Medicare 101

What is Medicare, and who is eligible?

Medicare is a federal government entitlement program that provides health coverage for people age 65 and older, as well as people with certain disabilities that prevent them from working.

What does Medicare cover?

Medicare offers a wide variety of benefits, depending on which “Parts” you elect:

• Part A is the original Medicare benefit. All Medicare eligible individuals are automatically enrolled in Part A, free of charge. Part A provides coverage for inpatient hospital stays.
• Part B is optional coverage that pays for doctor's visits and outpatient hospital care, as well as some costs associated with physical therapy and home health care. Beneficiaries must elect to enroll in Part B and are charged a premium for it. Part B offers 80/20 coverage, which means that Medicare will pay for 80% of the cost of service, while the beneficiary pays 20%. There is also an annual deductible which beneficiaries must pay before Part B coverage begins.
• Part C is Medicare Advantage, formerly known as Medicare + Choice. Medicare Advantage is very much like a private health insurance plan, offering managed care, PPO, and fee-for-service coverage options. It is only available in certain regions of the country, and the premium is higher than that charged for Part B, but it does offer the convenience of packaging Part A, Part B, and additional coverage into one neat bundle. Beneficiaries must elect to enroll in Medicare Advantage, and are charged a monthly premium for such coverage.
• Part D is Medicare's new Prescription Drug plan. Millions of Medicare beneficiaries have already enrolled in this program and are currently receiving prescription drugs through Part D. Part D is an optional program – beneficiaries must elect Part D and pay a monthly premium for coverage.

You can also elect Medigap supplemental coverage to cover items not covered under the various Parts of Medicare, or to help you with out-of-pocket copays and deductibles. Medigap plans are standardized – there are twelve types of plans, lettered A through L. To learn more about Medigap, read my article which contains advice and resources to help you decide if this supplemental coverage is right for you.