As the debate over healthcare reform stretches ever on, many people are suggesting a simple solution: extend Medicare to the entire population, instead of only to senior citizens, certain disabled people, and members of Congress. But what exactly is Medicare, and how does it work?
A Brief Overview of Medicare
Medicare, as it exists today, is a federally-funded health care program designed to offer health insurance to Americans aged 65 and over, at an affordable rate. It is not intended to replace other insurance. Instead, just as Social Security is meant to supplement other retirement income, Medicare is meant to supplement private healthcare coverage.
While most people assume that the only way to become eligible for Medicare is to be at least sixty-five years old and have at least ten years (total) of payments into the Social Security system, there are other ways to qualify. Disabled people who are younger than sixty-five and patients with end-stage renal disease (ESRD) are eligible for Medicare coverage, but receive it with more restrictions than seniors do. As well, the health plan provided to members of Congress is essentially a special version of Medicare.
Once a person reaches his or her sixty-fifth birthday, there is a seven-month window, during which enrollment in Medicare costs nothing. Once the window has closed, enrollment is still possible, but penalties and fees will apply.
What About the Alphabet Parts?
Even those who are unfamiliar with the details of Medicare have probably heard commercials mentioning things like “Medicare Part B” or “Part D.” These “alphabet parts” – lettered A through D – represent the four distinct aspects of Medicare benefits. They break down as follows:
1. Part A: Also known as hospital insurance, Medicare Part A is the basic Medicare plan. It provides hospital insurance for senior citizens, and the benefits include:
- Home health care services that are deemed medically necessary
- Hospice services
- Skilled nursing services
- In-patient hospital care
Most people who are eligible for Medicare coverage receive their Part A benefits without having to pay any premiums, because they’ve already paid into Social Security. For routine, non-emergent health care, however, they must pay for benefits via Parts B or C.
2. Part B: Medicare Part B is often referred to as medical insurance, because it provides coverage for medically necessary health services not covered by part A. These services include:
- Some medical equipment (if deemed necessary)
- Outpatient hospital care
- Physical and occupational therapy
- Diagnostic tests.
Aside from a single “Welcome to Medicare” baseline physical exam, Part B does not cover routine office visits. The premium paid for Medicare Part B is calculated on a sliding scale based on income, and deductibles and co-pays will apply.
3. Part C: Known as the Medicare Advantage Plan, Medicare part C was designed to allow private health insurers to offer coverage to Medicare beneficiaries. These approved health plans must, at a minimum, offer benefits equal to the coverage provided by Medicare Parts A and B, but insurers may also offer additional coverage, such as dental or vision plans.
Participants in Medicare Part C are limited to their private insurers list of doctors and hospitals, just as participants in conventional HMOs must stay in-network. This helps to keep costs low, though if a favorite physician is not part of the network, it may be a significant drawback.
4. Part D: Medicare Part D is the prescription drug plan part of Medicare, and it’s also the most recent addition to the collection. In order to provide low-cost prescriptions, Medicare contracts with insurance providers, and clients must pay an extra monthly premium to receive this benefit. The cost varies from state to state, and insurer to insurer.
Taken together, Medicare Parts A and B are referred to as “original Medicare.” While there are gaps in this coverage, Medicare pays for most things, and the gaps can be covered with either Medicare Supplemental Insurance – or MediGap Insurance – which is offered by private health insurers, but regulated by the federal government.
For millions of Americans, especially senior citizens, Medicare coverage is an essential source of healthcare insurance, despite the limitations, restrictions and rules inherent in the plan. A better understanding of how Medicare works, should also clarify just why such a program is indispensable.