Alyssa Lane
Original Medicare, also known as traditional Medicare, is a federal insurance program that provides guaranteed health insurance for people aged 65 and older and younger people with disabilities. It comprises Part A (Hospital Insurance) and Part B (Medical Insurance). Part A covers inpatient hospital care, while Part B covers doctors' services, tests, and preventive services. Medicare isn't free, and there are premiums, deductibles, copayments, and coinsurance associated with the program. Additionally, Original Medicare doesn't cover prescriptions, but enrollees can purchase a Part D policy from a private insurer. To enhance their coverage, many individuals also opt for Medicare Supplement Insurance, known as Medigap, which helps pay for deductibles and copayments.
| Characteristics | Values |
|---|---|
| Type | Federal insurance program |
| Coverage | Inpatient hospital care, doctors' services and tests, preventive services, prescription drugs (optional), hospital insurance, medical insurance |
| Eligibility | People aged 65 and older, younger people with a disability |
| Cost | Similar fees to private-sector insurance, monthly premium, deductible, copayment, coinsurance |
| Providers | Original Medicare, Medicare Advantage |
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What You'll Learn
Medicare Part A and Part B
Medicare is a federal health insurance program for anyone aged 65 and older and some people under 65 with certain disabilities or conditions. Original Medicare includes Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance).
Part A helps cover inpatient care in hospitals, skilled nursing facility care, hospice care, and home health care. It also covers inpatient hospital care, doctors' services and tests, and preventive services. You pay for services and items as you get them, and Medicare covers part of the cost. You must be lawfully present in the US for Medicare to pay for Part A and Part B-covered services.
Part B is medical insurance that covers doctors' services and tests and preventive services. It is important to note that Part B requires the payment of a monthly premium in addition to any other premiums you may be paying.
After signing up for Parts A and B, you can choose how you receive your health coverage. There are two main ways to get your Medicare coverage: Original Medicare and Medicare Advantage. Original Medicare allows you to see any doctor or hospital that accepts Medicare anywhere in the US. With Medicare Advantage, you typically must use doctors within the plan's network.
You can also join a separate Medicare drug plan (Part D) to get coverage for prescription drugs, including recommended shots or vaccines. Most Medicare Advantage plans include Part D coverage. You can also purchase supplemental coverage, such as Medicare Supplement Insurance (Medigap), to help pay for your share of costs in Original Medicare. Medigap policies are standardized and named by letters, like Plan G or Plan K. The benefits are the same regardless of the insurance company, and the price is the only difference.
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Medicare Advantage
You can be disenrolled from a Medicare Advantage Plan for several reasons, such as moving outside the plan's service area, losing Medicare or Medicaid eligibility, joining a drug plan (in some cases), or if the plan's contract with Medicare ends. If you are disenrolled, you will be eligible for a Special Enrollment Period, during which you can review your options and choose a new Medicare health plan or return to Original Medicare.
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Medigap policies
Medicare is a health insurance program for people aged 65 or above, or those under 65 with a disability or specific health issues. There are two main ways to get your Medicare coverage: Original Medicare and Medicare Advantage.
Original Medicare includes Medicare Part A (Hospital Insurance) and Part B (Medical Insurance). This covers things like inpatient hospital care, doctors' services and tests, and preventive services. You pay for services and items as you get them, and Medicare covers part of the cost.
Now, Medigap policies, also known as Medicare Supplement Insurance, are extra insurance policies that can be purchased from private companies. These policies are designed to help with the out-of-pocket costs not covered by Parts A and B, such as deductibles, copays, and coinsurance. Medigap plans are available in all 50 states and Washington, D.C., with some variation in premiums and enrollment eligibility.
It's important to note that Medigap policies are standardized and named by letters like Plan A, Plan B, Plan G, or Plan K. The benefits offered in each lettered plan are the same across insurance companies, with the only difference being the price. Generally, you need to have both Part A and Part B to buy a Medigap policy, and it's recommended to do so within 6 months of getting Parts A and B to avoid paying higher prices or losing the option to buy a policy.
Medigap coverage usually has no network limitations and can be used anywhere that accepts Medicare. Some Medigap plans even offer coverage for foreign travel emergency services. It's important to remember that Medigap policies typically don't cover long-term care, vision, dental, hearing aids, private-duty nursing, or prescription drugs.
To summarize, Medigap policies are supplemental insurance plans that can be purchased alongside Original Medicare to help with out-of-pocket costs. These plans are standardized and offer additional coverage, ensuring that individuals have more comprehensive health insurance.
