Medicare

Medicare is a federal health insurance program for people age 65 or older.  People younger than age 65 can qualify for Medicare if they have disabilities, permanent kidney failure or amyotrophic lateral sclerosis (Lou Gehrig’s disease).

Medicare should not be confused with Medicaid:  

Medicare federal health insurance program for people that are

  • age 65 or older or
  • disabled
Medicaid state health care program for people with

  • low income and
  • limited resources

Medicare helps with the cost of health care, but it does not cover all medical expenses or the cost of most long-term care. One may buy a Medicare supplement policy (called Medigap) from a private insurance company to cover some of the costs that Medicare does not.Some people qualify for one or the other, while other people qualify for both Medicare and Medicaid.

Medicare is financed by a portion of the Medicare payroll taxes paid by workers and their employers.  Generally, if you make less than $117,000 / year, and you work for someone else you pay 1.45% Medicare tax, while your employer also pays 1.45% Medicare tax.  However, if you are self-employed and make less than $117,000 / year, you pay 2.9% Medicare tax.

Medicare also is financed in part by monthly premiums deducted from Social Security checks.

The Centers for Medicare & Medicaid Services (CMMS) is the agency in charge of the Medicare program.  But individuals apply for Medicare at Social Security.

Medicare has four parts:

  1. Hospital insurance (Part A), which helps pay for inpatient hospital care and certain follow-up services.
  2. Medical insurance (Part B), which helps pay for doctors’ services, outpatient hospital care and other medical services;
  3. Medicare Advantage plans (Part C), where people with Medicare Parts A and B can choose to receive all of their health care services through a provider organization under Part C.
  4. Prescription drug coverage (Part D), which helps pay for medications doctors prescribe for medical treatment.

Who is eligible for hospital insurance (Part A)?

Most people get hospital insurance (Part A) when they turn 65. You are eligible at age 65 if:

  • You receive or are eligible to receive Social Security benefits; or
  • You receive or are eligible to receive railroad retirement benefits; or
  • Your spouse receives or is eligible to receive Social Security or railroad retirement benefits; or
  • You or your spouse (living or deceased, including divorced spouses) worked long enough in a government job where Medicare taxes were paid; or
  • You are the dependent parent of a fully insured deceased child.

If you do not meet these requirements, you may be able to get Medicare hospital insurance by paying a monthly premium. Usually, you can sign up for this hospital insurance only during designated enrollment periods.

NOTE: Even though the full retirement age is no longer 65, you should sign up for Medicare three months before your 65th birthday.

Before age 65, you are eligible for free Medicare hospital insurance if:

  • You have been entitled to Social Security disability benefits for 24 months; or
  • You receive a disability pension from the railroad retirement board and meet certain conditions; or
  • You receive Social Security disability benefits because you have Lou Gehrig’s disease (amyotrophic lateral sclerosis); or
  • You worked long enough in a government job where Medicare taxes were paid and you have been entitled to Social Security disability benefits for 24 months; or
  • You are the child or widow(er) age 50 or older, including a divorced widow(er), of someone who has worked long enough in a government job where Medicare taxes were paid and you meet the requirements of the Social Security disability program; or
  • You have permanent kidney failure and you receive maintenance dialysis or a kidney transplant and:
  • You are eligible for or receive monthly benefits under Social Security or the railroad retirement system; or
  • You have worked long enough in a Medicare-covered government job; or
  • You are the child or spouse (including a divorced spouse) of a worker (living or deceased) who has worked long enough under Social Security or in a Medicare-covered government job.

Who can get medical insurance (Part B)?

Almost anyone who is eligible for hospital insurance (Part A) can sign up for medical insurance (Part B). Part B is an optional program. It is not free. In 2014, the standard monthly premium is $104.90. Some people with higher incomes pay higher premiums.

If you are not eligible for free hospital insurance (Part A), you can buy medical insurance, without having to buy hospital insurance, if you are age 65 or older and you are:

  • A U.S. citizen; or
  • A lawfully admitted noncitizen who has lived in the U.S. for at least five years.

Who can get Medicare Advantage plans (Part C)?

Anyone who has Medicare hospital insurance (Part A) and medical insurance (Part B) can join a Medicare Advantage plan. Medicare Advantage plans include:

  • Medicare managed care plans.
  • Medicare preferred provider organization (PPO) plans;
  • Medicare private fee-for-service plans; and
  • Medicare specialty plans.

In addition to your Part B premium, you might have to pay another monthly premium because of the extra benefits the Medicare Advantage plan offers.

Who can get Medicare prescription drug coverage (Part D)?

Anyone who has Medicare hospital insurance (Part A) or medical insurance (Part B) or a Medicare Advantage plan (Part C) is eligible for prescription drug coverage (Part D). Prescription insurance is optional, and you pay an additional monthly premium for the coverage. Some people with higher incomes pay higher premiums.

People who become newly entitled to Medicare should enroll during their initial enrollment period (as explained under Signing up for Medicare on page 10). After the initial enrollment period, the annual coordinated election period to enroll or make provider changes is October 15 – 9 December 7 each year. The effective date for the enrollment is January 1 of the upcoming year. There also are special enrollment periods for some situations.

Many of the views expressed in this article were taken from www.socialsecurity.gov.