Medicare

What is Medicare?

Medicare is a U.S. federal health insurance program primarily for people aged 65 and older, though it also covers certain younger individuals with disabilities and those with End-Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS). The program is administered by the Centers for Medicare & Medicaid Services (CMS) and is funded through payroll taxes, premiums, and general government revenue.

Parts of Medicare

Medicare is divided into four main parts, each covering different aspects of healthcare:

1. Medicare Part A (Hospital Insurance)

Part A primarily covers hospital-related services, including:

• Inpatient hospital stays

• Skilled nursing facility (SNF) care (short-term, following a hospital stay)

• Hospice care for terminally ill patients

• Some home health services

Costs:

Most people do not pay a premium for Part A if they or their spouse paid Medicare payroll taxes for at least 10 years (40 quarters). However, those who haven't met this requirement must pay a monthly premium.

• In 2024, the premium for those with fewer than 40 work credits ranges from $278 to $505 per month.

• There is also a deductible ($1,632 per benefit period in 2024) and coinsurance costs for extended hospital stays.

2. Medicare Part B (Medical Insurance)

Part B covers outpatient services, including:

• Doctor visits

• Preventive services (vaccines, screenings, etc.)

• Outpatient hospital care

• Durable medical equipment (wheelchairs, walkers, etc.)

• Ambulance services

• Mental health services

Costs:

• Monthly premium: The standard premium in 2024 is $174.70, but higher-income beneficiaries may pay more due to the Income-Related Monthly Adjustment Amount (IRMAA).

• Deductible: $240 per year in 2024.

• Coinsurance: 20% of Medicare-approved costs after meeting the deductible.

3. Medicare Part C (Medicare Advantage)

Medicare Advantage (MA) plans are private insurance alternatives to Original Medicare (Parts A & B). These plans often include additional benefits, such as:

• Vision, dental, and hearing coverage

• Prescription drug coverage (often included)

• Wellness programs

Costs:

• Premiums vary by plan and provider. Some have $0 premiums, while others require additional monthly payments.

• Costs like copayments, deductibles, and out-of-pocket limits vary depending on the plan.

4. Medicare Part D (Prescription Drug Coverage)

Part D helps cover the cost of prescription medications. It is offered through private insurance companies approved by Medicare.

Costs:

• Monthly premiums vary by plan and income level.

• Deductibles (up to $545 in 2024) may apply.

• Copayments or coinsurance apply to medications, with costs varying based on drug tiers.

• Coverage gap (donut hole):

• After reaching a certain spending limit ($5,030 in 2024), beneficiaries pay a higher percentage of drug costs until catastrophic coverage kicks in.

Medicare Enrollment & Eligibility

• Automatic Enrollment:

• If receiving Social Security benefits at age 65, enrollment in Part A and Part B is automatic.

• Initial Enrollment Period (IEP):

• Begins three months before turning 65 and lasts for seven months.

• General Enrollment Period (GEP):

• January 1 – March 31 each year for those who missed initial enrollment (coverage starts July 1).

• Special Enrollment Periods (SEPs):

• Available for those with qualifying life events, such as losing employer coverage.

Medigap (Medicare Supplement Insurance)

Medigap policies are private insurance plans that help cover costs not paid by Original Medicare, such as deductibles, copayments, and coinsurance. These plans do not work with Medicare Advantage.

Medicare vs. Medicaid

• Medicare

• is a federal program primarily for seniors and some disabled individuals.

• Medicaid

• is a state and federally funded program for low-income individuals of all ages. Some people qualify for both (dual eligibility).