Understanding Medicare

Medicare may seem overwhelming at first, but when you boil it down to its most basic elements, it’s much easier to understand. That’s what we’ve done here. 

Who Qualifies

Medicare is the federal health insurance program for people 65 years of age or older regardless of their income or medical history.  Most people get PART A premium free if you or your spouse paid FICA taxes at least 10 years (40 quarters). Note that you qualify for Medicare at age 65, even if your Social Security Full Retirement Age is older than 65.

People under 65 who receive Social Security Disability Insurance (SSDI) generally become eligible for Medicare after a two-year waiting period. People who have End Stage Renal Disease or Lou Gehrig’s disease become eligible for Medicare when they begin receiving SSDI benefits.

Medicare Parts A and B

The two original parts of Medicare are Part A (Hospital Insurance) and Part B (Medical Insurance). Part A helps cover inpatient hospital stays, skilled nursing facility stays, home health visits, and hospice care. Part B helps cover visits to doctors, outpatient services, preventive services, and intermittent home health visits. In general, after you pay the deductible, Part B pays for 80% of the Medicare-approved amount for covered services. For Part A there are deductible amounts for hospitalization and skilled nursing facility stays.

While most people do not have to pay a premium for Part A, Part B coverage requires a monthly premium. If you’re still working and receiving health care coverage through your employer or spouse, it is recommended you delay enrolling in Medicare Part B until about three months before your coverage ends. In any case, you should sign up for Medicare Part A about three months before reaching age 65.

The premium for Part B coverage changes annually. There is a monthly premium that can vary depending on your income level ($174.70 in 2024 for most new Medicare enrollees.)

Nursing Home Coverage

Medicare Part A helps cover short-term care in a skilled nursing facility (nursing home), but it’s important to understand the restrictions. Medicare pays up to 100% for the first 20 days of skilled nursing care that follows a hospital stay of three days or more. For days 21 to 100, the patient pays a substantial daily copayment. Coverage ends when the stay exceeds 100 days. Note that all coverage applies only to Medicare-approved facilities and requires the individual to meet certain medical criteria. Medicare Part A does not pay for custodial level of care even if it is within the first 100 days of admission to a nursing home.

Home Health Coverage

Medicare Parts A and B help cover certain home health visits, but they do not pay for custodial care—the ongoing assistance with daily activities often provided by a caregiver. That’s true whether care is provided in a facility or at home. Note that Medi-Cal, California’s health care assistance program, may help pay for custodial care — and for many other expenses not covered by Medicare.

Medigap

Medigap insurance plans, also called Medicare supplement plans, are provided by private insurers to pay for the deductible portions of Medicare Parts A and B. They pay for all or part of your Medicare coinsurance and deductibles, but do not cover services that Parts A and B don’t. Ten standardized Medigap plans are available, lettered A, B, C, D, F, G, K, L, M, and N. Each provides a different set of benefits.

Medicare Advantage (Part C)

Medicare Parts A and B can be assigned to a Medicare Advantage plan. These plans are available through private insurers. Two types of Medicare Advantage plans are Health Maintenance Organization (HMO) and Private Fee For Services (PFFS.) They provide all Medicare-covered benefits and may add extra benefits such as glasses, hearing-aids, or dental care. Coverage may be limited to a specific network of doctors and hospitals. Premiums and coverage details vary widely depending on the plan you choose. Note that if you have Medicare Advantage, you don’t need Medigap.

Medicare Part D: Prescription Drug Coverage

Part D helps cover outpatient prescription drugs. To get it, you enroll through a private insurance company in a Medicare prescription drug plan. You pay the plan’s premium, deductible, and cost-sharing. If you have limited income, you may apply for extra help through the Social Security Administration to cover some of the plan’s costs. Note that if you don’t enroll in Part D when you become eligible, you’ll pay an increased premium penalty when you do enroll.

There are two ways to receive Part D benefits. First, stand-alone prescription drug plans (PDPs) are available to those with Medicare Part A or B coverage. Second, Medicare Advantage prescription drug plans (MA-PDs) are included as part of many Medicare Advantage plans.

If you have questions about Medicare eligibility or if you want to apply, call Medicare toll free at 1-800-MEDICARE (1-800-633-4227)