Haris Ashley
Medicare is the federal health insurance program for people aged 65 and over. It is the most common health insurance option for this age group, with 98.9% coverage rates in 2022. Medicare Part A is free for most people and covers hospital visits, home or skilled nursing, and hospice. Part B, which covers medical care received from doctors and other healthcare providers, outpatient care, home health care, durable medical equipment, and certain drugs, has a monthly premium. If you are still working, you may be able to get insurance through your employer. You can also purchase private insurance, and there are Medicare Advantage Plans (Part C) which are private plans that provide coverage similar to Part A and Part B combined.
| Characteristics | Values |
|---|---|
| Name of the program | Medicare |
| Who is eligible | People 65 years or older, certain people with disabilities, and people with end-stage renal disease (ESRD) |
| Types of plans | Original Medicare, Medicare Advantage Plan (like HMO or PPO), Medicare Prescription Drug Plan, Medicare Advantage (Part C) |
| Cost | Most people who are 65 and older can get free Medicare Part A Hospital Insurance. |
| Additional benefits | Medicare Advantage rates include prescription drug benefits. |
| Other options | Private insurance, Medicaid, Insurance through your job |
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What You'll Learn
Medicare Part A: free for most people over 65
Medicare is a federal health insurance program for people aged 65 or older, certain people with disabilities, and people with end-stage renal disease. Most people over 65 are eligible for free Medicare Part A, which covers most medically necessary inpatient care, skilled nursing facility care, home health care, and hospice care. However, eligibility for premium-free Part A depends on work history, with each calendar quarter of work that you pay into Social Security and Medicare taxes counting towards your eligibility.
If you don't qualify for free Medicare Part A, you can purchase private insurance or buy Part A coverage. You will need to pay a monthly premium for Part A coverage if you don't qualify for premium-free Part A. This premium can be automatically deducted from Social Security, Railroad Retirement Board, or Civil Service Retirement checks. If you don't receive these payments, you will be billed for your Part A premium.
The monthly premium for Part A coverage may vary depending on your income and work history. To be eligible for premium-free Part A, you must have worked and paid Medicare taxes for a certain amount of time, typically at least 10 years or 40 calendar quarters. Each calendar quarter refers to a three-month period ending on March 31, June 30, September 30, or December 31.
It is important to note that Medicare Part A is not the only component of Medicare. Original Medicare also includes Part B (medical insurance), which requires a monthly premium even if no covered services are used. Additionally, you can add extra coverage through private health insurance companies with a Medicare Supplement plan or a Medicare Advantage Plan (Part C). These plans can offer different benefits and vary in cost, so it is essential to review the options carefully before making a choice.
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Medicare Advantage Plan: like HMO or PPO
Medicare is a federal health insurance program for people aged 65 and over, certain people with disabilities, and people with end-stage renal disease. When you first enrol in Medicare, you will be signed up for Original Medicare unless you choose another option. One such alternative is a Medicare Advantage Plan, also known as Medicare Part C. This is a health insurance plan that you buy from a private insurance company.
Medicare Advantage Plans include Health Maintenance Organizations (HMO) and Preferred Provider Organizations (PPO). HMO plans require you to seek in-network services, and you will generally not have to manage additional fees unless you use out-of-network professionals. In emergency situations, you may owe additional costs, but you will need to check with your plan to see the fees. Under an HMO plan, you are required to choose an in-network primary care provider (PCP) who will refer you to in-network specialists. HMO plans may charge a monthly premium and a deductible, but these costs may be quite low or even $0 in some cases. Members usually pay a copayment for covered health care services, after meeting any deductible. Importantly, an HMO plan may not cover care received from providers outside the network at all, leaving the plan member responsible for the entire cost.
PPO plans, on the other hand, offer more flexibility for people who want to use both in-network and out-of-network healthcare professionals. PPO plans cover out-of-network professionals but at a higher cost. Under a PPO plan, choosing a PCP is not required, nor is a referral for specialist visits. Medicare Advantage PPO and HMO plans have the same baseline costs, including monthly premiums, deductibles, copayments, and coinsurance.
The best Medicare Advantage plan depends entirely on your personal medical and financial situation. If you value healthcare professional flexibility, a PPO plan may be your best option. If you are happy to use only in-network professionals, an HMO plan could work for you and may cost less.
