Your Guide To Medicare
A Wide Range Of Services To Meet Your Unique Life Needs
Medicare is a federal health insurance program for Americans 65 and older and younger Americans with specific disabilities.
The History of Medicare
Medicare was signed into law by President Lyndon Johnson on July 30th, 1965, and went into effect in 1966. The purpose was to provide healthcare for retired Americans (age 65 and older). Seven years later, Medicare was expanded to include Americans with long-term disabilities and End-stage renal disease (ESRD).
Medicare was patterned after the private fee-for-service healthcare system in place at the time (1960s). There were two main parts of Medicare in 1966 – hospital services and physician services. Over the years, Medicare expanded to cover more people and provide more benefits. Medicare has undergone many changes and will likely continue to change in the years ahead.
The Structure of Medicare
Medicare is administered and overseen by the Centers for Medicare & Medicaid Services (CMS), an agency of the U.S. Department of Health and Human Services (HHS). The U.S. Social Security Administration (SSA) confirms Medicare eligibility and administers enrollment into the program.
Medicare consists of four different parts.
- Medicare Part A (Hospital Insurance)
Medicare Part A is commonly known as “hospital insurance.” Part A helps pay for inpatient care in hospitals. It also helps cover qualifying skilled nursing care, hospice care, and some qualifying home health care. Most people don’t have to pay monthly premiums for Part A because they (or their spouse) paid for it through payroll taxes while working.
- Medicare Part B (Medical Insurance)
Medicare Part B is commonly referred to as “medical insurance.” Part B helps cover doctors’ services and outpatient care. Part B also helps cover durable medical equipment (like wheelchairs), diagnostics and testing, and many preventive services. Most people have to pay a monthly premium for Medicare Part B. Medicare Part A and Medicare Part B together are known as “Original Medicare.”
- Medicare Part C (Medicare Advantage)
Medicare Advantage is an alternative to Original Medicare (Part A & Part B). Medicare Advantage plans are offered by private insurance carriers. Still, the plans are heavily regulated and must be pre-approved by Medicare. These plans “bundle” Part A, Part B, and usually Part D benefits. Medicare Advantage Plans may offer additional benefits not provided by Medicare, such as gym memberships and dental services. However, in most cases, you’ll need to use doctors and hospitals in the plan’s specific network.
- Medicare Part D (Prescription Drug Coverage)
Medicare Part D helps cover the cost of prescription drugs and many vaccines. Prescription drug coverage is available to individuals with Medicare Part A or Medicare Part B. You can purchase a “stand-alone” Part D drug plan, or prescription drug coverage may be included as part of a Medicare Advantage Plan. Medicare drug coverage is run by private insurance carriers that follow rules set by Medicare.
Medicare Coverage Options
Two main ways to get Medicare coverage are Original Medicare (Part A & B) or Medicare Advantage (Part C).
Option #1 - Original Medicare
Original Medicare includes Part A (hospital insurance) and Part B (medical insurance). Original Medicare can be supplemented with a private stand-alone Part D drug plan and/or a private Medicare Supplement (“Medigap”) Plan.
Original Medicare beneficiaries can go to any doctor or hospital that accepts Medicare. There are no network restrictions. And you will most likely not need a referral to see a specialist.
Most people don’t have to pay a premium for Part A of Original Medicare. Part B requires a monthly premium which changes every calendar year. In 2023, the standard Part B premium is $164.90 per month.
Beneficiaries must pay deductibles, copayments, and coinsurance as they use services. For Part B services, beneficiaries must pay an annual deductible plus 20% of the Medicare-approved cost of services after the deductible is met. There is no annual limit on what a beneficiary may pay out-of-pocket each year.
Beneficiaries that enroll in a Part D Plan will pay an additional premium for that coverage. Costs vary from plan to plan. Beneficiaries that enroll in a Medicare Supplement (“Medigap”) plan will pay an additional premium for that policy. Costs vary widely by plan.
Option #2 - Medicare Advantage
Medicare Advantage Plans are commonly called “MA Plans.” These plans combine Parts A and B into an “all-in-one” alternative to Original Medicare. Many MA Plans include Part D drug coverage. You cannot have a Medicare Supplement (“Medigap”) Plan together with a Medicare Advantage Plan. MA Plans may also include additional benefits not provided by Original Medicare.
There are many types of Medicare Advantage Plans, the most common types being an HMO or PPO. You must usually use doctors and hospitals in the plan’s network (except for emergency care). You may also need a referral from your primary care physician to see a specialist.
Medicare Advantage Plan enrollees still must pay their monthly Part B premiums. Plus, the MA Plan may charge an additional premium as well. MA Plan premiums vary widely from plan to plan. Currently, there are $0 premium plans available in many areas.
Out-of-pocket costs vary by plan but are heavily regulated by Medicare. All plans provide an annual out-of-pocket limit for Part A and B services. Once the limit is reached, the enrollee is not responsible for an additional payment for the remainder of the year.
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