Facts About Medicare

Medicare is a federal insurance program that pays for a variety of health care expenses. Medicare beneficiaries are typically senior citizens, aged 65 and over, and adults with approved medical conditions like Lou Gehrig’s disease or qualifying permanent disabilities.

Like Social Security, Medicare is an entitlement program. Most U.S. citizens earn the right to enroll in Medicare by working and paying Medicare taxes for a minimum required period. If you have not worked for the required period, you may still be eligible, but you’ll probably pay more.

The Medicare “Parts”

The different Medicare programs are often referred to as Part A, Part B, Part C, and Part D.

Medicare Part A

Part A is hospital insurance. It covers inpatient hospital care, a limited stay in a skilled nursing care facility, limited home health care services, and hospice care.

Most Part A beneficiaries don’t pay monthly premiums to receive coverage under this part of “Original Medicare”, this is called “premium-free” Part A. Generally, if you’ve worked and paid Medicare taxes for at least 10 years (40 quarters), you will be eligible for premium-free Part A. Otherwise, you’ll pay a monthly premium.

Part A typically does not cover the full amount of your hospital bill. You’ll probably be responsible for a share of the hospital bill and you’ll have to reach a deductible before your Medicare benefits kick in. Medicare will then pay 100% of your costs for up to 60 days in a hospital or up to 20 days in a skilled nursing facility. After that, you’ll pay a flat amount up to the maximum number of covered days.

Your Part A benefits cover some of the costs for a total of 90 days in a hospital and 100 days in a skilled nursing facility. Medicare also covers up to 60 “lifetime reserve days.” These are days that you stay in a hospital in excess of 90 days in a row. You get a lifetime total of 60 reserve days.

Medicare Part B

Part B is medical insurance. Its benefits cover certain non-hospital medical expenses like doctors’ office visits, blood tests, X-rays, diabetic screenings and supplies, and outpatient hospital care.

There is a monthly premium for Part B of Original Medicare and the fee is typically higher for people with higher incomes. Medicaid, a different government program, can help cover the Part B premiums for low-income beneficiaries.

Part B beneficiaries are usually responsible for a portion of their health care costs. Typically, you pay a yearly deductible before your Part B benefits kick in and 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.

Medicare Part C

Part C, or “Medicare Advantage”, often includes every type of Medicare coverage in one plan. It’s offered by private insurance companies contracted through CMS to provide a benefits package as an alternative to Original Medicare. In order to enroll in this optional program, you must have Original Medicare Part A and Part B. You also may have to continue paying your Part B premium.

Medicare Advantage plans must provide all Medicare Part A and Part B benefits (except hospice care), additional benefits vary among the individual private health insurers. Many Medicare Advantage plans include prescription drug coverage known as Medicare Advantage Prescription Drug (MA-PD) plans.

Some plans might have a lower deductible, while also allowing you to pay a smaller share of the remaining costs. Medicare Advantage plans may even cover certain health care services that Original Medicare Part A and Part B does not cover like eye exams, hearing aids, dental care, or health care received while traveling outside the United States.

Medicare Part D

Part D is optional prescription drug coverage. Its available as a stand-alone prescription drug plan through private insurance companies and monthly fees vary among insurers. You will share in the costs of your prescription drugs according to the specific plan in which you enroll. Those costs can include a deductible, a flat copayment or a percentage of the full drug cost which is called “coinsurance”.