Medicare is a type of federal health insurance program that’s been available since 1965. Despite being used by over 62.6 million people in the US, it still remains a largely confusing program that even its long-time beneficiaries know little about. To dispel any mysteries and misconceptions surrounding it, we’ve developed a thorough overview of Medicare that will help you discern whether it’s the right choice for you.
What will you learn in this Medicare guide? – We’ll go over the ins and outs of this program, see who it’s for, glimpse into its advantages and disadvantages, and help you find the best Medicare type for your needs.
So, without further ado, what is Medicare?
Medicare Guide – A General Outlook on Medicare
Health insurance had always been linked with employment until the introduction of Medicare, meaning that millions of Americans were without coverage or disability insurance upon their retirement. That all changed when former president Lyndon Johnson signed the program that would become known as Medicare into law in 1965.
What is Medicare?
Medicare is a national health insurance program that subsidizes healthcare costs for approximately 18% of all Americans. Run by the Centers for Medicare & Medicaid Services (CMS), it’s funded by social security and income taxes, the federal budget, and by premiums that you pay as a beneficiary. Even if you know what mediace is, you should also know the key differences between medicare vs medicaid.
Depending on the type of coverage you prefer, you can opt to receive your benefits through Original Medicare via the federal government or through Medicare Advantage Plan via private insurance companies partnered with the federal government.
Who is Medicare For?
Medicare is designed for retired seniors over the age of 65. It was initially intended as an alternative to employer plans. However, it’s since expanded to offer coverage for younger people with disabilities that have been receiving Social Security or Railroad Retirement Board disability benefits for the past 24 months.
Additionally, it’s available for those with Lou Gehrig’s disease (ALS) – a progressive nervous system disease – and those with End-Stage Renal Disease (ESDR) – a chronic disease that prevents kidneys from functioning properly on their own.
What Will Medicare Pay For?
Medicare coverage depends on the type of program you choose. You will have access to:
Medicare part A is also known as hospital insurance. It offers coverage for in-patient hospital stays, hospice care, home health care, and care in a nursing facility. It includes charges for semi-private rooms, food, testing and analysis, and overall nursing services.
Your costs for Medicare part A depend on how many work credits you have.
You can qualify for premium-free Medicare part A if you have 40 credits. Since you can receive a maximum of four credits per year (based on your income), you’ll need to have worked for at least ten years, all the while paying your FICA taxes. Additionally, if you don’t have enough credit, you can qualify for this plan if your spouse has the necessary credits.
Medicare part B is also known as medical insurance. It offers coverage for out-patient care, preventative services, and medical supplies such as wheelchairs and walkers. It includes charges for ambulance services, rehabilitation services, lab testing, and physical therapy.
Your Medicare part B costs depend on your income – the higher your annual income, the more you’ll pay.
Medicare part A and Medicare part B are offered through Original Medicare.
Medicare part C is also known as the Medicare Advantage plan, covering all Original Medicare services with the exception of hospice care. However, unlike part A and part B, Medicare part C is offered through private insurance companies.
Depending on your chosen insurance company, you might face varying out-of-pocket costs, co-payments, and deductibles.
Finally, Medicare part D is also known as prescription drug coverage. It’s available for all beneficiaries of Medicare part A and Medicare part B, allowing you to receive subsidies for prescription drugs not covered by the Original Medicare.
Like Medicare part C, part D is offered through private companies. You’ll need to pay monthly premiums whose price will vary based on your income.
If you don’t sign up for part D during the initial enrollment period (three months before your 65th birthday to three months after your 65th birthday), you’ll face late enrollment penalties and drive up your monthly premium.
What Medicare Will Not Pay For?
Although Original Medicare offers extensive healthcare coverage, there are a few exceptions. Medicare will not cover:
- Prescription drugs (unless you enroll in Medicare part D);
- Long-term custodial care;
- Medical expenses outside the US;
- Dental care;
- Hearing care;
- Vision care;
- Cosmetic procedures;
- Massage therapy;
- Medical cannabis;
- Elective sterilization.
The Medicare Advantage plan (Medicare part C) could offer coverage for prescription drugs, dental, hearing, and vision care, and some health and wellness programs. However, your coverage will depend entirely on your chosen insurance company.
Are Medicare and Medicaid the Same?
Considering the name similarity between Medicare and Medicaid, many people confuse the two, thinking they are one and the same. However, they’re distinct programs, each designed for specific purposes. Still, they do share some similarities. Take a look.
Definitions of Both
Medicare is a federal health insurance program for senior citizens over the age of 65 and younger citizens with disabilities. It’s largely uniform across the US, having virtually the same eligibility criteria, the same benefits, and the same premiums whichever state you’re in.
To receive Medicare coverage, you’ll need to have paid into the trust funds during your employment.
Medicaid is different. It’s a federal assistance program designed for low-income individuals of any age. It’s available for children and the elderly, pregnant women, those with disabilities, and more. Eligibility criteria, coverage, and premiums vary across states.
