Roughly 15% of the US population is on Medicare. That’s tens of millions of people. Despite that massive number, it seems as though few people we discuss Medicare with know much about the program.
That’s a problem seeing as how there’s a good chance young people/aging adults today will be relying on Medicare, at least in part, at some point in the future. The disconnect between Medicare demand and Medicare knowledge inspired us to write this post on understanding Medicare.
If you have no idea what Medicare is, keep reading! You’re in the right place. If you have a base-level understanding of Medicare but would like to sharpen your knowledge on some of its finer points, we recommend you continue reading as well.
Below, we break down the basics on understanding Medicare plans, understanding Medicare parts, and much more.
What is Medicare?
Understanding Medicare starts with having a base understanding of what the program is. So, put simply, Medicare is a type of healthcare coverage that is largely subsidized by the government. The plan is meant for US citizens that are most vulnerable to health issues and may not have the funds needed to attain care through a private insurer.
Medicare is broken out into three parts, Part A, Part B, and Part C. Each part builds on the last, adding additional coverage. Plans tend to get more expensive based on the amount of coverage you opt into.
Where Did Medicare Come From?
Older people and/or history buffs may recall that access to Medicare has been far from an American right. As a matter of fact, the Medicare program didn’t even come into existence until 1966!
Back in 1965, Lyndon Johnson worked with Congress to pass what’s called the Social Security Act. This act established Medicare as a means to furnish people over the age of 65 with reasonably priced coverage. This coverage would not look into people’s medical history to determine eligibility.
While Medicare has changed since its 1966 passage, you can learn more about its original values by exploring the historical Social Security Act here.
How Much Does Medicare Cost?
A chief tenant of the Social Security Act amendments that spoke Medicare into existence revolved around income. To that end, Medicare sets out to provide people, no matter how much money they make, with medical coverage.
To realize that intent while also keeping the program sustainable, you’ll discover that Medicare costs different prices for different people. These price fluctuations don’t affect the quality of care one might get under the same plan. Instead, fluid pricing is in place to have each person pay what they can in hopes that everyone can help one another fund the program
Medicare pricing has changed over time. The best way to determine how much you might pay in each coverage tier is to explore this resource. It’ll break down what a standard monthly premium might look like based on your taxable income.
Who Qualifies for Medicare?
While many people of all age groups have long wanted to hop onto the government’s Medicare tab, as of today, it’s reserved for certain populations (though there is momentum around changing this).
The most obvious qualifying group for Medicare coverage are people that are age 65 and over. Upon hitting that threshold, you will be granted a window to opt into coverage, assuming you prefer it over the coverage you may be receiving through your employer, spouse, or via other means.
Unbeknownst to many, Medicare is not reserved solely for seniors. There are exceptions made that welcome younger people into Medicare programs.
For example, those that have been diagnosed with End-Stage Renal Disease (kidney failure) can claim Medicare benefits at any age. People that have collected Social Security Disability Insurance (SSDI) for any number of reasons also qualify.
They must have collected SSDI checks for at least 2 years before applying in most cases though. A notable exception to the 2 year SSDI waiting period is offered to those with disabilities stemming from ALS.
What Does Medicare Cover?
No understanding Medicare guide would be complete without appreciating what Medicare covers. Unfortunately, Medicare coverage can get confusing given that different medicare tiers offer different treatment allowances.
For the purpose of brevity, below, we lay out Medicare coverage allowances across all Medicare parts (A, B, and C). Understand that you may need to have opted into the most advanced Medicare part in order to claim some of the benefits listed. Also, know that all Medicare tiers provide general, preventative care.
Your base level Medicare will cover emergency/catastrophic care. This is any sort of care needs that would require hospitalization.
That’s not to say you won’t have any co-pay obligations when receiving these kinds of treatments. Know though that your rendered medical services will be appropriately subsidized.
Certain medicare provisions allow you to see specialists for conditions your general practitioner can’t treat. In order to engage with these specialists, you’ll need a general practitioner’s referral.
You’ll likely be limited to which specialists you can see due to network restrictions. Still, there should always be qualified help within your provider options. If there isn’t, your Medicare coverage may offer help with out-of-network support.
Prescription Drug Coverage
Prescription drug coverage is a Medicare Part C advantage. It allows people that pay into it the ability to get low or no-cost medication.
If you’re not a frequent flyer when it comes to prescription medication, you may be better off forgoing paying into this premium Medicare tier. If you anticipate needing to use medication chronically, the higher deductible you’ll pay with Medicare Part C will almost certainly cost you much less than if you were paying for your medications out of pocket.
What Doesn’t Medicare Cover?
There are a lot of misconceptions regarding what Medicare doesn’t cover. So you’re not caught off guard, keep these in mind when you buy a Medicare plan:
Some medical offices will require that patients pay co-pays when they visit. These co-pays are to be paid out of pocket and generally won’t be covered, at least in-full by Medicare.
If you’d like to bring down the cost burden associated with co-pays, consider visiting cheaper/lower co-pay medical offices.
If you’re considered to be in a high-need group, you may qualify for no deductible Medicare. The vast majority of people that use the program though do not qualify for that degree of help.
That means you’ll probably be liable for a monthly deductible charge to keep your coverage active.
Missing your deducible payments could disqualify you from applying your insurance to treatments you receive during your lapsed window. For that reason, make sure you keep your deductible payments up to date.
Out of Country Care
Talk to your Medicare provider before traveling out of the country. Chances are, if you need any sort of medical services abroad, your coverage won’t take care of you the way that it does domestically (or at all).
Part of understanding Medicare is understanding how to work around its shortcomings and buying travel insurance lets you side-step this pitfall.
Make sure the travel insurance coverage limits you buy into are high enough to cover the full extent of treatment you’d theoretically need in the event of a medical emergency.
The Big Medigap Question
As we’ve established throughout this post, Medicare, while subsidized, is far from free. But what if you were hoping to have fixed medical costs in your retirement?
Is there a way that you can make it so your monthly deductibles are inclusive of things like co-pays, overages, or other obscure charges that may crop up over the years?
You can continue reading about this here but we’ll spoil things a bit by telling you that there is such thing as all-in Medicare coverage. To attain that benefit, you’ll need to opt into Medigap insurance. This insurance coverage, as its namesake suggests, fills in the gaps in your Medicare coverage so you never have to worry about being caught off guard by your bills.
Understanding Medicare Is a Marathon, Not a Race
We hope that our post on understanding Medicare has achieved its intended end. If it has, you now have a better understanding of what Medicare is, where it came from, and what it can and can’t do for you.
If you’re still scratching your head and need more help understanding Medicare, know that that’s normal. We tell everyone we discuss Medicare with that mastering the complex health program is a marathon, not a race.
For additional information on Medicare, visit the government-run website that covers the subject. We also welcome you to browse more information on the subject in our website.