Medicare is a form of public health insurance created by federal law. Most people who work in the U.S. have taxes withheld from their pay under the Federal Insurance Contributions Act (FICA). The taxes are for old-age, survivors, and disability insurance (Social Security tax) and for hospital insurance (Medicare tax).
Who is eligible for Medicare?
• People age 65 and older who have worked (or have a spouse who has worked) for at least 10 years in Medicare-covered employment. You also must be a U.S. citizen. If you aren’t, you must have been a lawful permanent resident for at least 5 years.
• People under age 65 who have a disability under Social Security rules. If you receive disability benefits from Social Security or certain disability benefits from the U.S. Railroad Retirement Board, you must meet a 24 month waiting period before your Medicare can start.
• Children with End Stage Renal Disease and a Social Security-insured parent.
• People with End Stage Renal Disease or Lou Gehrig’s Disease (ALS). No waiting period applies if you have either of these conditions.
What does Medicare cover?
Part A: hospital insurance: inpatient care, skilled nursing (but not long-term care), hospice care, some home health. For most people, Part A is premium free.
Part B: outpatient services: doctor’s visits, durable medical equipment, clinical labs, preventive services, and some home health care. Part B has a monthly premium charge.
Part D: prescription drug coverage. This is an optional component, and it has a monthly premium charge. Private insurance plans offer this coverage.
How Is Medicare administered?
You choose how your Medicare benefits are administered: either Original Medicare or a Medicare Advantage Plan.
Original Medicare: Parts A and B are administered by the federal government as fee-for-service plans. It’s also called “traditional” Medicare. You can choose any doctor or hospital in the U.S. that accepts Medicare. You can also add a Part D plan separately.
Medicare Advantage Plan: This option is also called Part C, which can be confusing. A person can choose a third-party, private insurance plan to deliver Part A and Part B, instead of Original Medicare. Many Part C plans have drug coverage, or you can add Part D. Usually a premium is charged. For most Part C plans, you have to choose doctors and hospitals who are “in network” with the plan. The plan may cover additional benefits like vision, hearing, and dental, which aren’t in Original Medicare.
Do I have any other options?
Medigap Plan: This is extra insurance if you have Original Medicare, not a Medicare Advantage Plan. It’s also called Medicare Supplement Insurance. Original Medicare pays for much, but not all, of the costs for covered benefits. For example, you generally have to pay 20% coinsurance for each Part B covered service. A Medigap plan helps fill “gaps” in Original Medicare. It can help pay some of the remaining costs including copayments, coinsurance, and deductibles. These plans are sold by private insurance companies and have a monthly premium cost.
Medicare Savings Programs: State governments have Medicaid-administered programs to help low-income households pay Medicare’s Part A and Part B premiums. Some households also qualify for help to pay Part A and Part B deductibles, coinsurance, and copayments. Household income and resource limits apply.
“Extra Help” or Low Income Subsidy: This Medicare program helps people with limited income and resources to pay Part D premiums, deductibles, coinsurance, and other costs for drugs.
You can apply for both Extra Help and Medicare Savings Programs at the same time with your state’s agency that administers Medicaid.
What else should I know?
Medicare has rules for when you must enroll and when you can sign up. You could be charged a penalty if you don’t enroll when you should. You can be limited to certain times to make changes to your choices. If you also have employment-based insurance, rules will determine what/when Medicare will pay.
To Learn More:
• Visit the official government website: Welcome to Medicare | Medicare
• Locate resources in your state that can answer questions, offer information, and explain options: Home | State Health Insurance Assistance Programs (shiphelp.org)
Editor’s Note: This is general information and not legal advice. Please consult with a lawyer licensed in your state for legal advice.
By Susan Schoppa, J.D.