Medicare 101

Medicare is a national social insurance program administered by the U.S. government that provides health insurance benefits for people who are 65 or older, certain younger people with disabilities, and people with end-stage renal disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD). Medicare has been around since July 30, 1965 and is overseen by the Centers for Medicare and Medicaid Services (CMS).

Medicare has four parts, Part A, Part B, Part C, and Part D, each of which cover specific services.

Medicare Part A (Hospital Insurance)

Medicare Part A is often referred to as “hospital coverage” because it coves medically necessary items for which Medicare beneficiaries incur costs, including an inpatient hospital stay, inpatient mental health services, skilled nursing services, hospice care, and some blood transfusions.

Medicare Part B (Medical Insurance)

Medicare Part B covers the costs of medically necessary care that is received other than on an inpatient basis, such as physician services, outpatient hospital services, ambulance, outpatient mental health services, laboratory services, durable medical equipment (wheelchairs, oxygen, etc.), outpatient physical, occupational, and speech-language therapy, and some preventive care.

Medicare Part C (Medicare Advantage)

While Medicare Part A and Part B are known together as “Original Medicare,” Medicare Part C, is referred to as “Medicare Advantage.” Medicare Advantage is still part of the federal Medicare program, but it is run by private insurers that are approved by Medicare. This plan will provide all of the Medicare Part A and Part B coverage and often more, such as vision, hearing, dental, and/or health and wellness programs, at a lower cost than Original Medicare. Most Medicare Advantage programs also include prescription drug coverage (Part D).

Medicare Part D (Prescription Drug Coverage)

Medicare Part D is offered by private insurance companies to help with the cost of prescription drug costs. To receive these benefits, you must continue to pay your Part B premium. Each plan offering prescription drug coverage through Medicare Part D must give at least a standard level of coverage set by Medicare, though they can vary the list of prescription drugs they cover with a formulary. Many plans have a tiered formulary where drugs are divided into groups called “tiers”. In general, the lower the tier, the lower the cost. When choosing a Medicare plan, be sure that your prescriptions are covered.

Medicare Supplements

Medicare Supplement plans are offered by private insurance companies to help pay some of the out-of-pocket costs that come with Original Medicare. Beneficiaries who choose a Medicare Supplement plan will also need a prescription drug plan.

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