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Prescription drug coverage
Medicare Part B (Medical Insurance) covers a limited number of outpatient prescription drugs under certain conditions. Part B usually covers drugs administered in a doctor's office or hospital outpatient setting that you wouldn't typically give to yourself.
Medicare Part B covers drugs used with specific types of durable medical equipment (DME) if they are deemed medically necessary. It also covers some antigen allergy tests and treatments, HIV prevention drugs, injectable osteoporosis drugs, and erythropoiesis-stimulating agents for patients with End-Stage Renal Disease (ESRD) or anaemia.
If you receive non-covered prescription drugs in a hospital outpatient setting, you will be responsible for the full cost unless you have other drug coverage. If you have Part D coverage, your costs will depend on whether your drug plan includes the drug and if the hospital is within your plan's network.
You must have Medicare Part A (Hospital Insurance) and/or Medicare Part B (Medical Insurance) to join a separate Medicare drug plan. You can obtain Medicare drug coverage through a Medicare Advantage Plan (Part C) or another Medicare health plan. If you have Original Medicare and want to add drug coverage, you can join a separate Medicare drug plan, as most Medicare Advantage Plans include Part D coverage.
It is important to note that you may have to pay a Part D late enrollment penalty if you do not join a Medicare drug plan when you first get Medicare and go 63 days or more without creditable drug coverage. This penalty increases the longer you wait to join a plan, and you will typically pay it for as long as you have Part D coverage, even if you switch plans.
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Eligibility and costs
Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) are available to individuals in the following categories:
- Most people get Part A for free, but some have to pay a premium for this coverage. To be eligible for premium-free Part A, an individual must be entitled to receive Medicare based on their own earnings or those of a spouse, parent, or child.
- To receive premium-free Part A, the worker must have a specified number of quarters of coverage (QCs) and file an application for Social Security or Railroad Retirement Board (RRB) benefits.
- The exact number of QCs required depends on whether the person is filing for Part A based on age, disability, or End Stage Renal Disease (ESRD).
- Individuals who do not enroll in Part B or premium Part A when first eligible because they were performing volunteer service outside of the US for at least 12 months and had health insurance coverage during that time may enroll using a Special Enrollment Period (SEP).
- Individuals who enroll in Part A based on disability or ESRD but do not enroll in Part B because they were eligible for TRICARE Standard or TRICARE Prime may also enroll using this SEP.
- QCs are earned by paying payroll taxes under the Federal Insurance Contributions Act (FICA) during an individual's working years.
- Most people pay the full FICA tax, so the QCs they earn can be used to meet the requirements for both monthly Social Security benefits and premium-free Part A.
- Certain Federal, State, and local government employees only pay the Part A portion of the FICA tax, so their QCs can only be used to meet the requirements for premium-free Part A and not for monthly Social Security benefits.
- To be eligible for premium-free Part A based on age, an individual must be eligible for monthly Social Security or RRB cash benefits.
- If an individual is already receiving monthly Social Security or RRB benefits at least four months before turning 65, they do not need to file a separate application to become entitled to premium-free Part A.
The costs of Medicare vary based on the plan and coverage options chosen, as well as the providers and location. Monthly premiums vary depending on the plan and can change annually. Deductibles, coinsurance, and copayments also differ based on the selected plan. While some plans have a yearly limit on out-of-pocket expenses, others do not. Supplemental coverage, such as a Medicare Supplement Insurance (Medigap) policy or a Medicare Advantage Plan, can eliminate the yearly limit on out-of-pocket expenses. Individuals with limited income and resources may receive financial assistance from their state to cover premiums, deductibles, coinsurance, and copayments. Additionally, Extra Help is available to cover drug costs for those who qualify, including a waiver of the Part D late enrollment penalty. For those with Medicare and full Medicaid coverage, Medicaid may pay for additional drugs and services not covered by Medicare.
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Frequently asked questions
Straight Medicare insurance, more commonly known as Original Medicare, is a federal insurance program that provides guaranteed health insurance for people aged 65 and over and for younger people with a disability.
Original Medicare includes Part A (Hospital Insurance) and Part B (Medical Insurance). Part A covers inpatient hospital care, while Part B covers doctors' services, tests, and preventive services.
Original Medicare does not cover prescription drugs, long-term care, dentures, or routine physical exams.
Original Medicare has fees similar to private-sector insurance. Almost everyone pays a premium for Part B, which was $164.90 per month in 2023 and increased to $174.70 in 2024. High earners can expect to pay more.
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