What is Medicare & What Does It Cover?

Health insurance is essential for all people, particularly older adults and people with disabilities. Medicare is one branch of health insurance, but what does it cover?

Medicare is federal health insurance offered to people over the age of 65 and to people with disabilities, ESRD, and ALS. Different plans or parts under Medicare broadly cover services ranging from hospital care, diagnostics and treatment of conditions, and prescription drugs.

This article will explain what Medicare is, the different parts of Medicare, and what they cover. 

Medicare is a National Health Insurance Program

Medicare is a national health insurance program enacted by the government in the United States of America. The program began under the United States Social Security Administration. 

The program offers federal health insurance for people who are 65 or older, younger people with disabilities as determined by the CMS (Centers For Medicare and Medicaid Services), people with end-stage renal disease, which is a permanent kidney disease, and people with ALS. 

As of 2019, Medicare helps over 59.9 million people manage their healthcare expenses, usually covering about half of the incurred expenses.

Typically, people enrolled in Medicare use other insurance types to help them pay the remainder of their medical expenses. 

Is Medicare Free?

Medicare is not free as it is an insurance program. People who are enrolled in Medicare pay premiums through taxes known as Medicare taxes for a certain amount of time.

Additional plans must be purchased by paying a premium.  Individuals pay premiums based on the plans they are enrolled in under Medicare. 

People who have paid Medicare taxes while working do not have to pay premiums on the Part A plan, which is known as premium-free part A. 

This plan is the only part of Medicare that could be considered “free” as no monthly premiums are necessary for people who have paid Medicare taxes.

However, all other parts of Medicare require regular payment of monthly premiums.

Coverage and Plans

There are four different parts or plans under Medicare, which include:

• Part A
• Part B
• Part C
• Part D 

Social security enrolls all eligible individuals in Part A and Part B Medicare. Parts C and D of Medicare are controlled by private insurance companies that adhere to Medicare rules.

Part A is the only plan under Medicare that is premium free, and this only applies to adults who had paid Medicare taxes for a while when they worked. 

Here is a detailed breakdown of what is covered under the different parts of Medicare.

Part A

Medicare Part A is part of Original Medicare and is the minimum essential coverage accorded to all adults over 65 and other eligible individuals, which is frequently premium-free for most taxpayers. 

This covers: 

• Inpatient hospital care for up to 90 days: Inpatient hospital care includes a stay at a Medicare-certified psychiatric hospital for 190 days in the individual's lifetime.
• Care in a skilled nursing facility called SNF: This is covered for up to 100 days following three consecutive days as an inpatient at the hospital.
• Home health care: This includes coverage for up to 100 days, and to qualify, you must have spent a minimum of three consecutive days as an inpatient at a certified hospital within two weeks of receiving home care. Individuals who do not meet these qualifications can opt for Part B of Medicare.
• Hospice care

Services covered by Medicare require people to cover part of the costs through cost-sharing mechanisms that may include other insurance. 

People who need to purchase Part A will spend between $274 to $499 each month, depending on how long they or their spouse paid Medicare taxes. The deductible for a hospital stay is $1,556. 

Part B

Part B of Medicare covers medically necessary services such as diagnostics and treatment and detection and prevention of illness like vaccinations.

Services covered under diagnostics and treatment include: 

• Clinical research
• Medical equipment
• Ambulance services 

Part B also covers some outpatient prescriptions, such as: 

• Drugs used with medical equipment
• Antigens
• Injectable osteoporosis drugs
• Blood-clotting factors
• Injectable and infused drugs

This Medicare plan also covers drugs necessary for people suffering from End-Stage Renal Disease. 

Mental health services covered under Medicare include inpatient and outpatient care and partial hospitalization, where individuals also pay a percentage of the Medicare-Approved amount, meet the Part B deductible, and pay coinsurance. 

The premium for Part B is approximately $170, which may be adjusted to match the incomes of individuals who have purchased the service. The deductible for Part B is $233.

Part C

Medicare Part C is also known as Medicare Advantage and, along with Part D, is offered by external insurance companies under Medicare's rules. 

Medicare Advantage works as an alternative to Medicare Part A and Part B, i.e., Original Medicare. The services offered by Medicare under Part A and Part B are combined into a singular plan in Medicare Part C, along with additional services like preventive dental care or vision checkups. 

So the services covered under Medicare Part C include inpatient care, outpatient care, and prescription drugs. The additional services under Medicare Part C include: 

• Dental and vision services
• Fillings
• Extractions
• Cleanings
• Eye exams
• Glasses
• Contact lenses

There are different plans under Medicare Advantage, typically health maintenance organizations and preferred partner organizations. 

HMOs are focused on wellness and prevention of illness and typically limit coverage to under-contract professionals. PPOs have a network of providers, and utilizing their services typically costs less than out-of-network professionals. 

Referrals are not required under PPOs.  The premium for Medicare Advantage varies depending on the insurer. Individuals choosing Part C must pay the premium for Part B and any additional costs as determined by the private insurer. 

Medicare Part C plans typically have a plan deductible, as low as $0, and a separate drug deductible. Copayments are required for doctor's visits.

Part D

Part D of Medicare is for prescription drugs. Individuals must be enrolled in a Medicare plan that covers drugs like Original Medicare (Part A and Part B) to get coverage for prescription drugs. 

However, enrolling in Part D if you already have Medicare Advantage (Part C) might dis-enroll you from Part C if Medicare Advantage already covers prescription drugs.

Medicare Part D covers several brand name and generic prescription drugs that are arranged in tiers from lowest to highest copayment necessary. 

Premiums for Part D vary by income, with the average being about $33.37. The deductible for Part D varies according to the insurance provider but is capped at $445.

Quick Recap

Medicare is a federal insurance program for adults over 65 and individuals suffering from disabilities, ESRD, or ALS. The different parts of the program include Part A and B, which are called Original Medicare, of which Part A can be premium-free for people who have paid Medicare taxes. 

Part C or Medicare Advantage covers all the services under Original Medicare with additional services like dental and vision, while Part D covers prescription drugs.