Medicare, part of President Lyndon Johnson’s “Great Society,” was first enacted in 1965. As it has evolved over the decades, Medicare now consists of four unique “parts,” each designed to provide specific healthcare insurance coverage to American seniors.
Here are the “parts” of today’s Medicare program:
- Medicare Part A – which is coverage for inpatient hospitalization and inpatient skilled nursing services, as well as Hospice care. Part A covers most (typically 80%) of medical expenses incurred while in the hospital and there is an annual deductible associated with Part A ($1632 for 2024). Part A is free to anyone who is also eligible for Social Security, but also available to those who are not by paying a Part A premium.
- Medicare Part B – which is coverage for outpatient healthcare services, such as those provided by doctors and other medical service providers. Part B typically covers 80% of most necessary medically necessary[1] procedures after a small deductible ($240 in 2024) is paid, and there is a monthly premium associated with Part B ($174.70 for 2024). The Part B premium is usually deducted from your Social Security benefit payment, but other payment arrangements can be made if you are not yet collecting Social Security.
Medicare Parts A and B are sometimes referred to as “original Medicare” because this was the structure of the 1965 program. Parts A and B are administered by the federal Centers for Medicare and Medicaid Services (CMS) which manages all incoming tax revenue and outgoing payment services to medical service providers.
Over the years, the Medicare program expanded to provide two additional healthcare coverage options:
- Medicare Part C – which is healthcare insurance coverage administered by private insurers replacing “original Medicare” provided by the Federal government. Part C plans are often referred to as “Medicare Advantage” plans and must provide coverage at least equivalent to Medicare Parts A and B. Those with a Part C plan must still pay the Part B (and, if appropriate, Part A) premium(s) to CMS, from which the government provides funding to private insurers for their Part C plan. Part C plans often include services beyond that provided by original Medicare, but usually require all services to be provided through a limited network of medical service providers.
- Medicare Part D – which is insurance coverage offered by private insurers for prescription drugs, the premiums for which are paid directly to the private insurer. Prescription drug coverage is sometimes included in Part C Medicare Advantage plans, often making a separate private Part D plan unnecessary.
Medicare coverage normally becomes available at age sixty-five[2] but enrolling in any part of Medicare is not mandatory if there is a premium associated with that part. Nevertheless, not having healthcare coverage is a financially dangerous and perhaps foolhardy choice, which is why about 66 million American seniors are enrolled in Medicare. Although Medicare is mostly voluntary, it is mandatory to be enrolled in free Medicare Part A to collect Social Security benefits after age 65, and there may be penalties if you enroll in Medicare Part B (or D) outside the normal Medicare enrollment periods.[3]
Enrolling in Medicare can be a confusing undertaking, and there may be a need for supplemental insurance coverage for those healthcare costs “original Medicare” does not cover. The AMAC Foundation’s Social Security Advisory staff are experts in Medicare enrollment rules and procedures and can assist you with navigating this complex federal benefit program.
[1] Part B also covers some preventive healthcare services.
[2] Those on SS Disability become eligible for Medicare two years after their SSDI benefits start, regardless of age. Those with certain disabilities (like ALS and End Stage Renal Disease) are eligible even sooner.
[3] Medicare’s Initial Enrollment Period (IEP) starts 3 months before the month you turn 65 and ends 3 months after the month you turn 65. You can defer Part B enrollment if you have “creditable” employer healthcare coverage and will enter an 8 month Special Enrollment Period (SEP) when your employer coverage ends. Enrolling outside these periods may result in a Late Enrollment Penalty.