Intro to Medicare Health Insurance

You’ve likely heard about it in the news or possibly even from your doctor. However, do you know what it is?

According to Clearmatchmedicare, it’s a federally operated health insurance program intended for three distinct groups:

Citizens 65 and older;
Particular people under 65 who have disabilities;
Individuals with ESRD*.

*ESRD stands for end-stage renal disease which is a permanent failure of the kidneys where transplant or dialysis is necessary.

A Brief History

The program started in 1965 for anyone aged 65 or older. Health status, medical history, and income level didn’t matter, as everyone was covered. The program saw significant expansion in 1972 in order to cover particular individuals younger than 65 if they had long-term disabilities.

Modern Medicare

The program these days offers health benefits and financial security to over 60 million people. It helps cover health care services, including:

Doctor visits;
Hospitalization;
Preventative services;
Prescription drugs;
Skilled nursing facilities;
Hospice care;
Home health care.

According to Kaiser Family Foundation, this program’s spending accounts for 15 percent of all federal spending and 20 percent of overall American health spending.

Eligibility

Most people who are 65 or older can get Part A, provided that they or the person they are married to have Social Security eligibility. They might not have to pay premiums for Part A if they paid into payroll taxes for a decade or more.

Anyone under the age of 65 who gets Social Security Disability Insurance payments usually gain eligibility after two years. People diagnosed with amyotrophic lateral sclerosis, or ALS, and anyone with ESRD don’t have wait for eligibility. They should get it immediately.

Many Parts

The program has different parts which cover specific things:

Part A: This is insurance for inpatient hospital visits, hospice care, time in skilled nursing facilities, and even certain home health care.
Part B: This is medical insurance that covers some outpatient care, preventative services, medical supplies, and physician services.
Part D: This is prescription drug coverage that not only covers medications but also many recommended vaccines and shots.

More About Part A

Most people won’t have to pay any monthly premiums for their Part A coverage. If you or your spouse paid enough related taxes during your working years, then you can enjoy premium-free Part A.

Part A is something you can buy. The level of premiums you are responsible for will usually be determined by how many quarters you paid program taxes for, provided they weren’t enough to hit the minimum for premium-free coverage.

More About Part B

Everyone is responsible for Part B premiums. Individuals whose income is over a certain level will also pay an amount on top of the normal premium.

More About Part D

This is a separate plan just for drugs. You might have to deliberately add it to your coverage based on your choices.

Choosing Your Coverage

You normally have two options. They are Original Medicare and Medicare Advantage.

Original Medicare

This includes Parts A and B. You will pay for any services as you receive them. You start each year with a deductible, and your coinsurance is usually 20 percent of the costs for any services approved by the program. Part D is something you would have to add separately.

Medigap is a supplemental insurance policy that can cover many healthcare costs that the program doesn’t cover. It might also cover medical care outside of the United States.

Medicare Advantage

This comprehensive alternative bundles Parts A, B, and typically D. You can get additional benefits, such as dental, hearing, and more. The terms and conditions of this plan change on a yearly basis.

Not Your Only Coverage

This program doesn’t always cover every health care expense, so many people actually have supplemental coverage on top of their federal benefits. Employer-sponsored insurance covers roughly a third of retirees, but retiree health benefits have dropped significantly in the last three decades.

Medigap covers just about as many retirees through private insurance companies. Cost-sharing is done through a massive group of subscribers.

Medicaid is a federal-state program offering coverage to those in low-income brackets. Rules vary from one state to the next.

Program Financing

This program has several sources of financing:

General revenues account for over 40 percent of funding.
Payroll tax contributions account for over 33 percent of funding.
Beneficiary premiums make up approximately 15 percent of funding.

The Program’s Future

The future of this program will be talked about from families discussing practical details of their lives around the kitchen table to the offices and assemblies in Washington where leaders debate how to handle financing the upkeep of the program. The population is aging rapidly, and that puts a tremendous burden on a program. Keeping affordable and quality care to current beneficiaries while making sure the benefits are still around for future generations is going to be a tricky balancing act for leaders and the nation.

How You Should Handle It

Despite the obstacles the program faces, terminating the benefits or scaling them back dramatically would likely be political suicide for the leaders of the nation. When you hit retirement age, the program should be there to help you afford health care. However, even in its current state, it doesn’t cover everything. Have a plan for health care spending and supplemental coverage to protect yourself.

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Melissa Bell

Melissa Bell has a strong background in nutrition education, fitness and yoga, and experience working on specialized stretching, bodybuilding and weight loss programs. She is actively studying Japanese, doing research and travelling for conferences while taking care of two children.