Just about every American adult has heard of Medicare, but unless you're of a certain age, and likely using it, you probably don't know very much about it. Here's a quick review of what it is, how it works, and, importantly, what it costs. (It's worth noting, after all, that although it's a government-provided service, it's not free.)
In a nutshell, Medicare, signed into law by President Johnson in 1965, is a federal health insurance program for those aged 65 and up. (It also serves some younger people with disabilities and certain people with end-stage renal disease.)
A, B, C, D...
Medicare features a handful of "parts," with different functions.
- Part A covers inpatient hospital care (such as surgery), as well as care provided by skilled nursing facilities, hospice, and some home healthcare providers. It also covers some lab test and doctor visits.
- Part B covers certain doctors' services, outpatient care, medical supplies, and preventive services. More specifically, it covers "medically necessary" services needed to diagnose or treat you, as well as preventive and early detection services such as certain vaccines and screenings. It also covers durable medical equipment (such as blood sugar monitors and home oxygen equipment), mental-health care, and limited prescription drugs.
- Part C features Medicare Advantage plans, which are an alternate way to receive Part A and Part B coverage. Whereas Parts A and B are traditionally provided by Medicare, those opting for Part C instead will be in a Medicare Advantage plan, with services covered by a private organization (such as a health insurance company) that has contracted with Medicare to do so. Medicare Advantage plans are relatively new and worth investigating, if you're in the market for coverage.
- Part D offers prescription-drug coverage.
That may seem pretty comprehensive, and it is indeed pretty good. But there remain holes in Medicare coverage, which is why you can also opt to buy supplemental insurance plans, such as Medigap.
So, what does all this cost? Well, it depends -- and the prices change from year to year. The numbers below are for this year, 2015.
- Part A is free for most of us, as we (often unknowingly) paid taxes toward it while working. Those who don't get Part A for free will pay up to $407 per month. There are also deductibles, such as $1,260 for each benefit period, as well as coinsurance payments.
- Part B sports a deductible of $147 per year, and costs most people (individuals earning $85,000 or less, or couples filing jointly and earning $170,000 or less) $104.90 per month. Those earning more will pay more, with the highest earners paying $335.70 per month.
- Part C is variable, because Medicare Advantage plans vary in their pricing (and also in their services, though they must meet certain Medicare minimum standards).
- Part D also varies according to which plan you choose, and higher earners can pay more. Those earning $85,000 or less (or $170,000 or less for couples filing jointly) will often pay no more than their plan premium, with the highest earners paying $70.80 plus their plan premium per month.
That's the basic info for Medicare coverage and costs. You can get much more information from the horse's mouth at www.Medicare.gov.