The Basics of Medicare

There’s a lot of talk – and confusion – about Medicare these days.

And that’s understandable. It can be a confusing topic. But one that is an important one to understand for seniors and their loved ones.

In this article we aim to cover the basics of Medicare in plain English. We want to present it in a way that anyone can understand. You won’t find a comprehensive guide to Medicare here. But if you just want a basic understanding of what it is, who is it for and what it covers, you’re in the right place!

Who Qualifies for Medicare?

  • Anyone over the age of 65
  • Individuals who are entitled to Social Security disability benefits for not less than 24 months
  • Individuals entitled to Railroad Retirement benefits or Railroad Retirement disability benefits
  • Those who are suffering from end stage renal disease or ALS

The Basics on Medicare

The first thing you need to know is that Medicare is not a welfare program. It is a national program that is available for everyone 65 and older. Your income and your assets will not be taken into consideration when it comes to determining the eligibility or benefit payment.

Medicare covers some of the cost of medical care. In this way, it’s similar to what private insurance companies offer. Those with Medicare are required to pay deductibles and coinsurance.

Medicare Part A vs Medicare Part B

It is also important to know that Medicare has two main parts: Part A and Part B. Here’s what both parts offer:

  • Part A – Medicare Part A covers inpatient hospital care, inpatient care in a nursing facility, hospice care and home health care services.
  • Part B – Medicare Part B which covers medical care and other services provided by doctors and medical practitioners. It also covers home health care, outpatient care, durable medical equipment and home health services.

Basically, Part A is free hospital insurance and Part B is medical insurance in which you need to pay a monthly premium fee. You can expect Medicare Part A and Part B to cover around 50% of your total health care expenses; this is also referred to Original Medicare. You can find out if the health care or service you need is covered by Medicare by going to their website.

Medicare also offers Part C and Part D. These two parts offer additional coverage that you can purchase. Here is what each offers:

  • Part C – often referred to as the Medicare Advantage Plan or Medicare Health Plan, Part C is a private insurance which provides coverage in an existing plan that includes either Medicare Part A or Part B (or both).
  • Part D – this insurance offers you prescription drug coverage. You can also choose to add it to your basic Medicare Part A and B benefits.

Both Parts C and D may also include extra covered services such as hearing, vision and dental medical services. Now, the bigger question is how much do all of these cost? Let’s break it down below.

Medicare Part A

As previously mentioned, most people do not have to pay a monthly fee for Part A. This is because you (and/or your spouse) have likely been paying into the system through taxes taken out of your paychecks over the years.

As long as you have 40 or more quarters of Medicare-covered employment, you are eligible for premium-free Part A. Those who don’t get a free Medicare Part A may still choose to enroll but have to pay a fee of $411 per month. These are usually people who have less than 30 quarters of Medicare-covered employment.

Medicare Part B

Now, we have Medicare Part B which costs $135.50 standard per month. Unless your modified adjusted gross income is greater than $85,000 (this is for single filers) and $170,000 for joint filers. You will need to pay a higher premium monthly prices if your income exceeds the amounts mentioned above.

Medicare Part C

The price for Medicare Part C varies depending on the benefits you will choose. Medicare offers an online plan finder tool to help you get a rough estimate of your monthly fee.

Medigap or Medicare Supplement Policies

If you have decided to go with Original Medicare (Part A & B), you may also want to purchase Medigap policies. This will help take care of the gaps in the Original Medicare. The fee depends on the price you will choose.

We hope this gives you a simple, plain English overview of Medicare. And we hope you understand it better now. To get more detailed information, check out the Medicare site here.