What Is Medicare?
Medicare is a federal health insurance program in the United States designed to provide coverage for various medical expenses for eligible individuals. It was established in 1965 as part of the Social Security Act, and it primarily serves people who are 65 years old or older, as well as certain younger individuals with disabilities or specific medical conditions. Think you might be eligible? Here’s what you need to know:
What Is Medicare?
Medicare is a government-run health insurance program that provides coverage for hospital care (Medicare Part A), medical services (Medicare Part B), prescription drugs (Medicare Part D), and additional benefits through Medicare Advantage plans (Medicare Part C). The program is administered by the Centers for Medicare & Medicaid Services (CMS) and is funded through payroll taxes, premiums, and general government revenues.
What are the Parts of Medicare?
Medicare is divided into several parts, each addressing specific healthcare needs: Medicare Part A: This covers inpatient hospital care, skilled nursing facility care, hospice care, and some home health services. Most people do not pay a premium for Part A if they or their spouse have paid Medicare taxes while working. Medicare Part B: This covers outpatient medical services, such as doctor visits, preventive care, durable medical equipment, and some laboratory tests. Beneficiaries pay a monthly premium for Part B, with the amount based on their income. Medicare Part C (Medicare Advantage): Offered by private insurance companies approved by Medicare, Part C plans combine Part A and Part B benefits, and often include prescription drug coverage (Part D) and additional services like vision and dental care. Medicare Part D: This is stand-alone prescription drug coverage available through private insurance companies. It helps beneficiaries lower the cost of their prescription medications. Think Medicare Advantage might be right for you? Compare plans with Wise Money Tips’ Medicare comparison tool in minutes.
Who Is Eligible?
To be eligible for Medicare, individuals must meet certain criteria:
Individuals who are 65 years old or older are generally eligible for Medicare. This age requirement is based on the age at which most people retire and leave the workforce. Medicare helps provide health coverage for seniors during their retirement years.
People under the age of 65 may also qualify for Medicare if they have certain disabilities or medical conditions. The following groups are eligible based on disability status: Social Security Disability Insurance (SSDI) Recipients: Individuals who have received SSDI benefits for at least 24 months are automatically enrolled in Medicare, regardless of their age. SSDI recipients include those with severe and long-term disabilities, as recognized by the Social Security Administration. End-Stage Renal Disease (ESRD) Patients: People with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a kidney transplant) are eligible for Medicare, regardless of age, provided they meet certain requirements. Amyotrophic Lateral Sclerosis (ALS) Patients: People diagnosed with Amyotrophic Lateral Sclerosis, also known as Lou Gehrig's disease, are eligible for Medicare as soon as they start receiving disability benefits from Social Security.
Additional Eligibility Considerations:
While age and disability are the primary eligibility criteria, some other situations can affect one's Medicare eligibility: Working Spouses: If an individual is under 65 but their spouse is 65 or older and has worked and paid Medicare taxes for a sufficient duration, the younger spouse may also become eligible for premium-free Medicare Part A. Government Employees and Railroad Workers: Some government employees and railroad workers may have different Medicare eligibility rules due to their specific retirement systems. These individuals should consult with their employer's benefits coordinator or the Railroad Retirement Board to understand their Medicare eligibility.
What Does Medicare Cover?
Medicare covers a wide range of healthcare services and supplies necessary for maintaining overall health and treating medical conditions. Some of the covered services include:
- Inpatient hospital care, including semiprivate rooms, meals, and general nursing.
- Doctor visits and outpatient services.
- Preventive services, such as screenings, vaccinations, and counseling.
- Medically necessary supplies and equipment.
- Prescription medications (covered under Part D or Medicare Advantage plans).
- Home health services like skilled nursing care and physical therapy (under certain conditions).
- Hospice care for individuals with a terminal illness.
How is Medicare and Medicare Advantage Different?
Medicare and Medicare Advantage (Part C) differ in several key aspects: Original Medicare (Parts A and B) is a government program, while Medicare Advantage (Part C) is offered by private insurance companies approved by Medicare. Original Medicare allows beneficiaries to see any healthcare provider that accepts Medicare, while Medicare Advantage plans typically have a network of preferred providers and may require referrals for specialists. Medicare Advantage plans often include additional benefits, such as vision, dental, and fitness programs, which are not covered by Original Medicare. Original Medicare has a separate prescription drug plan (Part D), while most Medicare Advantage plans include prescription drug coverage within the plan. Choosing between Original Medicare and Medicare Advantage depends on individual healthcare needs, preferences, and budget.
How Do I Sign Up for Medicare?
If you are eligible for Medicare, you can typically enroll during the Initial Enrollment Period (IEP), which includes the three months before your 65th birthday, your birth month, and the three months after. For those under 65 with disabilities, enrollment is automatic if they've received Social Security Disability Insurance (SSDI) for 24 months. To sign up for Medicare, follow these steps:
- If you are already receiving Social Security or Railroad Retirement benefits, you will be automatically enrolled in Medicare Parts A and B.
- If you are not receiving these benefits, you need to apply for Medicare through the Social Security Administration (SSA) either online, by phone, or in person at your local SSA office.
- If you prefer Medicare Advantage or Part D coverage, you can select and enroll in a plan offered by private insurance companies that operate in your area.