What is Medicare?

Medicare is the federal health insurance program created in 1965 for people ages 65 and over, regardless of income, medical history, or health status.

The program was expanded in 1972 to cover people under age 65 with permanent disabilities.

Today, Medicare helps to pay for many medical care services, including hospitalizations, physician visits, and prescription drugs, along with post-acute care, skilled nursing facility care, home health care, hospice care, and preventive services.

Who is Eligible?

Most people ages 65 and over are entitled to Medicare Part A if they or their spouse are eligible for Social Security payments and have paid payroll taxes for 10 or more years. Many eligible enrollees automatically get Part A and Part B starting the first day of the month they turn 65.

People under age 65 who receive Social Security Disability Insurance (SSDI) payments generally become eligible for Medicare after a two-year waiting period, while those diagnosed with end-stage renal disease (ESRD) and amyotrophic lateral sclerosis (ALS) become eligible for Medicare with no waiting period.

What Does Medicare Cover?

Medicare benefits are organized and paid for in different ways:

Part A covers inpatient hospital stays, skilled nursing facility stays, some home health visits, and hospice care.

Part B covers physician visits, outpatient services, preventive services, ambulance, durable medical equipment (DME), and some home health visits.

Part C refers to the Medicare Advantage program through which beneficiaries can enroll in a private health plan, such as a health maintenance organization (HMO) or preferred provider organization (PPO), and receive all Medicare-covered Part A and Part B benefits and typically Part D benefits.

Part D is a voluntary benefit that helps pay for enrollees’ drug costs and offers catastrophic coverage for very high drug costs. Outpatient prescription drugs are covered through private plans that contract with Medicare, including both stand-alone prescription drug plans (PDPs) and Medicare Advantage drug plans (MA-PD plans).

What Does Medicare Cost?

Part A benefits are subject to a deductible ($1,288 per benefit period in 2016).

Additionally, beneficiaries are subject to coinsurance amounts for extended inpatient stays in a hospital or skilled nursing facility.

Part B benefits are subject to a deductible ($166 in 2016), and most Part B benefits are subject to coinsurance of 20 percent. No coinsurance or deductible is charged for an annual “wellness visit” or for certain preventive services.

Part C, or Medicare Advantage, pricing will vary by provider, so it’s worthwhile to compare all available plans before enrolling.

Part D enrollees pay monthly premiums (which vary by plan type) and cost sharing for prescriptions, including an annual deductible and coinsurance. Drug costs are covered at 95% after reaching the catastrophic threshold.

When to Enroll?

Initial Medicare applicants have a 7-month window to enroll. This period includes 3 months before and 3 months after the month in which they turn 65. Those who enroll after this eligibility period may have to pay a late enrollment penalty.

The general enrollment period for Medicare A & B is January 1st through March 31st of each year.

The annual enrollment period for Part C & D is October 15th through December 7th.

Medicare Supplements

Participants enrolled in Part D may be eligible for Extra Help if they meet certain income and resource limits. For 2016, drug costs can be capped at $2.40 for generic and $7.40 for brand-name drugs. Other people may be eligible for a reduction in Medicare plan premiums and deductibles based on income levels.

In 2016, participants who have up to $17,820 in yearly income ($24,030 for a married couple) may be eligible for Extra Help.

Certain participants may also be Dual Eligible for Medicare and Medicaid. Eligibility is determined based on a participant’s monthly income in relation to the Federal Poverty Level (FPL).

Dual Eligible standards range from 100% of the FPL for a Qualified Medicare Beneficiary (QMB), to 200% of the FPL for Qualified Disabled Working Individual (QDWI).

Medicare participants should contact their state Medicaid office for further eligibility requirements.

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