How Does Medicare Work

If you have ever had to stumble through the bureaucratic jungle that is Medicare, you are likely to have asked the question: "Just how does Medicare work?"

How Does Medicare Work as a Health Care Option?

Medicare is a federally-funded healthcare program, which is designed to deliver affordable health insurance for Americans starting at age 65. Much like Social Security, Medicare is designed to serve as a supplement to other types of healthcare coverage.

Disabled individuals under the age of 65, and people with end-stage renal disease (ESRD) are also eligible for coverage by Medicare, but the coverage benefits are more limited than those available to older individuals.

Most Americans are eligible for Medicare at age 65, even if they are not old enough to qualify for Social Security. In addition, they need to have paid into the system through Social Security taxes, for a total of at least 10 years. Social Security taxes are typically withheld from your paycheck by your employer or from your business earnings when you file your taxes.

Once they turn 65, seniors have a seven-month enrollment window during which they can enroll in Medicare at no cost. When this period ends, however, penalties and enrollment fees will apply if they do decide to enroll.

An Alphabet of Healthcare Benefits

The Medicare coverage benefits are organized in four distinct parts:

• Part A
• Part B
• Part C
• Part D

Medicare Part A

Also called Hospital Insurance (HI), Medicare Part A is offers basic Medicare coverage. It provides hospital insurance benefits for seniors. It covers:

• In-patient hospital care
• Skilled nursing services
• Medically-necessary home healthcare services
• Hospice care

If you are eligible for Medicare, you will generally get Part A coverage premium-free, because you've already paid into the system with your Social Security withholdings. For a simple office visit, however, you have to resort to Medicare Part B or Part C to offset the costs.

Medicare Part B

Sometimes referred to as Medical Insurance (MI), Medicare Part B provides coverage for medically necessary health services, which Part A does not cover. These include:

• Diagnostic tests
• Outpatient hospital care
• Physical and occupational therapy
• Some medical equipment

It does not provide coverage for routine check ups, aside from a one-time "Welcome to Medicare" physical exam. A monthly premium applies for Medicare Part B. There are also deductibles and co-pays, which must be paid out-of-pocket. The premium is calculated based on your income.

Medicare Part C

Also called the Medicare Advantage Plan, Medicare Part C is designed to enable private health insurance companies to offer health coverage to Medicare beneficiaries. At a minimum, these Medicare-approved health plans must include the same benefits as those offered under Medicare's Parts A and B. Part C insurers can also offer additional coverage such as vision and dental.

The private health insurers limit participants' choice of health care providers and facilities to those within their own networks. If your favorite doctor is not a network member, this can be a major drawback. On the other hand, it helps them keep costs down and premiums relatively low.

Medicare Part D

Medicare Part D is the program's Prescription Drug Plan. It is also the most recent of Medicare's programs. Medicare contracts with insurance providers to provide this drug coverage. Just like Part B coverage, you will have to pay an extra monthly premium for the prescription drug benefits. The premium varies from insurer to insurer and state to state.

The Original Medicare Plan

Parts A and B together, are referred to as the "Original Medicare." The coverage benefits offered by the Original Medicare Plan is somewhat limited, leaving gaps in your healthcare coverage. Medicare pays for most – but not all – the costs of its beneficiaries' healthcare.

The gaps in coverage can be covered by purchasing private health insurance called MediGap Insurance or Medicare Supplemental Insurance. MediGap is provided by private health insurers under federal regulation.

A Vital Option for Many Seniors

For millions of Americans, Medicare is an essential means for covering the cost of their healthcare expenses. With all its rules, exceptions, provisions and other bureaucratic roadblocks, it is a vital, indispensable health care option for our senior citizens. It is well worth it to understand just how does Medicare work.

• Full Coverage Dental Insurance
• Low Cost Motorcycle Insurance
• Pros and Cons of Universal Health Care
• Car Accident Reports

• Free Medical Release Forms
• Sample Medical Release Form
• Guardian Dental Insurance
• Insurance Sample Cancellation Letter
• Sears Appliance Extended Warranty

• Cheap Health Insurance and Prescription
• How Health Savings Accounts Work: An Interview with John Phillips
• COBRA Rules
• Category:Health Insurance
• Medicare