Understanding Medicare Insurance

For millions of senior citizens across the United States, affordable insurance might not be possible without the existence of Medicare. Medicare is a publicly funded insurance program designed to provide affordable and reliable coverage to senior citizens who have retired and no longer make high enough wages to afford coverage from private insurance companies. Medicare’s basic structure has changed in the 45 years since it was signed into law by President Lyndon B. Johnson, but its goal remains the same. Let’s take a closer look at the basics of Medicare insurance.

When Medicare was first introduced it had just two parts, Part A and Part B. Medicare Part A is the portion that provides beneficiaries with hospital insurance. Part A covers expenses related to inpatient hospital care in critical access hospitals, inpatient rehabilitation facilities, and long-term care hospitals. For those who need extra services after a hospital stay, Part A also covers expenses related to stays in a skilled nursing facility, hospice, and when necessary for home health services. Medicare Part A is available to most Medicare eligible individuals without a monthly premium payment, though a deductible is attached.

Medicare Part B is the other half of the original Medicare which is responsible for general medical insurance. Part B covers expenses for general medical care and doctors visits as well as preventive services to help an individual maintain their health level and avoid hospital care. Medicare eligible individuals who are enrolled in Part A must enroll in Part B, there is a monthly premium for its coverage. Under Part B coverage, Medicare insurance usually covers 80% of an individual’s medical expenses.

The original Medicare program doesn’t provide enough coverage for certain individuals.  Additionally, gaps in the insurance coverage provided could leave beneficiaries holding the bag with some hefty bills. As a result Medicare began to offer Supplemental Insurance, otherwise known as Medigap. Medigap requires a monthly premium for its services but often times eliminate the out of pocket cost for beneficiaries by paying for copayments, coinsurance, and other deductibles that Part A and Part B left individuals open to paying themselves.

In recent decades the government took a step to broaden Medicare insurance options by adding Medicare Part C. Part C, sometimes called the Medicare Advantage Plan, allows beneficiaries to obtain their Medicare Part A and Part B coverage through a private insurance company whose services have been approved by Medicare. In addition to providing Part A and Part B insurance, Part C plans generally offer other services Medicare does not such as vision, dental, and hearing. Many plans also provide prescription drug coverage.

The most recent addition to Medicare’s insurance coverage is Part D. Under Part D coverage, beneficiaries receive help to cover the cost of prescription drugs. Plans are run by private companies that have been approved by Medicare and come with varying costs and drugs covered.

Medicare insurance provides coverage to select beneficiaries. Any senior citizen over the age of 65 is eligible for Medicare insurance and as well as select individuals under the age of 65 who suffer from certain illnesses or disabilities. Medicare insurance is funded through payroll taxes the government collects from any gainfully employed U.S. citizen. As of 2009 Medicare insurance comprised nearly 13% of the government’s annual budget, making it the third largest portion of the budget behind only military funding and Social Security.