Medicare Explained
Medicare is the federal health insurance plan designed to help certain populations meet their health care needs. Medicare is like a regular private insurance plan, except the government runs it. Specifically, it is run by a federal agency called the Centers for Medicare and Medicaid Services (CMS). While many people confuse Medicare and Medicaid, the two are, in fact, different. Medicare is for older people or people with disabilities, while Medicaid is for people with limited incomes. Read more to learn more about the basics of Medicare.
Population Covered by Medicare
Medicare was created for certain people. These populations include:
- People who are 65 and older
- Younger people with certain disabilities with Social Security Disability Insurance
- People with End-Stage Renal Diseases
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Structure of Medicare
Medicare is funded mainly by taxpayers. In particular, it is funded by income tax paid into the Social Security and Medicare fund and partly by premiums that Medicare participants pay. Additional payment depends on the type of plan.
There are two main plans: Original Medicare and Medicare Advantage Plans. Original Medicare is paid for by the federal government but does not include prescription drug coverage. Medicare Advantage Plans are different. They are Medicare-approved plans offered through private insurance companies that often include prescription drug coverage with a monthly premium.
Medicare is structured in three parts: Part A, B, and D. Medicare Advantage Plans are often referred to as Part C. Part A mainly covers hospital and skilled nursing facility costs, Part B covers mostly outpatient care, and Part D covers prescription medications. All 3 of these parts allow people to have more flexibility when choosing healthcare providers. Generally, people can choose whatever doctor or hospital they want as long as that provider is enrolled in Medicare.
How to Enroll in Medicare
While the exact method of enrolling in Medicare differs depending on the population, most people get Medicare by enrolling in Social Security right before they turn 65. If you already get Social Security benefits, you will automatically be enrolled in Medicare at age 65.
After you sign up for Medicare, you will receive your Welcome to Medicare package, including your Medicare card. You then choose your coverage. When you choose to enroll in Medicare, you are automatically enrolled in Part A. You have to choose Part B, which has a monthly premium. You must have Part B to enroll in any Supplement Plans or Medicare Advantage Plans.
The Welcome to Medicare packet has helpful information. Even so, choosing coverage is often the most challenging part for people throughout the Medicare process. Our resources will help you understand the different parts of Medicare and how to navigate this process.
What Medicare Covers
Original Medicare aims to create a flexible environment for people to access healthcare while also minimizing costs. This means that consumers can go to any doctor or hospital that accepts Medicare. They do not need to assign a Primary Care Physician and do not need to receive a referral to see a specialist. While inpatient care, outpatient care, preventive care, and some rehabilitation care is covered, prescription drugs are not. Additionally, consumers are expected to pay a deductible before Medicare benefits begin to cover their out-of-pocket expenses. There is no yearly limit on out-of-pocket expenses. While Part A has no monthly premium, Part B does. Some people choose Medicare Supplement Plans in addition to Original Medicare to bridge the gaps in coverage and reduce their out-of-pocket payments. Others may choose a Medicare Advantage Plan as an alternative to Original Medicare.
Summary
Medicare is the federal health insurance program administered by the CMS for adults over the age of 65, people with ESRD, or people with disabilities. Medicare has multiple public and private options to make accessing healthcare easier and more flexible for most people. Unfortunately, having multiple options has the added effect of making the process more confusing. Our resources will help you understand the different aspects of Medicare and what will work best for you.