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Medicare Prescription Drug Plan
Medicare is a federal health insurance program for people aged 65 and over, as well as those with certain disabilities and people with end-stage renal disease. When you first enrol in Medicare, you are automatically signed up for Original Medicare unless you choose another plan. Original Medicare includes Part A (hospital insurance) and Part B (medical insurance).
Original Medicare does not include prescription drug coverage, so you may need to join a Medicare Prescription Drug Plan (Part D) to cover this. This is an add-on to your Original Medicare and is the only way to get prescription drug insurance with Original Medicare.
Medicare Advantage (Part C) is another option for health insurance for those over 65. This is a health insurance plan that you buy from a private insurance company and it may include prescription drug coverage. However, not all Medicare Advantage Plans include prescription drug benefits, so it is important to check before enrolling.
If you have a low income, you may be able to get help to pay for your Medicare premiums and lower your healthcare costs through the Medicare Savings Program or Medicaid. Even if you have Medicare, you can dual enrol in Medicaid to lower your medical costs.
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Medicaid: for low-income earners
Medicaid is a federal-state program that provides free or low-cost health coverage to Americans with low incomes. The federal government provides a portion of the funding and sets guidelines for the program, but each state has its own rules about who qualifies for Medicaid. For example, in 40 US states and Washington, D.C., you can qualify for Medicaid if you earn about $21,000 as a single person (roughly $44,000 per year for a family of four). The limits are higher in Alaska and Hawaii. In 10 states, you can only qualify for Medicaid if you meet another qualification, such as having a certain disability or needing nursing home care.
Medicaid programs may have different names depending on the state, such as "Medical Assistance" or "Medi-Cal." They also vary in their coverage and costs. Some Medicaid programs pay for your care directly, while others use private insurance companies to provide coverage. Importantly, Medicaid may be able to help you pay for medical care from the last 3 months, even if you weren't enrolled at the time.
Eligibility for Medicaid is generally based on income and family size. All states provide coverage for some individuals and families, including children, parents, pregnant people, the elderly, and people with disabilities. Some states have expanded their Medicaid programs to cover all adults below a certain income level. Additionally, seniors aged 65 and over who earn too much to qualify for Medicaid may still be eligible if they have high medical costs. The Medicaid spend-down program allows you to subtract your medical costs from your income, potentially qualifying you for Medicaid.
If you have Medicare and want to lower your medical costs, you can dual-enroll in both Medicaid and Medicare. If you have limited Medicaid coverage, you can apply through the Marketplace to see if you qualify for full-benefit coverage through either Medicaid or a Marketplace insurance plan with savings based on your income. It is important to note that if you qualify for Medicaid, you are not eligible for savings on a Marketplace plan.
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Private health insurance: purchased directly from an insurance company
Private health insurance is an option for people over 65 who do not qualify for free Medicare Part A. This can be purchased directly from an insurance company, and there are several options available.
Firstly, Blue Cross Blue Shield (BCBS) is a well-rated company that offers private health insurance plans. BCBS is widely available through HealthCare.gov or your state marketplace. A marketplace health insurance plan is a good option for those under 65 who do not have coverage through their job or qualify for Medicare or Medicaid.
Secondly, if you have Medicare, you can add extra coverage from private health insurance companies through a Medicare Supplement plan (Medigap). This lowers the portion of medical costs you pay from 20% to almost $0. You can also add prescription drug coverage through a Medicare Part D plan, which is your only way to get prescription drug insurance with Original Medicare.
Thirdly, Medicare Advantage (Part C) is a health insurance plan that you can buy from a private insurance company. This is a bundled coverage option that includes prescription drug benefits.
Finally, if you are still working, you may be able to get private health insurance through your employer. This can be a more affordable option for those over 65 who are still in employment.
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Frequently asked questions
Medicare is the main federal health insurance program for people 65 years or older.
There are two main types of Medicare: Original Medicare and Medicare Advantage. Original Medicare is run directly by the government and includes Part A (hospital insurance) and Part B (medical insurance). Medicare Advantage (Part C) is a health insurance plan that you buy from a private insurance company.
You can get Medicare drug coverage through a Medicare Advantage Plan (Part C) or a Medicare Prescription Drug Plan (Part D).
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