What Is Medicare, and What Does It Cover?


Medicare is a federal health insurance program in the United States that provides coverage for certain healthcare services to eligible individuals. It was established in 1965 and is designed to assist older adults aged 65 and above and individuals with certain disabilities or specific medical conditions. Medicare is funded through payroll taxes, premiums, and general government revenue.

Medicare Part A (Hospital Insurance)

Medicare Part A, called Hospital Insurance, is a component of the United States government-run healthcare program, Medicare. It offers coverage for various healthcare services focused on inpatient hospital stays. Part A includes coverage for skilled nursing facility care, hospice care, and specific home healthcare services.

One notable feature of Medicare Part A is that most individuals are not required to pay a premium for this coverage. This is because individuals, or their spouses, have contributed to Medicare through payroll taxes throughout their working years. These payroll taxes go towards funding the Medicare program, including Part A. As a result, most people qualify for premium-free part A coverage once they reach eligibility requirements.

Inpatient hospital stays covered by Medicare Part A include semi-private rooms, meals, general nursing care, and other necessary services and durable medical equipment like a lift chair. Skilled nursing facility care includes skilled nursing care, rehabilitation services, and certain medical supplies. Hospice care provided under Part A focuses on supporting individuals with a terminal illness, aiming to provide comfort and ease pain. Finally, Part A also covers home healthcare services like skilled nursing care, physical therapy, and speech-language pathology services.

Medicare Part B (Medical Insurance)

Medicare Part B, or Medical Insurance, provides coverage for various outpatient medical services. These services include doctor visits, preventive care, laboratory tests, durable medical equipment, and certain vaccines.

To enroll in Part B, you must pay a monthly premium based on your income. The premium amount can vary depending on your annual income. Additionally, there is usually an annual deductible that you need to meet before your coverage begins. The deductible amount can change each year.

Once you have met the deductible, Medicare Part B generally covers 80% of the Medicare-approved amount for covered services. You are responsible for paying the remaining 20% as coinsurance. However, some preventive services, like certain screenings and vaccinations, may be covered without cost-sharing.

Medicare Part C (Medicare Advantage)

Medicare Part C, also known as Medicare Advantage, is an alternative option to traditional Medicare provided by private insurance companies approved by Medicare. These plans integrate the coverage provided by Part A (hospital insurance) and Part B (medical insurance) of Medicare. Additionally, Medicare Advantage plans often include extra benefits like prescription drug coverage (Part D) and dental, vision, or hearing services.

Unlike traditional Medicare, which the federal government administers, private insurance companies offer Medicare Advantage plans. Medicare must approve these companies and follow specific regulations and standards.

One important aspect of Medicare Advantage plans is that they may need the payment of an extra premium on top of the premium for Part B. The exact amount of this premium can vary depending on the specific plan and the insurance company offering it.

It’s worth noting that Medicare Advantage plans operate within a network of healthcare providers. Beneficiaries may need care from doctors, hospitals, and other providers in the plan’s network to receive full coverage. However, there are often exceptions for emergency or urgent care situations.

Medicare Part D (Prescription Drug Coverage)

Medicare Part D, also known as Prescription Drug Coverage, is a program designed to assist individuals in covering the costs of their prescription medications. It is available as a standalone plan that can be obtained alongside traditional Medicare (Part A and Part B) or as part of a Medicare Advantage plan (Part C). Medicare Part D is administered through private insurance companies approved by Medicare.

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One of the primary benefits of Medicare Part D is that it provides access to a wide range of prescription drugs at discounted prices. The program has a formulary, which is a list of covered medications, and each plan may have its specific formulary. This allows individuals to choose a plan that aligns with their medication needs.

Individuals must pay a monthly premium to the insurance company offering the plan to enroll in Medicare Part D. The premium amount can vary depending on the plan chosen. Additionally, there may be other out-of-pocket costs such as deductibles, co-payments, and coinsurance associated with the prescription drugs.

It’s important to note that Medicare Part D is voluntary. Still, if individuals refrain from enrolling when they are first eligible, they may face a late enrollment penalty if they decide to enroll later. Thus, it is recommended to consider the options and enroll in a Medicare Part D plan that best suits one’s prescription medication needs and budget.

Coverage Gaps and Supplemental Coverage

While Medicare provides comprehensive coverage, it does not cover all healthcare costs. Beneficiaries are responsible for certain out-of-pocket expenses, including deductibles, co-payments, and coinsurance. To help fill these coverage gaps, individuals can opt for supplemental coverage, also known as Medigap. Private insurance companies sell Medigap plans and can help pay for deductibles and coinsurance.

What Medicare Does Not Cover

It is essential to understand the services and items that Medicare does not cover. Some examples include long-term care (custodial care), dental care, dentures, routine eye exams for glasses, hearing aids, and cosmetic surgery. However, some Medicare Advantage plans may offer more coverage for these services.

Enrollment and Eligibility

Most individuals become eligible for Medicare at age 65. However, eligibility can also be based on disability or certain medical conditions. Enrollment generally occurs during the Initial Enrollment Period (IEP), a seven-month window starting three months before an individual’s 65th birthday. There are also other enrollment periods, such as the General Enrollment Period and Special Enrollment Periods, during which individuals can sign up for or change their Medicare coverage.

Medicare is a federal health insurance program in the United States that provides coverage for certain healthcare services to eligible individuals. It consists of several parts, including hospital insurance (Part A), medical insurance (Part B), Medicare Advantage (Part C), and prescription drug coverage (Part D). While Medicare covers a wide range of medical services, individuals should be aware of limitations and gaps in coverage. It is advisable to review the available plans and options to ensure adequate coverage based on individual needs.