Medicare is a federal health insurance program that helps U.S. residents who are disabled or who are 65 years of age or older.
People who are eligible for Social Security automatically qualify for Medicare hospital insurance (Part A) when they turn 65.
Medicare, like other insurance programs, does not pay the entire medical bills.
Medicare coverage is divided into four parts identified as Part A, B, C, and D.
Original Medicare provides basic coverage for hospitals (Part A) and doctors and outpatient
services (Part B). Services are provided through any doctor or hospital that accepts Medicare.
Routine expenses not covered by Medicare:
Dental care, including cleanings, fillings and dentures.
Long-term care, including custodial care such as daily living assistance for dressing and bathing.
Vision care such as eye exams, eyeglasses and contact lenses.
Outpatient prescription drugs unless you have also Medicare Part D coverage.
The gaps in Medicare services may be covered by buying private insurance (Medigap coverage).
The coverage of Medigap insurance plans is standardized and regulated by the government.
Part A (Hospital Insurance)
Includes inpatient care in hospitals, skilled nursing facilities, at home, or in hospices. Blood for
transfusions is also covered, except for three pints per calendar year. You must pay co-insurance and deductible
charges from your own pocket. A typical 60-day hospitalization would cost you $992 Dollars and the rest
would be paid by Medicare. The insurance coverage decreases after 60 days in the hospital, and nothing is paid by
Medicare beyond 150 days. For a stay at a skilled nursing facility, Medicare would cover 100% of the approved
amount for 20 days. The coverage decreases after that, and nothing is paid beyond 100 days. Items covered:
Semi-private room and meals
Regular nursing services
Operating and recovery room costs
Intensive care and coronary care
Drugs, lab tests, and X-rays
Medical supplies and appliances
Rehabilitation services (physical therapy)
Part B (Medical Insurance)
Helps to pay for doctors' services, durable medical equipment, and other medical supplies. Part B also requires
co-insurance and deductible payments from your own pocket. In addition, everyone enrolled in Part B must pay
a monthly premium which is deducted from your Social Security check or billed quarterly.
Medicare pays 80% of the approved amounts for medical expenses, doctor fees, and outpatient hospital expenses.
The Medicare Part B monthly premium is based on the income reported on the Tax Return.
In 2009, the cost for individuals earning less than $85,001 was $96.40. Higher rates apply to persons with more income.
Medicare Part B also has a deductible amount that must be paid before insurance coverage applies.
In 2009, you pay the first $135 calendar-year deductible amount and the remaining 20% of the expenses. Items covered:
Medical and surgical services, including anesthesia
Diagnostic tests for your treatment
Radiology and pathology services
Mental illness treatment
Outpatient or emergency room treatment
Part C (Medicare Advantage)
Allows persons who qualify for Part A and are enrolled in Part B to enroll in a private health maintenance organization (HMO),
preferred provider organization (PPO), provider-sponsored organization (PSO), private fee-for-service organization (PFFS),
or medical savings account (MSA). Medicare Advantage plans cover everything that original Medicare covers,
but may offer lower costs and extra services. There are many plans and each has different costs and benefits which
may or may not include prescription drug coverage.
When you join a Medicare Advantage Plan, you will have to pay your monthly
Medicare Part B premium to Medicare. In addition, you will have to pay a monthly premium to your Medicare Advantage
Plan for the extra benefits that they offer. Premiums vary depending on the plan chosen, but
generally there are extra benefits and lower copayments than in the Original Medicare Plan.
For these plans, you use the health insurance card that you get from the plan for your health care, and
you may have to see doctors that belong to the plan or go to certain hospitals to get services.
HMOs require you to go to doctors in the plan's network, except in a medical emergency.
PPOs allow you to see specialists without a referral, but you pay more if you go to doctors
or hospitals not sponsored by the plan.
PFFS plans allow you to go to any doctor or hospital that accepts the terms of the plan.
Providers may reject patients if they do not agree to the terms set by the PFFS. These plans usually cover
treatment by any doctor or hospital for an emergency.
SNPs are Special Needs Plans for people who receive both Medicaid and Medicare and live in long-term care facilities.