The program is funded by the states and the federal government, and you might be required to cover co-payment fees.
Understanding the Differences
The main difference between Medicaid and Medicare is the eligibility criteria. As mentioned, Medicare is available to all those over the age of 65 or with specific disabilities regardless of their income levels. As long as you (or your spouse) have enough work credits, you can apply for and receive Medicare.
Medicaid, on the other hand, is only available to low-income individuals and families. Since the introduction of the Affordable Care Act, it’s been available in most states to those with an income of 133% of the federal poverty line. It’s commonly used as a last resort for those who have no other options and who cannot cover other forms of health insurance.
Medicare beneficiaries typically have some out-of-pocket costs, copays, and deductibles but pay no premiums. Medicaid is usually free with small copays.
Another notable difference between the two programs is coverage.
Medicaid coverage varies by state, but as a general rule of thumb should include:
- Lab services;
- X-ray services;
- In-patient care;
- Out-patient care;
- Family planning services;
- Nursing services;
- Surgical dental services;
- Health screenings.
Medicaid also covers dependents, and together with the Children’s Health Insurance Program (CHIP) offers health insurance to over 9.6 million children.
Medicare offers hospital, medical, and prescription drug coverage (plus coverage offered through part C) and doesn’t typically have dependent coverage. It is possible to receive coverage through a spouse who uses Medicare. Additionally, children with ALS or ESDR could receive coverage using the parent’s work credits.
The only similarity between Medicare and Medicaid is that they’re both government programs that provide easier access to healthcare insurance. They offer somewhat similar coverage (in-patient and out-patient care, health screenings, lab services), but there are few other overlaps. Eligibility criteria and costs are different.
How They Work Together
Despite their differences, Medicare and Medicaid can work together to offer comprehensive coverage.
You can be dually eligible and minimize your out-of-pocket healthcare expenses if you are over the age of 65 (or under the age of 65 and have a disability, ALS, or ESDR), already enrolled in Medicaid part A or part B, are up to 133% of the federal poverty line, and already enrolled in full-coverage Medicaid or a Medicaid’s Medicare Savings Program (MSP).
If you’re using both of these insurance plans, Medicare will always be the primary payer. Medicaid will pay the remaining expenses (if there are any) as long as it offers coverage for them.
Advantages of Having Medicare
As this Medicare guide has made evident, there are plenty of advantages to using this healthcare insurance plan:
- Medicare part A can be premium-free;
- Medicare part B has low out-of-pocket expenses;
- Medicare Advantage offers additional coverage;
- Medicare Advantage offers personalized plans;
- You can receive coordinated medical care;
- You can reduce your healthcare costs.
Whether you opt for Original Medicare or the Medicare Advantage Plan, you’ll receive comprehensive coverage and minimize your expenses. However, you’ll need to keep in mind that you’ll only have access to healthcare providers who are part of the Medicare program.
Is Medicare Worth It?
Whether Medicare is worth it depends entirely on your unique needs. If you need healthcare insurance to cover regular annual checkups, in- and out-patient care, typical nursing services, and the like, the program is well worth it.
However, if you want the freedom to choose your healthcare providers or need a program for dental, vision, and hearing care, Medicare might not be ideal for you. While Medicare Advantage does offer additional coverage, it depends on your chosen service provider. Make sure to carefully scrutinize coverage options offered by your provider before signing up for Medicare Advantage.
With all this in mind, the Centers for Medicare & Medicaid Services is the largest healthcare payer in the US, covering over 90 million Americans.
How To Find the Best Medicare?
To find the best Medicare plan for your needs, you’ll have to consider a few key factors:
- The costs:
- Different plans offer different coverage and have varying premiums, deductibles, and copays. Examine the costs before making your choice;
- Your preferred healthcare provider:
- Not every healthcare provider accepts Medicare insurance. Make sure that your preferred doctor belongs to the Medicare network;
- Your lifestyle:
- If you’re a frequent traveler, it would be in your best interest to choose Medicare plans that offer emergency care in foreign countries;
- Your health:
- If you use many prescription drugs, Medicare part D would likely be the best option for you. If you need frequent out-patient care, look into plan B, and if you’re likely to need in-patient care, take a look at what plan A has to offer.
Ideally, you’ll want to consult your physician and insurance agent before you make your decision. Talk with friends or family members who use Medicare, and examine all your options.
Where Can I Find Out More and Get Advice on Medicare?
Medicare can be an excellent health insurance plan for those over the age of 65 and those who have disabilities, ALS, or ESDR. However, how beneficial it is for you depends entirely on your unique condition, needs, and preferences.
Request a free consultation with Policy Solver to learn more about Medicare and find out whether this is the right healthcare insurance choice for you.
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Frothingham, S. (2020). Understanding Medicare Work Credits. Retrieved from Healthline website:
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