What is Medicare?

Medicare (U.S. Social Security Administration; www.ssa.gov) is a federally run health insurance pro-gram for people who are 65 years of age or older, or who are on Social Security Disability (SSD; see Question 83) for two consecutive years, are legally blind, or are on renal dialysis. A brief outline of Medicare cover-age is provided here; for more information refer to the official Medicare Web site at www.medicare.gov.

Part A. Usually free to you, but may be purchased if you have not accrued enough Social Security cred-its based on your work contribution history. Traditionally, this plan covers inpatient hospitalization, care at a skilled nursing facility (with specific limita-tions), hospice care, in-home nursing care, and home health care. Deductibles and co-payments may be required.

Part B. Optional, and is purchased by paying monthly premiums (usually $96.40/month in 2009, but may be higher based on income). This plan covers most medical services, lab tests, outpatient hospital services, medical equipment, supplies (usually including ostomy supplies), and chemotherapy, if administered by your healthcare provider. It also may cover some preventive care services, including cancer screenings. If you also meet Medicaid requirements, the premium may be paid as part of a program called Qualified Medicare Beneficiary Program. Medicare previously did not cover prescription medications (those not administered by hospital staff ), syringes,or insulin for diabetics, experimental treatments, routine medical transportation (ambulance is covered in specific circumstances), or nonmedical or extensive home care services.

Part C—Medicare Managed Care (Medicare Advantage Plans: PPOs, HMOs). Medicare establishes an agreement with certain health insurance companies to manage your insurance coverage. You continue to pay for “Part B,” and other fees may be associated with this type of coverage. If you are enrolled in such a program, you may receive added benefits. You will probably be required to choose a primary care physician and may also have added restrictions, such as being limited to in-network medical care, being required to pay additional fees, and more.

Part D—Prescription Drug Coverage. Medicare recently added a prescription coverage component, which may lower drug costs for many people. Typically, the drug coverage benefit is managed by an independent insurance company approved by Medicare. This type of coverage usually entails an additional fee, and what exactly is covered can vary across specific plans. All of the specifics of Part D are beyond the scope of this brief discussion. For more details, contact the Social Security Adminis-tration (see the Appendix for contact information).

Medicare Supplemental (or “MediGap”) Plans. Purchased by you and is intended to provide additional coverage, such as prescription drug coverage and other benefits, to people with Medicare. The government has standardized these plans, and they provide a range of additional coverage. To learn more about these policies, order a copy of The Guide to Health Insurance for People with Medicare (U.S. Department of Health and Human Services; see the Appendix for ordering information).