Medicare is a federal health insurance program with a country-wide network of providers where beneficiaries of the program can receive health care coverage.

Medicare works by covering the costs of health care expenses like hospitalization, which is covered under Medicare Part A, and medical supplies, which are covered under Part B. Although Original Medicare may cover most of your health care costs, you are still required to pay part of your health expenses in the form of copayments and deductibles. Also, Part A Medicare will typically not attract premiums, but you will be required to pay premiums for Part B coverage.

Since Medicare is a federal program, it does not offer family plans like most private health insurance plans. Each person enrolls at a different time based on personal eligibility factors like age or disability.

Upon enrolling, beneficiaries can choose the following:

• Stay with Original Medicare (the traditional federal-run Medicare) and add no coverage to it;
• Stay with Original Medicare and add coverage to it through Medicare Part D (prescription drug plans) or Medigap (supplemental coverage that helps fill in the financial gaps of Original Medicare);
• Replace Original Medicare with Medicare Advantage (private plans that must offer the same coverage as Original Medicare but often offer additional benefits and perks and often bundle Medicare Part D).

The type of coverage or benefits that you get under your Medicare plan will typically depend on the specific type of Medicare plan that you have.

The main principles of Medicare: how does the program work?

In general, Medicare works the following way:

• Once they turn 65, most American citizens get automatically enrolled in Original Medicare. That includes Part A (that is premium-free for most) and Part B (that has a monthly premium that is usually deducted from the Social Security benefit payment). Once you’re in the system, there’s no need to re-enroll every year – you’re covered for life.

Note: The age rule does not apply to people with certain disabilities – they qualify for Medicare after 24 months of receiving Social Security disability benefits.

• Once the coverage starts (usually the 1st day of the month of the 65th birthday), Medicare kicks in and will cover some of the costs of your hospital care (Part A) and outpatient services (Part B). You can go to any Medicare-approved provider and have your health care expenses covered by Medicare up to the limits specified in your plan. Coinsurance and deductibles will apply.
• During the Initial Enrollment Period (lasts for 7 months, starting 3 months before you turn 65 and running up 3 months after your 65^th birthday month) and then every year during the Annual Enrollment Period beneficiaries can change their coverage: drop their current plans and enroll in a different ones should they choose to.

How does Medicare part A work?

Medicare Part A is included in Original Medicare. In most cases, people are not required to pay any premiums for Part A coverage. Part A Medicare provides coverage for inpatient health care expenses, including hospitalization or care at a skilled nursing facility up to a certain limit. Part A Medicare will also cover the cost of hospice care and some types of home health care.

Provided you meet any of the following criteria, you will not be required to pay premiums for Medicare Part A:

·        You are eligible for Social Security or the Railroad Retirement Board benefits.

·        You had Medicare-covered employment.

·        You have received disability benefits from Social Security or the Railroad Retirement Board for at least 24 months.

·        You have End-Stage Renal Disease.

Although you may not incur premiums for Part A coverage, in 2024 you will still have to pay deductibles for Part A and coinsurance as follows:

·        Each benefit period attracts $1,632 in deductibles;

·        $0 coinsurance for the first 60 days per benefit period

·        $408 coinsurance per day of each benefit period from day 61 to the 90^th day

·        $816 coinsurance for 91 days and beyond.

If you would like to minimize your deductible and co-insurance costs, you can purchase a Medicare supplement plan from a Medicare-approved private insurer.

How does Medicare part B work?

Medicare Part B is part of Original Medicare and provides coverage for medical services and supplies that are required as treatment for your illness. Some of the medical services covered by Medicare Part B include:

·        Outpatient care, including doctor visits;

·        Preventive medical services such as vaccinations, screenings of diseases like cancer;

·        Ambulance services;

·        Durable medical equipment such as canes, crutches, walkers, wheelchairs, and glucose monitors;

·        Some outpatient prescription drugs;

To get Medicare Part B coverage, you will be required to pay a premium which can vary depending on the year. The Part B premium for 2024 starts at $174.70 per month. Medicare Part B also has a deductible of $240. You will also be required to copay 20% of the Medicare-approved costs for covered medical services and supplies.

Please note that Medicare only covers services that have been officially deemed to be medically necessary. Also, these services are only covered by your plan if you go to a Medicare-approved provider.

Enrolling for Medicare

There are three types of enrollment periods available for Medicare:

• Initial enrollment: this is the automatic enrollment period when you first become eligible for Medicare when you turn 65. Initial enrollment lasts for 7 months, starting 3 months before you turn 65 and running up 3 months after your 65^th birthday month.
• General enrollment period: If you missed your initial enrollment period, you can sign up to Medicare Part A and/or Medicare Part B during this period that runs every year from January 1st to March 31st. 
• Special enrollment: if you miss the initial and open enrollment periods, you may be able to enroll for Medicare under special enrollment, provided you meet the set requirements for this type of enrollment. 

Which other plans are available in Medicare?

Apart from Original Medicare, which is a federal program, there are other types of Medicare plans offered by private insurers. You can use these plans to enhance your Original Medicare coverage or replace it. These plans include:

Medicare Part D

Medicare Part D offers prescription drug coverage for prescription drugs, including those in protected classes like AIDs and cancer drugs. When you choose a Part D provider, you will be provided with a list of covered drugs or formulary.

Medicare Part D is offered by private insurers, and costs can vary depending on the insurer and your location. Medicare Part D is available to anyone with Original Medicare, but the coverage is not mandatory. However, if you do not have creditable prescription drug coverage, you may incur a late enrollment penalty if you do not enroll for Part D when you first become eligible.

You can use a Medicare plan finder to find a Medicare-approved Plan D provider in your area. 

Medicare Supplement Plans

Like Medicare Part D, Medicare supplement plans or Medigap are offered by Medicare-approved private insurers. Medigap plans do not cover specific medical services but rather help to cover the costs of the deductibles and copayments incurred with Original Medicare. Anyone with Original Medicare can purchase a Medigap plan.

Medicare Part C

Medicare Part C or Medicare Advantage combines Medicare Part A and Part B coverage plus added benefits. You can enroll in Medicare Advantage instead of Original Medicare if you want more coverage. Most Part C plans will include prescription drug coverage, so you do not need Medicare Part D if you opt for a Medicare Advantage plan. In addition, Medicare Advantage plans have been increasing the range of extra benefits they offer. Additional benefits may include popular benefits such as vision care, dental care, and hearing aids but also newer benefits such as acupuncture, chiropractic services, discounted gym memberships, transport, etc.

Since Medicare Advantage plans are offered by private insurers, coverage benefits and premiums can vary, so it is important to compare plans before settling on a provider.

Questions about Medicare?

Shoot us an email at medicare@hihella.com.

Article updated on January 12, 2024