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Understanding Medicare

Medicare is a federal health insurance program in the United States that provides coverage for people aged 65 or older and some younger individuals with disabilities. It also covers people of any age with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant). This article delves into the intricacies of Medicare, its benefits, and how it works.

Components of Medicare

Medicare is divided into four parts, each offering different types of coverage. Understanding these parts is crucial for anyone looking to benefit from the program.

Medicare Part A

Medicare Part A, also known as hospital insurance, covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care. Most people don’t pay a premium for Part A because they or their spouse already paid for it through their payroll taxes while working.

Medicare Part B

Medicare Part B, also known as medical insurance, covers certain doctors’ services, outpatient care, medical supplies, and preventive services. Most people pay a standard premium for Part B. Some high-income individuals may pay a higher premium.

Medicare Part C

Medicare Part C, also known as Medicare Advantage, is an alternative to Original Medicare (Parts A and B). These are private health plans approved by Medicare. If you join a Medicare Advantage Plan, you still have Medicare, but you’ll get your Medicare Part A and Part B coverage from the Medicare Advantage Plan, not Original Medicare.

Medicare Part D

Medicare Part D, added to Medicare in 2006, covers prescription drugs. These plans are offered by insurance companies and other private companies approved by Medicare. Each Medicare Prescription Drug Plan has its own list of covered drugs (formulary).

Eligibility for Medicare

Eligibility for Medicare is based on several factors, including age, disability status, and certain health conditions.

Age-based Eligibility

People aged 65 or older are eligible for Medicare. However, they must be U.S. citizens or permanent legal residents who have lived in the U.S. for at least five years.

Disability-based Eligibility

People under 65 may be eligible for Medicare if they have been receiving Social Security Disability Insurance (SSDI) for more than 24 months or have a disability pension from the Railroad Retirement Board and meet certain conditions.

Health Condition-based Eligibility

People of any age with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant) or Amyotrophic Lateral Sclerosis (ALS, also known as Lou Gehrig’s disease) are eligible for Medicare.

Enrollment in Medicare

Enrollment in Medicare is not automatic for everyone. It depends on whether you’re receiving Social Security benefits before you turn 65 or if you need to sign up for Medicare.

Automatic Enrollment

If you’re already receiving Social Security benefits, you’ll be automatically enrolled in Medicare Parts A and B when you turn 65. Your Medicare card will be mailed to you about 3 months before your 65th birthday.

Manual Enrollment

If you’re not receiving Social Security benefits, you’ll need to sign up for Medicare. You can sign up during your Initial Enrollment Period, which begins three months before the month you turn 65 and ends three months after the month you turn 65.

Costs of Medicare

Medicare costs include premiums, deductibles, copayments, and coinsurance. The costs vary depending on the part of Medicare you’re enrolled in and the coverage you choose.

Costs for Part A

Most people don’t pay a premium for Part A. However, if you buy Part A, you’ll pay up to $471 each month in 2021. If you paid Medicare taxes for less than 30 quarters, the standard Part A premium is $471. If you paid Medicare taxes for 30-39 quarters, the standard Part A premium is $259.

Costs for Part B

The standard Part B premium in 2021 is $148.50. Some people who make more money pay a higher premium. Your Part B premium can be deducted from your Social Security, Railroad Retirement, or Civil Service Retirement check. If you don’t get these benefit payments, you’ll get a bill.

Costs for Part C

Each Medicare Advantage Plan can charge different out-of-pocket costs. They can also have different rules for how you get services, like whether you need a referral to see a specialist.

Costs for Part D

Each Medicare Prescription Drug Plan has its own list of covered drugs and different costs. However, you might qualify for Extra Help to pay for your prescription drug coverage.

The Bottom Line

Medicare is a complex program with many parts and options. Understanding the basics of Medicare can help you make an informed decision about your health care coverage. Whether you’re new to Medicare or have been enrolled for years, it’s important to understand your Medicare coverage choices and to pick your coverage carefully. How you choose to get your benefits and who you get them from can affect your out-of-pocket costs and where you can get your care.

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