What is Medicare?
Medicare is a federal health insurance program that pays for a variety of health care expenses. The Centers administer it for Medicare & Medicaid Services (CMS), a division of the U.S. Department of Health & Human Services (HHS).
Medicare benefits people who are 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD).
Similar to Social Security, Medicare is an entitlement program.
Most U.S. citizens earn the right to enroll in Medicare by working and paying their taxes for a minimum required period. Even if you didn’t work long enough to be entitled to Medicare benefits, you might still be eligible to enroll, but you might have to pay more.
There are four (4) main parts under Medicare:
- Part A: Hospital Insurance
- Part B: Medical Insurance
- Part C: Medicare Advantage Plans
- Part D: Prescription Drug Coverage
Medicare Part A or Hospital Insurance (HI) helps pay for hospital stays, which includes meals, supplies, testing, and a semi-private room. This part also pays for home health care such as physical, occupational, and speech therapy that is provided on a part-time basis and deemed medically necessary.
Care in a skilled nursing facility as well as certain medical equipment for the aged and disabled such as walkers and wheelchairs are also covered by Part A.
Part A is generally available without having to pay a monthly premium since payroll taxes are used to cover these costs.
For example, Medicare Part B covers:
- Durable medical equipment (canes, walkers, wheelchairs, etc.)
- Physician and nursing services
- X-rays, laboratory and diagnostic tests
- Certain vaccinations
- Blood transfusions
- Renal dialysis
- Outpatient hospital procedures
- Some ambulance transportation
- Immunosuppressive drugs after organ transplants
- Certain hormonal treatments
- Prosthetic devices and eyeglasses
You pay a monthly premium for this part of Original Medicare. The fee can be higher for people with high incomes. A different government program, Medicaid, can help cover Medicare Part B premiums for low-income beneficiaries.
Part B beneficiaries are usually responsible for a portion of their health care costs. You’ll have to pay a deductible each year before your Medicare Part B benefits kick in, and then you’ll generally pay 20% of the bill when you go to a participating Medicare doctor. Medicare pays the full cost of many lab tests and services requested by your doctor.
If you’re enrolled in a Medicare Advantage Plan, most Medicare services are covered through the plan and aren’t paid for under Original Medicare. Most Medicare Advantage Plans offer prescription drug coverage.
These plans are offered by insurance companies and other private companies approved by Medicare. You will share in the costs of your prescription drugs according to the specific plan in which you’re enrolled. Those costs can include a deductible, a flat copayment amount, or a percentage of the full drug cost (called “coinsurance”).
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