What is Medicare and What Does it Cover?
Updated: Nov 3, 2020
Article originally featured on ZME Science
Medicare is a federal health insurance program that pays for a variety of health care expenses. Here's a rundown of the most important things you need to know about Medicare.
Unlike most developed countries in the world, the United States does not have a universal healthcare system. However, millions of Americans have access to Medicare, a federal government insurance program that subsidizes certain healthcare services. Let’s see what it’s about.
Medicare covers those over age 65, as well as younger people who meet certain eligibility criteria, and people suffering from certain health problems. Those who do not qualify for Medicare plans at no cost have to pay a premium and need to sign up during specific enrollment periods.
Although Medicare helps with the cost of healthcare services, it does not necessarily cover all medical expenses or the cost of long-term care.
The Types of Medicare
Medicare is divided into four categories: Medicare Part A, Part B, Part C or Medicare Advantage, and Medicare Part D for prescriptions.
Medicare Part A is basically hospital insurance that pays for inpatient care in a hospital or other inpatient-like settings. Medicare Part A also covers some home healthcare and hospice care.
Medicare Part B is medical insurance that helps cover services performed by doctors and other healthcare providers, durable medical equipment, and some preventive services.
Social Security enrolls American citizens and residents in the Medicare Part A and Part B, which are the Original Medicare.
Medicare Part C, now known as Medicare Advantage, bundles all the benefits and services covered under Part A and Part B under a single plan offered by a private insurance provider. Depending on your insurance company, Medicare Part C may provide other benefits and features not included in Original Medicare.
Medicare Part D helps cover the cost of prescription drugs.
Additionally, Americans can choose to order a Medigap policy from a private insurance company that covers some of the costs that Medicare does not cover, such as copayments, coinsurance, and deductibles.
How Medicare Works
Medicare is a federal health insurance program that pays for a variety of health care expenses. It’s administered by the Centers for Medicare & Medicaid Services (CMS), a division of the U.S. Department of Health & Human Services (HHS).
Just like Social Security, Medicare is an entitlement program, meaning that U.S. citizens and permanent residents earn the right to sign up for Medicare by working and paying their taxes for a minimum required period. It’s possible to enroll in Medicare if you haven’t paid taxes for very long in the United States, but you’ll need to pay more.
Who’s Eligible for Medicare
Each Medicare plan has different eligibility criteria.
American citizens or permanent residents of the United States who are age 65 or older qualify for Medicare Part A.
According to Social Security services, you can be ensured for Part A at no cost at age 65 if either one of the following applies:
You receive or are eligible to receive benefits from Social Security or the Railroad Retirement Board (RRB).
Your spouse (living or deceased, including divorced spouses) receives or is eligible to receive Social Security or RRB benefits.
You or your spouse worked long enough in a government job through which you paid Medicare taxes.
You are the dependent parent of a fully insured deceased child.
Before the age of 65, people may be eligible for Medicare Part A at no cost if one of the following applies:
You’ve been entitled to Social Security disability benefits for 24 months.
You receive a disability pension from the RRB and meet certain conditions.
You receive Social Security disability benefits because you have Lou Gehrig’s disease (amyotrophic lateral sclerosis).
You worked long enough in a government job through which you paid Medicare taxes, and you have met the requirements of the Social Security disability program for 24 months.
You’re the child or widow(er) age 50 or older, including a divorced widow(er), of a worker who has worked long enough under Social Security or in a Medicare-covered government job, and you meet the requirements of the Social Security disability program.
You have permanent kidney failure (end-stage renal disease) and you receive maintenance dialysis or a kidney transplant.
If these conditions don’t apply to you, Medicare Part A is available by paying a monthly premium.
If you’re eligible for Medicare Plan A at no cost, you can enroll in Medicare Part B by paying a monthly premium.
You can only sign up in Plan A and Plan B during designated enrollment periods.
If you have Part A and Part benefits from the government, this means you have Original Medicare. However, if you receive benefits from a private company approved by Medicare, you have a Medicare Advantage plan, which provides extra coverage and may lower out-of-pocket healthcare costs.
If you have Medicare Advantage, you don’t need a Medigap policy since many of the same benefits are covered. These include extra days in the hospital after you’ve used the days that Original Medicare covers.
Anyone with Original Medicare is also eligible for Part D, which covers prescription drug costs. Part D is available as a stand-alone policy or built into Medicare Advantage.
To access Part D, you need to pay an extra monthly premium. Beneficiaries with higher incomes will pay a higher monthly Part D premium.
People who have a low income and have Medicare Part A may be able to get help from the state in order to pay for Medicare premiums. Some of these state-sponsored programs pay for Medicare premiums while others cover Medicare deductibles and coinsurance. Each state has different eligibility criteria, so it’s best if you visit Medicare.gov to find out the required qualifications for your state.
Additionally, as of March 27, 2020, President Trump signed the CARES (Coronavirus Aid, Relief, and Economic Security) Act, into law. This program expands Medicare’s ability to cover healthcare costs for those affected by COVID-19.
How Much Does Medicare Cost in 2020
Depending on your age, history of chronic disease, and the number of years employed, the cost of Medicare can vary wildly. Here’s how much various Medicare plans cost in 2020 at a glance.
Part A premium: Most people don’t pay a monthly premium for Part A (sometimes called “premium-free Part A“). If you buy Part A, you’ll pay up to $458 each month in 2020. If you paid Medicare taxes for less than 30 quarters, the standard Part A premium is $458. If you paid Medicare taxes for 30-39 quarters, the standard Part A premium is $252.
Part A hospital inpatient deductible and coinsurance: You pay: $1,408 deductible for each benefit period. Days 1-60: $0 coinsurance for each benefit period. Days 61-90: $352 coinsurance per day of each benefit period. Days 91 and beyond: $704 coinsurance per each “lifetime reserve day” after day 90 for each benefit period (up to 60 days over your lifetime). Beyond lifetime reserve days: all costs
Part B premium: The standard Part B premium amount is $144.60 (or higher depending on your income).
Part B deductible and coinsurance: $198. After your deductible is met, you typically pay 20% of the Medicare-approved amount for most doctor services (including most doctor services while you’re a hospital inpatient), outpatient therapy, and durable medical equipment (dme)
Part C premium: The Part C monthly premium varies by plan. Compare costs for specific Part C plans.
Part D premium: The Part D monthly premium varies by plan (higher-income consumers may pay more). Compare costs for specific Part D plans.
What’s the Difference Between Medicare and Medicaid
Many confuse Medicare with Medicaid, or vice-versa. Medicaid is a joint federal and state program that provides hospital and medical coverage for those with low income that cannot afford Medicare Plans A and B.
While Medicare is designed for those over 65 and younger people with certain health conditions, Medicaid provides healthcare coverage to people with low income.
Each state in the country has its own rules about who’s eligible for Medicaid and what costs the insurance covers. Depending on where you live, some may qualify for both Medicare and Medicaid.