How Medicare Works

President Lyndon B. Johnson signs the Medicare bill in July 1965.
President Lyndon B. Johnson signs the Medicare bill in July 1965.
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Medicare became America's first federal health insurance program when it was signed into law on July 30, 1965. The program offers health insurance to seniors over the age of 65 regardless of their current health, medical history and income. President Lyndon B. Johnson presented the first Medicare card to former President Harry S. Truman, calling him the "real daddy" of Medicare [source: Updegrove]. Truman had tried but failed to implement public health insurance for elderly Americans during his presidency. (Franklin D. Roosevelt had also considered including public health insurance in the Social Security Act of 1935, part of the New Deal legislation, but ultimately left the idea out.)

Before the introduction of Medicare in the U.S., only about half of individuals 65 and older had health insurance — and life expectancy rates, compared to today, were eight years less for American men, and five years less for American women [source: Center for Medicare Advocacy]. On July 1, 1966, when Medicare services were made available to all of America's seniors, more than 19 million enrolled [source: Stanton]. In 1972, under President Nixon's expansion of Social Security, Medicare hospital insurance benefits were extended to disabled individuals under 65.

Today, to receive Medicare, you first have to be eligible for Social Security benefits. For someone 65 or over, this means you or your spouse must have worked at least 10 years (they don't have to be consecutive) with Social Security and Medicare Withholding tax withheld from your pay (this tax is part of the Federal Insurance Contributions Act, which shows up as FICA on your pay stub). Individuals younger than 65 may be eligible for Medicare's hospitalization insurance benefits, either subsidized or as an out-of-pocket monthly expense, if they're diagnosed with end-stage renal disease (ESRD) or a qualifying long-term disability.