What is Medicare?
Medicare is a health care program managed by the United States government that covers people who are age 65 or older, under age 65 but with certain disabilities, and those of any age with End-Stage Renal Disease (ESRD). The Centers for Medicare and Medicaid Services (CMS) is the federal agency that is responsible for its administration. The original Medicare plan, which was signed into law in 1965 to amend Social Security legislation, has two parts. Part A, which is hospital insurance, and Part B, medical insurance. However, since its inception, multiple options have become available for subscribers that may enhance their original benefit at a decreased expense. Programs such as Medicare Part D, a prescription benefit; Medigap, a supplement to parts A and B; and Medicare Advantage, a combination of the above offered by private companies, are now available to subscribers.
Who is eligible?
In general, individuals are eligible for Medicare if they worked for at least 10 years in Medicare-covered employment. They must also be at least 65 years old and a citizen or permanent resident of the United States.
Individuals under the age of 65 may also be eligible if they are disabled or have End Stage Renal Disease. People under 65 and disabled must be receiving disability benefits from either Social Security or the Railroad Retirement Board for at least 24 months before Medicare automatic enrollment occurs.
Medicare Benefits
Part A: Medicare Part A is hospital Insurance. It also covers skilled nursing facilities, hospice care and home health care (not custodial or long-term care). This part helps cover in-patient care in hospitals, which includes critical access hospitals. Most often, there is not a premium associated with this due to the individual having already paid for it through their payroll taxes while working.
Part B: Medicare Part B is medical Insurance. This covers doctors’ services and outpatient care. It often covers other medical services that part A does not cover, such as physical and occupational therapy and some home health care. If a service or supply is deemed medically necessary, Part B may offer coverage as well. Subscribers pay a monthly premium for Medicare Part B.
Part C: Medicare Part C refers to the option given to beneficiaries to obtain their Medicare benefits through private insurance companies instead of through the original Medicare program. These types of programs, called Medicare Advantage plans, are required to mirror the original benefits, or offer enhanced coverage. They often replace Medicare’s typical co-pay arrangement with fixed deductibles or co-pays. Part C plans also include Medicare Part D, which offers prescription drug coverage to beneficiaries.
Part D: Medicare Part D is a federal program that subsidizes the cost of prescription drugs for Medicare beneficiaries in the United States. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 added the drug benefit in 2006. Part D, however, is not part of the “original” Medicare program comprised of Part A, hospital coverage or Part B, medical services coverage (physician/outpatient). It is, in fact, additional coverage that may be purchased through private insurance carriers or as part of a Part C plan, such as Medicare Advantage.
You can join a Medicare drug plan when you first become eligible for Medicare and each year between the enrollment period of November 15 through December 31. Medicare beneficiaries MUST specifically choose and enroll into one of the two plans in order to obtain the benefit of the medical drug benefit.
Medigap: Medigap coverage is supplemental insurance that is offered in coordination with the original Medicare plan. This is sold to individuals through private insurance companies for the purpose of filling in the “gaps” that Medicare doesn’t cover, such as the deductibles and co-pays. It is different than a Medicare Advantage plan in that it is only offered for those who have original Medicare parts A and B.
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