Medicare

What is Medicare?

Medicare is a single-payer federal health insurance program created to provide health coverage for Americans aged 65 and older and later expanded to cover younger people who have permanent disabilities or who have been diagnosed with end-stage renal disease or amyotrophic lateral sclerosis (ALS).

When did the Medicare program begin?

The law to create Medicare was enacted in 1965, under President Lyndon Johnson. Former President Harry Truman – who had worked tirelessly to pass similar legislation during his term in office – and his wife Bess Truman, were the first two Medicare beneficiaries, with coverage that took effect in July 1966.

Who is eligible for Medicare coverage?

Most Americans become eligible for Medicare when they turn 65. But 14 percent of Medicare beneficiaries are under the age of 65 and are eligible due to a disability.

In most cases, people who are eligible for Medicare do not have to pay a premium for Medicare Part A, although there are premiums for people who don’t have at least 10 years of work history in the United States (or a spouse with at least 10 years of work history). There are monthly premiums for everyone enrolled in Medicare Part B, but there’s financial assistance available for some people who would otherwise struggle to pay the premiums.

What are the different types of Medicare coverage?

Medicare is comprised of Medicare Part A (hospital insurance, which covers inpatient care in a hospital or skilled nursing facility, as well as hospice care) and Medicare Part B (outpatient and physician coverage). Together, these are called Original Medicare, or Traditional Medicare, and they’re run by the federal government.

Enrollees also have the option to purchase Medicare Part D (coverage for prescription drugs) and a Medigap supplement (to cover some or all of the deductible and coinsurance charges that go along with Original Medicare), or to wrap everything into a Medicare Part C plan (Medicare Advantage), which will generally also offer additional benefits such as dental and vision coverage, a nurse hotline, gym membership, etc. As noted above, Medicare Part A is free for most enrollees, as they’ve paid for it with payroll taxes over their working years. There are premiums for the other parts of Medicare, but they’re also subsidized by tax dollars.

When can Americans enroll in Medicare?

If you’re already receiving Social Security or Railroad Retirement benefits four months before you turn 65, you’ll automatically be enrolled in Medicare the month that you turn 65. If you’re not yet receiving retirement benefits, you’ll have a seven-month enrollment period that includes the three months before the month you turn 65, the month you turn 65, and the three following months.

If you’re receiving Social Security disability benefits, your Medicare coverage will start in the 25th month. (You don’t have to wait that long if you’ve got end stage renal disease or ALS.)

Learn more about the best time to enroll in Medicare and the details of how you enroll. Keep in mind that you’ve also got a time-limited opportunity to enroll in Medigap and a Part D plan, or to select a Medicare Advantage plan. But there’s also an annual open enrollment period for Medicare Advantage and Part D (but not for Medigap in most states).

Where do Americans buy Medicare coverage?

If you enroll in Original Medicare (Part A and Part B), the coverage is provided directly by the federal government. But most people with Original Medicare also have supplemental medical coverage, from Medicaid (learn more about dual eligibility for Medicare and Medicaid), a current employer’s plan or retiree coverage from a former employer, or via Medicare Advantage plans or Medigap and/or a stand-alone Part D plan (supplemental coverage is optional but recommended, as out-of-pocket costs are not capped under Original Medicare).

If you want to enroll in Medigap, Medicare Part D, or a Medicare Advantage plan, a private insurance company will provide the coverage. You can use Medicare’s plan finder tool to see what plans are available in your area, or reach out to a trusted broker or agent for assistance. You can call 844-309-3504 for more information and to speak with a licensed Medicare advisor if you don’t already have your own broker.

How can enrollees save money on Medicare coverage?

You can save money on Medicare by making sure you enroll in the coverage that best fits your needs and avoid duplicating coverage. (For example, if you’re able to delay Part B because of the coverage you have from your employer, you may want to do so as a cost-saving strategy.) Also, carefully comparison shop when you first enroll in Medicare (Part D and/or Medigap, or Medicare Advantage) and compare all your options each year during the annual open enrollment period. Switching to a new plan for the coming year could make a significant difference in your total out-of-pocket costs.

These articles offer a variety of tips for reducing costs on your Medicare premiums and drugs:

• Four ways to save money on your Medicare Part B premiums
• Eight ways to cut your prescription drug costs.
• Seven rules for shopping Medicare Part D plans.
• Understand if and when you can deduct your Medicare premiums on your tax return.
  

How is Medicare funded?

Medicare funding comes from a combination of tax dollars (general revenue and payroll taxes) and premium payments from beneficiaries, although the specifics vary for the different parts of Medicare. This article explains the details about how Medicare is funded.