Warning: When you enroll in a Medicare Advantage plan (Part C), you will
automatically lose your current PDP (Part D) coverage, even if the Medicare Advantage plan does not cover drugs. Also,
your Medigap policy will not work.
Part D (Prescription Drug Plan)
Offers special assistance to beneficiaries with limited income, and a choice of prescription drug plans (PDP) to
anyone enrolled in Part A and Part B.
Medicare prescription drug plans (PDPs) cover only outpatient drugs for people in original Medicare
who have no other drug coverage. You can not enroll both in a Prescription Drug Plan and in
a Medicare Advantage plan. When you enroll in a Medicare Advantage plan, you will automatically
lose your current PDP coverage, even if the Medicare Advantage plan does not cover drugs.
Every year Medicare has an enrollment period from November 15 through December 31 when
it is possible to change prescription drug providers. Medicare imposes penalties if you want
to enroll in a prescription drug plan and you were not previously enrolled in a creditable drug plan.
The long list of Part D providers, and the many options for monthly fees, types of coverage, and deductibles
make it very difficult to choose. It is important to think carefully before making a selection because the
wrong choice can cost you hundreds of dollars more in out-of-pocket expenses. Medicare has an
interactive Prescription Drug Plan Finder in
its Prescription Drug Coverage web page.
Medicare does not pay for long-term care, custodial care, private-duty nurses, private room, blood transfusions at home,
care received outside the U.S., routine dental care and dentures, prescription drugs outside the hospital, nursing care at home,
cosmetic surgery, routine foot care, eyeglasses, hearing aid, or personal comfort items such as a telephone or a television
in your hospital room.
Medigap (Supplemental Insurance) Policies
A Medigap policy is health insurance sold by private insurance companies to
cover the gaps in coverage of the Original Medicare Plan. All Medicare participants are guaranteed
acceptance for supplemental coverage if they act within six months of turning age 65 or enrolling in
Part B at age 65 or older.
Medigap policies help pay some of the health care costs that the Original Medicare Plan does not cover.
If you have coverage under the Original Medicare Plan and you also have a Medigap policy, then both of these plans
will pay their corresponding shares of health care costs.
Private insurance through a former employer can sometimes be continued or converted into a supplemental
policy after retirement. The converted coverage has the advantage that there are no waiting periods or exclusions
for pre-existing health conditions, and premiums may be partially or completely paid by the employer.
Insurance companies can only sell standardized Medigap policies with specific
benefits that can be compared easily. There are 12 different standardized Medigap policies (Medigap Plans A through L)
which must follow Federal and State laws. A Medigap policy must be clearly
identified on the cover as "Medicare Supplement Insurance". Each plan, A through L, has a different set of basic
and extra benefits.
It is important to know that if you join a Medicare Advantage Plan (Part C), your Medigap policy will not work.
This means it will not pay any deductibles, copayments, or other cost-sharing under your Medicare Health Plan.
Therefore, you may want to drop your Medigap policy if you join a Medicare Advantage Plan.
Applying for Medicare
You should sign up for Medicare a couple of months before your 65th birthday so that your benefits are in place when
you turn 65. You have three months after your 65th birthday to enroll in Medicare, but if you postpone your application beyond
that time, you have to wait until the general enrollment period and you may have to pay a higher premium. These are the two
steps for applying for Medicare:
Call Social Security on the toll-free information line at 1-800-772-1213 from 7 AM to 7 PM weekdays.
A Social Security representative will gather information about you, and have the local Social Security office contact you.
Go to your local Social Security office with your birth certificate, passport, or other acceptable proof-of-age document
to sign and pick up your Medicare card. Your benefits are also based on military service. If applicable, you should
have your military service records.
If you are applying for Social Security retirement benefits at the same time,
bring your W-2 or other tax documents needed to establish your retirement benefits.
You can apply online for many Social Security benefits at
Although you can receive Medicare benefits at age 65, the age for achieving full retirement benefits
has been adjusted upward depending on the year of birth. Since there is a substantial reduction in the Social Security
retirement benefits when retiring early, most people will choose to apply for Medicare first, and then apply at a later date for
Social Security Retirement benefits.