Medicare Programs–The Basics

Medicare is a health insurance program of the United States government for people aged 65 years old and above. Younger individuals with disabilities, kidney failures or sclerosis could also qualify for Medicare coverage provided they meet some special criteria.

Medicare aids in health care costs, though it does not shoulder all expenses for long-term medical care. The program is comprised of 4 parts, namely: hospital insurance, medical services excluded from hospital insurance, Medicare Advantage, and Prescription Drug Coverage. This program was signed into law by President Lyndon B. Johnson in the 1960’s with former President Harry S. Truman as its first beneficiary.

Since the Medicare program started, the government has partnered with private agencies that function as intermediaries between medical providers and the government. Most of these agencies are already in the health care or insurance business. Processing of claims and payments are contracted out. The same goes for its call centre services, fraud investigation, and clinician enrolment which is handled by separate expert companies.

Types of Medicare Programs

Hospital Insurance
Subject to certain criteria, Medicare covers hospital or skilled nursing facility stays of at least 3 days and nights for some diagnosed condition during such stay, regardless of the discharge date for hospital stays and a maximum of 100 days per ailment for stay in a skilled nursing facility. However, if a beneficiary does not receive skilled facility services after using the benefit, the 100-day period is reset and qualifies the beneficiary anew for another 100-day benefit.

Medical Insurance
For outpatients, medical insurance helps in paying for services not covered by hospital insurance. This benefit is optional and could be deferred, especially if the beneficiary is still working. Actively working individuals who does not enrol in medical insurance could get penalized for life at a rate of 10% annually.

Medicare Advantage Plans
Instead of receiving Medicare benefits through hospital and medical insurance, beneficiaries also have the option of receiving them through private health insurance plans. While Medicare Advantage Plans are mandated to meet or exceed the original medical program’s standards, they need not cover exactly the same benefits in a similar way.

Prescription Drug Plans
Anyone who is eligible for hospital and medical insurance coverage is eligible for prescription drug plans. These plans are administered by private agencies in the health insurance industry, but the Medicare program sees to its approval and regulation.

What Finances Medicare?

Payroll taxes partly finance Medicare. Formerly, a maximum amount of salary was provided on which Medicare tax could be annually imposed. However, this ceiling was removed on the 1st of January 1994.

Medicare Coverage Eligibility

The following are the general qualifications one needs to satisfy in order to be eligible for Medicare coverage.

• U.S. citizen or permanent legal resident of the country for 5 successive years, and
• At least 65 years old
• Exception: for those below 65 years old, you are covered if you have specific conditions.

The so-called dual eligibility also exists where a beneficiary qualifies for both Medicaid and Medicare.