and long-term U.S. residents) to pay for diverse healthcare expenses. The Centers for Medicare and Medicaid Services administers it.
More specifically, Medicare subsidizes the cost of healthcare for the elderly (65+ of age) and younger people with specific disabilities or disorders. It helps to pay medical bills from trust funds that those covered have contributed to.
This program comprises four health insurance plans (or parts), namely:
- Part A: Hospital insurance plan
- Part B: Medical insurance plan
- Part C: Advantage plan
- Part D: Prescription drug coverage
Part A and Part B constituted the “original” Medicare designed exclusively for adults that are 65 years or older. The legislation creating the program was enacted in 1965 during President Lyndon B. Johnson’s administration – amendments to the Social Security Act of 1935. It came into effect in 1966.
Amendments were made to Medicare in 1972 that extended health coverage to persons of all ages with long-term disabilities or chronic kidney disease.
Parts C and D are later additions to the health insurance program and are managed by private companies. The Medicare Advantage plan was the first to be enacted in 1997 and begun in 1999. It would undergo restructuring and be re-enacted along with Part D in 2003, coming into effect in 2006.
The process of enrolling for the different categories of this program differs. Also, the amounts you pay in premium, if any, are different between them.
Medicare Part A
This health insurance plan helps to cover basic care. It assists patients to pay associated bills when admitted to a hospital, skilled nursing care facility, or hospice. Coverage also extends to some home health services.
Under Part A, the bulk of a patient’s cost of hospitalization linked to an episode of illness is covered for up to about three months. The patient would usually have to pay a one-time deductible for the first 60 days of an episode, which starts from the day of hospitalization and extends to 60 days after being discharged. They also make a co-payment for the next 30 days.
Read Also: Rising Health Care Costs in the U.S.
People who are already receiving Social Security benefits are automatically enrolled for Medical Part A when they turn 65. Those who haven’t been getting such benefits would need to sign up through the Social Security office in their area.
There is a seven-month enrollment period extending from three months before your 65th-birthday month to three months afterward. People who don’t sign up during this “Initial Enrollment Period (IEP)” will get an opportunity to do so between January and March every year. Coverage kicks in on July 1 of the enrollment year.
However, note that failure to sign up for Part A when you first become eligible can cause a 10% hike in your monthly premium.
What you pay: You don’t need to pay a premium if you or your spouse has been receiving Social Security benefits. But you’d have to pay a monthly premium if you aren’t already part of Social Security to get Medicare Part A. Currently, your payment can be up to $458 a month, depending on how many quarters you’ve paid Medicare taxes.
Medicare Part B
Also known as Medical Insurance, this plan adds to the benefits you get from Part A. It helps you take care of the costs of outpatient care and visits to your doctor as well as associated services. You can use it to pay for preventive care, including tests and vaccines, and certain medical supplies.
Medical Part B is available to most people that are at least 65 years old. As in the case of Part A, you may be enrolled in it automatically when you turn 65. The health insurance plan is financed with both payments by those covered and tax-payers’ money.
With Part B, you’re required to pay a deductible and a monthly premium. You also pay 20% of the amount approved by Medicare for the care you require. The plan takes care of 80% of your bills once you meet all conditions.
Expect to pay more out-of-pocket if the doctor you’re seeing does not accept amounts approved by Medicare. In such a case, you might even have to pay the total cost for a visit or care.
Almost everyone eligible for Medicare Part A is also enrolled for the medical insurance plan. Sign-up is usually automatic for persons that are 65 and receive Railroad Retirement Board or Social Security benefits. If you aren’t enrolled automatically, the process for doing so is similar to that for Part A.
There may be a late enrollment penalty for failing to buy Medical Insurance when first eligible. You will continue paying this for the length of time you have the plan.
What you pay: The standard monthly premium for Medical Insurance is at least $144.06. For the deductible, you pay $198. The 20% co-insurance you’d need to pay comes in after meeting those requirements.
