Medicare is a federally-funded and federally-managed health insurance program mainly designed to provide coverage for adults over 65. The funds come from Social Security that working people pay into the system, and rules and management are set at the federal level and are consistent in all states. Some people under 65 qualify for Medicare.
Enrolling in Medicare can be very confusing because there are many options, including basic vs. private plans and prescription plans. It is important to consider all the choices and to take time to make a final choice about enrollment and plans for Medicare, but in general most enrollees report getting good quality care and having good access to care.
What is Medicare?
Medicare is a public and federal health insurance program for Americans over the age of 65 and for certain other individuals who qualify for coverage. Medicare is funded entirely by the federal government through the Social Security Administration. The funding comes from taxes that workers in the U.S. pay into Social Security. Medicare is managed by the federal department known as the Centers for Medicare and Medicaid Services.
Beginning in the 1970s, Medicare enrollees were given the option to get benefits through a private health insurance plan rather than through the traditional Medicare system. Most of these alternatives are HMOs, or health maintenance organizations. In 2017 there were more than 57 million Americans enrolled in Medicare. About one-third of those chose a private insurance plan, a number that has been growing since 2004.
Eligibility for Medicare
Eligibility rules for Medicare are the same across the U.S. since the program is funded and managed by the federal government, not by state governments. The biggest group that Medicare covers is adults over the age of 65. Anyone over 65 who has been a legal resident in the U.S. for at least five years, who has worked long enough (or whose spouse has) to be eligible for Social Security, or who is a government employee or retiree who did not pay into Social Security, is eligible for Medicare.
There are also some individuals under the age of 65 who can be eligible for Medicare coverage. These include people with permanent kidney failure, those with amyotrophic lateral sclerosis (ALS), also known as Lou Gehrig’s disease, and people with certain disabilities who have been received Social Security Disability for at least two years. Those with ALS or kidney disease do not have to wait this two-year period to be enrolled in Medicare.
Medicare Parts and Plans
Medicare can be very confusing because of a complicated set of rules and coverage benefits and also because the program includes several different parts as well as the option to choose a private health care plan. The basic and original form of Medicare includes two parts: A and B. Part C is the private insurance option, and Part D covers prescription medications.
- Part A. Both Parts A and B are included in the original, federally-run Medicare program. Part A covers the costs of hospital care nursing and stays. It does not cover physician care. It also covers some home health care services. Part A comes with a yearly deductible.
- Part B. Part B is medical coverages, which includes some of the costs of doctor appointments, home health care, rehabilitation, diagnostic tests, outpatient procedures, and mental health care. You can opt out of Part B, which requires a monthly premium.
- Part C. This is the plan offered through private insurers that have been approved by the Medicare program. This is also known as Medicare Advantage and to enroll, you must first enroll in Parts A and B. Individuals choose their own private plan from among the options and enroll through the private health insurer. Part C plans are typically HMOs or PPOs, preferred provider organizations.
- Part D. This is the prescription drug program, which is optional. Enrollees can choose from among Medicare-approved private insurers for medication coverage. Part D plans usually have premiums, deductibles, and co-pays.
Choosing Medicare Parts and Plans
Medicare can be very confusing, so it is important to learn all about the options before making enrollment choices. The first choice is between going with the original program, Parts A and B, or to choose a private plan through Part C. If you choose Part C, you will then have to choose from among all the available private plans. With Parts A and B it is important to be aware of what options you will have for doctors that accept Medicare, as not all do.
It is also important to be aware that if you choose Part C, you still need to be enrolled in Parts A and B first. This means there will be a part B premium to pay even if you choose Part C. On the other hand, co-pays for part C are generally less, and part B co-pays are 20 percent across the board. If you choose part D prescription coverage, you also need to be enrolled in Parts A and B first.
Another choice you have with Medicare is Medigap, a supplemental insurance plan offered by private insurers. As with Parts C and D, this requires enrollment in Parts A and B first. You cannot buy Medigap if you have chosen Part C insurance or if you have a disability. There are eleven different Medigap policies offered in most states. They differ but generally cover Part A deductibles and co-pays, part B co-pays, and some other expenses not covered by Medicare.
Medicare Compared to Medicaid
Medicaid is another public health program, but it is one designed to cover low-income individuals of any age. Medicaid often covers more services and costs than Medicare. Adults over 65 who meet the requirements for Medicaid may choose to enroll in both programs. The coverage from Medicaid can be used to fill in gaps in Medicare coverage. It can also cover some of the costs of care that Medicare doesn’t pay.
An important difference between the two health insurance programs is in how they are funded and administered. While Medicaid is funded by both federal and state governments and is administered separately by each state government, Medicare is entirely federal. It is funded by the federal government and administered by the federal government. This means that rules for eligibility and coverage under Medicare are the same across all states.
Access and Quality of Care
Medicare reaches many people in the U.S., but it is only useful if those enrollees get good health care and have good access to physicians, treatments, procedures, hospitals, and other services. Access and quality are particularly important with Medicare because it covers older adults and disabled adults, people who are more vulnerable to illness and injury and have more pressing medical needs.
Studies have found that access to physicians through Medicare is generally good. Most enrollees have access to a primary care doctor. Most are also able to schedule timely appointments. Those with more access issues are enrollees who are under 65 and disabled, enrollees with low incomes, African-American enrollees, and enrollees with poor health or multiple chronic conditions.
While most physicians, 91 percent, accept new Medicare patients, there is a big gap in mental health. As many as 42 percent of psychiatrists do not accept Medicare, which means that enrollees may struggle to access mental health care at all, let alone good quality care.
Before you enroll in a Medicare program, make sure you understand what all your options are and have taken the time to weigh the benefits of each against your needs. It is also important to ensure you choose plans and parts that will provide you with good access and care from the professionals you want to see.