Introduction. Medicare is the Federal health insurance program for Americans age 65 and older and for certain disabled Americans. If you are eligible for Social Security or Railroad Retirement benefits and are age 65, you and your spouse automatically qualify for Medicare.
Medicare has two parts: hospital insurance, known as Part A, and supplementary medical insurance, known as Part B, which provides payments for doctors and related services and supplies ordered by the doctor. If you are eligible for Medicare, Part A is free, but you must pay a premium for Part B.
Medicare will pay for many of your health care expenses, but not all of them. In particular, Medicare does not cover most nursing home care, long-term care services in the home, or prescription drugs. There are also special rules on when Medicare pays your bills that apply if you have employer group health insurance coverage through your own job or the employment of a spouse.
Medicare usually operates on a fee-for-service basis. HMOs and similar forms of prepaid health care plans are now available to Medicare enrollees in some locations. The best source of information on the Medicare program is the Medicare Handbook. This booklet explains how the Medicare program works and what your benefits are. To order a free copy, write to: Health Care Financing Administration, Publications, N1-26-27, 7500 Security Blvd., Baltimore, MD 21244-1850. You also can contact your local Social Security office for information. Medicare is a federal program that provides health insurance to retired individuals, regardless of their medical condition. Below are some basic facts about Medicare you should know.
What does Medicare cover? Medicare coverage consists of two parts--Medicare Part A (hospital insurance) and Medicare Part B (medical insurance). A third part, Medicare Part C (Medicare+Choice) is a program that allows you to choose from several types of health-care plans.
- Medicare Part A (hospital insurance): Generally known as hospital insurance, Part A covers services associated with inpatient hospital care (i.e., the costs associated with an overnight stay in a hospital, skilled nursing facility, or psychiatric hospital, such as charges for the hospital room, meals, and nursing services). Part A also covers hospice care and home health care.
- Medicare Part B (medical insurance): Generally known as medical insurance, Part B covers other medical care. Physician care--whether it was received while you were an inpatient at a hospital, at a doctor's office, or as an outpatient at a hospital or other health-care facility--is covered under Part B. Also covered are laboratory tests, physical therapy or rehabilitation services, and ambulance service.
- Medicare Part C (Medicare+Choice): The 1997 Balanced Budget Act expanded the kinds of private health-care plans that may offer Medicare benefits to include managed care plans, medical savings accounts, and private fee-for-service plans. The new Medicare Part C programs are in addition to the fee-for-service options available under Medicare Parts A and B.
- Medicare Part D (prescription drug coverage): Medicare prescription drug coverage is insurance that covers both brand-name and generic prescription drugs at participating pharmacies in your area. Medicare prescription drug coverage provides protection for people who have very high drug costs. Everyone with Medicare is eligible for this coverage, regardless of
income and resources, health status, or current prescription expenses.
Your decision about Medicare prescription drug coverage depends on the
kind of health care coverage you have now. There are two ways to get
Medicare prescription drug coverage. You can join a Medicare
prescription drug plan or you can join a Medicare Advantage Plan or
other Medicare Health Plans that offer drug coverage.
Like other insurance, if you join, you will pay a monthly premium,
which varies by plan, and a yearly deductible (no more than $250 in
2006). You will also pay a part of the cost of your prescriptions,
including a copayment or coinsurance. Costs will vary depending on
which drug plan you choose. Some plans may offer more coverage and
additional drugs for a higher monthly premium. If you have limited
income and resources, and you qualify for extra help, you may not have
to pay a premium or deductible.
Are you eligible for Medicare?
Most people become eligible for Medicare upon reaching age 65 and becoming eligible for Social Security retirement benefits. In addition, you may be eligible if you are disabled or have end-stage renal disease.
Who administers the Medicare program?
The Health Care Financing Administration (HCFA), a division of the U.S. Department of Health and Human Services, has overall responsibility for administering the Medicare program. Although the Social Security Administration processes Medicare applications and claims, the HCFA sets standards and policies.
However, as a beneficiary, you deal mostly with the private insurance companies that actually handle the claims on the local level for individuals receiving Medicare coverage. Insurance companies handling Medicare Part A claims are called Medicare intermediaries, and insurance companies handling Part B claims are called Medicare carriers. Managed care plans handle Part C claims. Although the same private insurance company may handle both Part A and Part B claims, Part A and Part B are very different in regard to administration (e.g., different deductibles and co-payment requirements). There is virtually no overlap; it is as if you have two separate health insurance policies.
How do you sign up for Medicare?
Any individual who is receiving Social Security benefits will automatically be enrolled in Medicare at age 65 when he or she becomes eligible. If you are not receiving Social Security benefits prior to age 65, you will be automatically enrolled when you apply for benefits at age 65. However, if you decide to delay retirement until after age 65, remember to enroll in Medicare at age 65 anyway, because your enrollment won't be automatic. Individuals who will be automatically enrolled in Medicare will receive notification by mail from the Social Security Administration, usually three months before their 65th birthday.