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The Basics of Federal Health Insurance
Medicare is the health plan provided by taxpayers to everybody aged 65 and older, as well as younger people with disabilities. While the prescription-drug portion of the plan can be complicated, the basic hospital and health service plans are not that difficult to navigate once you know the basics.
This is the plan that covers virtually every US citizen and legal immigrant, and is not to be confused with Medicaid, which is a federal health assistance program for the poor that is administered through the states.
What Does Medicare Cover?
Medicare is divided into 4 parts:
- Part A is hospital insurance—It helps pay for hospital, limited nursing home, home health, and hospice care.
- Part B is medical insurance—It helps pay for doctors, ambulances, tests, outpatient therapy, and other professional services, and some medications, including certain cancer drugs. There are 2 kinds of Part B coverage. One kind pays for medically necessary services (what is needed to diagnose or treat your condition), and the other pays for preventive services.
- Medicare Advantage Plan (like an HMO or PPO)—This consists of plans administered by private health insurance and health maintenance organizations that add extra coverage to the basic government Medicare plans.
- Plan D is the prescription drug plan.—This actually consists of many plans administered by private companies and organizations approved by the federal government.
What Are Medicare's Limitations?
Basic Medicare does not cover acupuncture, dental services, help with dressing and other custodial care, certain eye care, hearing aids, and some other goods and services. It pays for only a limited number of visits to speech and occupational therapists and covers only about half of outpatient mental health services.
You can buy additional health insurance on your own that does pick up these costs.
If a supplier or doctor does not accept Medicare, you may be required to pay most or all of the bill when you receive services, but Medicare may reimburse you for some portion of these services.
What Does It Cost?
Most people don't have to pay for Part A because they or their spouse have paid for it already through payroll taxes.
Part A does not require payment for people who are 65 and older and who:
- Receive or are entitled to Social Security or railroad retirement benefits, or
- Have worked long enough in a government job to be eligible, or
- Are entitled to Social Security benefits based on a spouse's (or ex-spouse's) work record
It also covers younger people who:
- Have been getting Social Security disability benefits for 2 years, or
- Get Social Security disability benefits and have amyotrophic lateral sclerosis ( Lou Gehrig's disease ), or
- Have worked long enough in a government job to meet the requirements of the Social Security disability program
All persons with kidney failure are covered if they:
- Receive maintenance dialysis or have had a kidney transplant, and
- Are insured or are getting benefits under Social Security or the railroad retirement system, or
- Have worked long enough in government to be eligible
Those who do not meet these eligibility criteria may still purchase Plan A.
Part B requires a monthly payment and can be purchased with deductions from your Social Security, railroad, or Civil Service retirement check. While the costs of Part B continue to rise, the enrollment fees are generally much lower than the cost of private insurance.
Like private insurance, all Medicare plans have deductibles, copayments, and fee restrictions, which can add up quickly. These costs are often called "gaps." For help with costs of these payments, private companies offer "gap" (or medigap) insurance.
Alternatives to gap insurance include Medicare Advantage plans available from managed care companies in many areas. These plans include Parts A and B (at the standard cost) and the approved prescription drug plans. They also provide extra benefits, including paying more of the bill or providing extra days in the hospital. The costs of these plans vary depending on the amount of coverage you select.
To find out more about plans in your area, use the Medicare Plan Finder web tool.
There are many versions of the new Medicare Prescription Drug plan. Refer to this article devoted entirely to this topic: How to Choose a Medicare Drug Plan.
Who Does the Paperwork?
You are not required to file most paperwork to Medicare. That is the job of the doctors and other providers.
How Do I Enroll?
Social Security generally contacts eligible persons to tell them about their options a few months before their 65th birthday. If you require benefits before you are 65, or want more information about the various plans, contact your local Social Security office.
US Social Security Administration
Medicare & you 2016. Medicare website. Available at: https://www.medicare.gov/Pubs/pdf/10050.pdf. Accessed June 23, 2016.
What does Part B cover? Medicare website. Available at: http://www.medicare.gov/what-medicare-covers/part-b/what-medicare-part-b-covers.html. Accessed June 23, 2016.
- Reviewer: Michael Woods, MD
- Review Date: 07/2014
- Update Date: 07/17/2014