Medicare Basics


Image courtesy Medicare
Originally, Medicare covered people age 65 and over. Later, the program expanded to include people with permanent disabilities as well as ESRD, or end-stage renal disease (severe kidney disease). There are a few extra eligibility requirements, however. To receive Medicare, you have to be eligible for Social Security. For someone age 65 or over, this means you have to have worked for a minimum of ten years (non-consecutive) at a job that withheld Social Security from your pay. People under age 65 can sometimes receive Social Security, but they are still not eligible for Medicare until they turn 65. While changes to Social Security will push the age at which benefits begin to 67, Medicare eligibility will still start at 65.

People with disabilities or ESRD who want Medicare coverage have to meet the Social Security Administration's definition of permanently and totally disabled or end-stage renal disease, respectively.

Medicare provides partial coverage for certain medical services. The main coverage has two parts, Part A and Part B.

Medicare Part A
Part A is also known as Hospital Insurance, or HI. People who are eligible for Medicare can usually get Part A coverage without having to pay a monthly premium, because they have already paid into the system with their Social Security withholdings.

Part A covers hospital stays including meals, supplies, necessary testing and a semi-private room. A private room is not covered unless it is medically necessary. Rehabilitation and other skilled nursing services are covered. Home health care is covered, but only if it is medically necessary, and only on a part-time, intermittent basis. This includes physical, occupational and speech therapy when conducted by a Medicare-approved health agency. Certain medical equipment, such as walkers, wheelchairs and other supplies are also covered. Finally, Part A covers hospice care for terminally ill patients, including drugs and support services for symptom treatment and pain relief.

Medicare Part B
Part B is sometimes referred to as Medical Insurance, or MI. The monthly premium for Part B in 2005 was $78.20. Patients must also meet an annual deductible before coverage kicks in. In 2005, the deductible was $110.

The insurance provided by Part B covers medically necessary doctor's appointments. This includes outpatient medical and surgical services, diagnostic tests and some medical equipment. It also offers coverage for home health care. It does not cover routine checkups, except for a one-time "Welcome to Medicare" exam.

Together, parts A and B are known as Original Medicare. While Original Medicare allows you to visit any doctor that accepts Medicare, the coverage is somewhat limited, and Part B carries deductibles and co-payments. These coverage exceptions and costs are "gaps" in Medicare. You can purchase health insurance from a private company to cover these gaps, or MediGap Insurance. MediGap providers must follow federal guidelines and must clearly identify their policy as Medicare Supplement Insurance.

Medicare does not cover dental work, cosmetic surgery, health care services obtained outside the United States, hearing tests, long-term care, routine eye care, eyeglasses, most shots or long-term care.

In the next section, we'll talk about Medicare Advantage Plans and Part D, the Prescription Drug Plan.

Waiting Can Cost You
You can only enroll in Part B during certain enrollment periods. For each year that you were eligible for Part B and didn't enroll, your Part B monthly premium will be increased by 10 percent when you do enroll. This is a permanent penalty, added to every monthly premium for the rest of your life.