Medicare Part C
The privately-run Part C plan covers all services included in the Original Medicare (Parts A and B), bar hospice care. It offers broader coverage often at extra costs. Apart from hospital and medical insurance, coverage can extend to:
- Prescription drugs
- Optical services
- Dental services
- Ear care
- Wellness programs
Part C requires paying a monthly premium. This can vary widely between different plans.
The process of enrolling for Medicare Advantage varies since it is run by private insurance companies. Therefore, the rules will be different as regards how you sign up. It is required that you’re already signed up for both Parts A and B if you wish to enroll.
What you pay: The average monthly premium for Medicare Advantage plans is about $30. This is aside what you may be paying for Original Medicare.
Medicare Part D
Referred to as Prescription Insurance, this health insurance plan covers your prescription drug needs. The plan you choose determines what medications are covered. However, there is a minimum standard level of coverage that Medicare-approved companies offering the plans must provide.
Since coverage varies, the amounts interested persons have to pay are also different. There are usually monthly payments and deductible requirements. You may also be required to make co-payments.
You must be signed up for at least one of Parts A and B to enroll for Prescription Insurance. Enrollment must be through an insurance company.
You may have to pay a late enrollment penalty if you do not have at least one of this plan, Medicare Advantage, and adequate prescription drug coverage for 60 consecutive days or more after the period that you’re eligible to sign up. The longer you wait before enrolling, the higher the penalty.
What you pay: Average monthly premium for Part D is around $33. Your reported income affects the exact amount you’d have to pay. You’d also be required to pay a monthly adjustment based on your income besides the typical premium once your income crosses a threshold. Your deductible can range from nothing out-of-pocket to $415.
How About When You Have Other Insurance?
It is possible that you may have other insurance that could cover your health needs. These can include Medicaid, employer group coverage, worker’s compensation, TRICARE, and retirement benefits.
The question then becomes: how does Medicare work when you also have another type of insurance?
It’s rather simple. Medicare determines who pays first for your healthcare needs by working with other health insurance you may have. There are usually primary and secondary payers.
The insurance that goes first toward settling your healthcare bills – to the coverage threshold – is the primary payer. What is left out of your bills is for the secondary payer to take care of.
When determining who the primary payer would be, the type of coverage you have is put into consideration. Your other insurance pays first in many cases when you have more than Medicare. For example, the federal health insurance program will be the secondary payer when you have worker’s compensation coverage.
You may want to read the official Medicare page on how it works with other insurance to get a better understanding of primary and secondary payers in different situations.
You can consider delaying enrollment for Medicare if you’re still working when you turn 65 and enjoy coverage attached to your job. This helps you to avoid making premium payments yet. It is possible to sign up during a Special Enrollment Period when you quit working or loses your coverage without having to pay a penalty.
However, you can go ahead to sign up for Part A if you’ve worked for at least 40 quarters (10 years) and have paid Medicare taxes all the time. You don’t pay a premium for the Hospital Plan when this is the case.
Must You Use Specific Providers with Medicare?
You are not completely restricted by Medicare in terms of what providers to use, particularly for the government-run parts. The program doesn’t maintain a network of providers to forcibly use with Parts A and B. You can use practically any healthcare practitioners that accept patients using the federal health insurance plans. There’s no overt geographical restriction as well.
It is best to work with providers that declare they accept “Medicare assignment” for the best terms, however. Such healthcare professionals or facilities agree to the prices approved by Medicare for services and supplies that are covered.
However, a provider can still agree to treat you, even when it doesn’t accept Medicare-approved rates. The only problem is that you will be charged more than what is approved. You will be solely responsible for any extra amount beyond that set by Medicare, in addition to your co-pay.
There’s a Physician Compare tool on Medicare’s official website to find doctors and medical facilities that agree to accept assignments.
Medicare and Medicaid | United States health insurance | Britannica (https://www.britannica.com/topic/Medicare-United-States-health-insurance)
Medicare costs at a glance | Medicare (https://www.medicare.gov/your-medicare-costs/medicare-costs-at-a-glance)