Medicare Coverage Basics An Introduction to Medicare
Medicare is a federally funded health insurance program designed for citizens aged 65 and older. It was created on July 30, 1965, when President Lyndon B. Johnson signed the program into law. Nearly 50 percent of Americans did not have health insurance at the time, and the majority of the elderly could not find affordable healthcare.
Today, Medicare provides health insurance for more than 55 million people, a number that includes senior citizens and younger enrollees with disabilities. Aside from providing health insurance for older Americans, Medicare also provides health insurance coverage for people with specific medical conditions and disabilities, including end-stage renal disease (ESRD) and ALS. Medicare is segmented into different groups of coverage that provide distinct services:
Medicare Part A provides hospital insurance, covering inpatient hospital stays, hospice care, care from a skilled nursing facility and even some forms of home healthcare. Part A coverage is free for people who paid into the system through payroll taxes for at least 10 years. For people who paid the Medicare tax for less than 10 years, there is a premium for Part A, which can be as much as $505 a month in 2024.
Medicare Part B provides coverage for outpatient care, preventive services, medical supplies and select services administered by doctors. There is a fee or monthly for Part B coverage. These fees can be deducted from monthly Social Security checks or must be paid out-of-pocket in order to maintain valid coverage. The standard monthly Part B premium in 2023 is $164.90 for new enrollees. That increases to $174.70 in 2024. Higher-income enrollees pay more for Part B in order to offset the cost of providing care for low-income beneficiaries. In 2024, the threshold for paying more is $103,000 for individuals and $206,000 for couples who file joint taxes, based on tax returns from two years prior (2022).
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Medicare Part C is also known as Medicare Advantage (or MA). It is a special type of Medicare coverage administered through private companies that have agreements in place with Medicare to offer comparable coverage to Parts A and B, with extras. Individuals enrolled in a Medicare Advantage Plan have services covered by way of the plan, instead of Original Medicare. Prescription drugs are typically covered by a Medicare Advantage plan. MA plan types include Health Maintenance Organizations (HMOs), Special Needs Plans (SNPs), Fee for Service (FFS) plans and Preferred Provider Organizations (PPOs).
Part D of Medicare provides prescription drug coverage.
If you are enrolled in Medicare, and you are not sure what type of Medicare you have, take a look at your Medicare card. Call the phone number located on the card to speak with a Medicare representative, who can tell you exactly what type of Medicare you have and what services you are eligible for. If you can’t find your card, just dial (800) 633-4227.
Medicare provides coverage to those with pre-existing conditions, and Part A is free for many participants over the age of 65. In order to be eligible for “premium-free” Part A coverage, you or your spouse must have paid FICA taxes for 40 quarters (10 years) or more. For those who have not worked enough to qualify for the coverage, there’s a monthly premium for Medicare Part A. In 2023 and 2024, the monthly cost for Medicare Part A coverage is $278 for individuals who paid FICA taxes for 30-39 quarters. Those who paid taxes for less than 29 quarters will pay $506 per month ($505 in 2024). Anyone who is nearing 30 or 39 quarters of FICA tax payments should continue working until they break the threshold. The savings will be well worth the extra time and effort spent in the workplace.
Those who decide to accept Social Security payments before turning 65 will be automatically enrolled in Medicare Parts A and B. These people will be mailed a Medicare card a three months before turning 65. Since Part B requires a premium, enrollment can be refused. Those who haven’t accepted Social Security payments by 65 should proactively enroll in Medicare Parts A and B three months before turning 65. Individuals who fail to sign up for Medicare before turning 65 will likely have coverage delayed and might even have to pay late enrollment fees. You should also enroll in Part D before turning 65 unless you have coverage for prescription drugs from another affordable source.
Those who desire healthcare insurance coverage under a Medicare Advantage plan instead of Part A and B should choose a plan and enroll before turning 65. By doing so, coverage will kick in on time and no penalties will be applied. Things get a bit trickier for individuals who keep working beyond the age of 65 if they have healthcare coverage through their employer. They’ll have to speak to a human resources benefits administrator to determine how the company’s coverage works along with Medicare. Many employer plans force Medicare Part A enrollment for those aged 65 and over.