Medicare: Definition, Coverage, Advantages and Disadvantages
Author: Thomas Roth
Last Updated: 8/18/2022
Medicare has been around since 1965 and helps millions of people receive medical treatment each year. It’s a government program that’s managed by the Centers for Medicare and Medicaid Services. Medicare covers people who are over the age of 65 and individuals who receive social security disability benefits. There are a few different types of Medicare coverage and the type of coverage someone receives depends on the individual and their situation.
Medicare is also similar to Medicaid, which is another government program for health insurance. However, Medicare is different because it can only be used by people who are over the age of 65. Medicare can cover medical procedures, medications, visits to the doctor, alcoholism, and more. Read on to learn more about Medicare and what it covers.
What is Medicare?
Medicare is a federal health insurance program for people who are over the age of 65. In some cases, Medicare is also used for people who are under the age of 65 if they’re receiving social security benefits. While Medicare covers many types of medical procedures and medications, it doesn’t cover everything. Medicare also doesn’t cover the cost of long-term care; not fully.
Medicare is also broken down into different parts. There are Medicare Part A, Medicare Part B, Medicare Part C, and Medicare part D. The original Medicare plan, Medicare Part A, covers general health insurance, while Medicare Part B covers medical insurance. Other parts of Medicare like Part D cover prescription medications and Medicare Part C groups all of the plans together.
Another important aspect of Medicare is that it’s not always full coverage. In many cases, a supplemental insurance plan like Medigap is needed to cover the rest of the costs. Otherwise, Medicare has a 20% deductible.
How Does Medicare Work?
Medicare is broken down into four parts, which dictates how it works. Parts A and B are used for health and medical insurance, while Part D is used to cover medications. However, Part C is customizable and allows people to group everything from Part A, B, and D together.
While Medicare is accessible to people over the age of 65, it’s not free health insurance. The cost is lower than many alternatives but people still have to pay fees, monthly premiums, and deductibles. That said, there are additional plans that reduce these costs.
Medicare is also automatically granted to people who receive social security benefits. Many variations and changes can be made to plans, so Medicare works on an individual basis. Of course, there are commonalities between Medicare plans but it comes down to everyone’s personal situation.
What are the Parts of Medicare?
There are a few parts of Medicare that determine how the plan is structured. People can also customize their plans to include more than one part. While Part A is the most common Medicare plan, it’s important to be aware of the other Medicare options, especially because Part D is required for medications.
The parts of Medicare are listed below.
- Part A: Hospital insurance that covers inpatient care in hospitals, nursing facility care, and home health care
- Medicare Part B: Medical insurance that covers outpatient care, doctor services, home health care, medical equipment, vaccines, shots, and wellness visits
- Part C: Bundles of Part A and Part B that come from an approved private insurance company
- Medicare Part D: Covers the cost of prescription drugs and some vaccines
Depending on the individual, each part of Medicare can be viable. In many cases, Medicare Advantage plans have become more popular because they group everything together.
How Much Does Medicare Cost?
Medicare costs about $499 per month for the standard Medicare Part A plan and an additional $170 for the Part B plan. However, these figures vary depending on income level, taxes paid, and several other factors. Some people pay as little as $179 per month, while some comprehensive Medicare plans that include multiple parts can cost upwards of $1,000 per month.
One of the primary determining factors is how many quarters someone paid into a Medicare health insurance plan. If someone paid Medicare taxes for less than 30 quarters (less than 7.5 years), the insurance costs $499 per month. On the other hand, for people who paid over 30-39 quarters (more than 7.5 years) the cost is $274 per month.
Medicare Part B is an optional add-on for Medicare insurance coverage. Part B plans cover more specific conditions, which include outpatient doctor care. The average cost of Medicare Part B is around $170. Keep in mind that the cost for Part B plans varies based on income.
Medicare plans may also have deductibles. The deductible for Medicare Part A plans costs $1,556 for each period of benefits. Medicare Part B also has a deductible that costs around $233.
Part C and Part D Medicare plans vary based on the type of plan and the conditions they cover. Some Part C plans can be upwards of $1,000 per month and the same applies to Part D plans.
What Does Medicare Cover?
Medicare covers services (tests), doctor visits, inpatient care, and some outpatient services. That said, Medicare can also cover medications and other services if someone has more than the standard Part A Medicare plan. In fact, Medicare Part C plans bridge the gaps between Medicare Part A, C, and D.
Below are the things that Medicare Part A covers.
- Inpatient hospital care
- Skilled Nursing
- Lab testing
- Hospice care
- Home-based health care
There can be some variations depending on your location.
Part B has different coverage options than Medicare Part A. Below you’ll find everything that Medicare Part B covers.
- Outpatient doctor care
- Doctor services like checkups
- Medical equipment
- Some parts of home-based healthcare
- Preventative services and treatments
Medicare Part B is a companion plan for Medicare Part A.
Medicare Part C covers gaps between Medicare Part A and Part B. There is also Medicare Part D, which covers medications and prescriptions.
What are the Advantages of Medicare?
Medicare has several advantages when comparing it to other types of insurance. The primary advantage is that Medicare is more affordable than other insurance options and most people over the age of 65 are eligible for coverage. Medicare also covers most things that older people need, which makes it a convenient plan.
There are also plenty of additions that can be made to a Medicare plan that makes the coverage more comprehensive. Medicare also covers drugs and it meshes well with third-party plans.
What are the Disadvantages of Medicare?
Medicare comes with several disadvantages. While it’s a universal coverage plan, there are some limitations around travel. Additionally, Medicare plans don’t give people a lot of freedom to choose their healthcare provider. Instead, the insurance company makes recommendations and handles that side of the coverage.
Some other disadvantages include additional costs and deductibles. Medicare plans also have gaps in coverage, which can lead to people spending more money on comprehensive plans like Medicare Part C or Medicare Part D. The last thing to mention is that Medicare plans can be confusing to navigate at times. So, it’s important to learn everything you can before deciding on a Medicare plan.
When Should I Apply for Medicare?
You should apply for Medicare 3 months before you turn 65 because this is when you become eligible for Medicare benefits. You can also apply for Medicare B up to 3 months after you turn 65 but if you wait longer there are penalties and late fees. Typically, the enrollment period is between January 1st and March 31st of every year. After the enrollment period, the coverage begins on July 1st.
Who Needs to Use Medicare?
People over the age of 65 should use Medicare. Medicare is also for people who are under the age of 65 if they’re receiving social security disability benefits. Still, people over the age of 65 don’t always need Medicare. The people who need Medicare the most are people over the age of 65 who are retired and no longer receive health benefits through employment.
What is the Difference Between Medicare and Non-Medicare Insurance?
The primary difference between Medicare and non-Medicare insurance is that Medicare insurance is a government insurance plan. Government insurance plans are different from private insurance plans because they’re subsidized by the United States government. Therefore, taxpayers pay into the program to support it.
Private insurance, on the other hand, is private. A private insurance plan can be used alongside Medicare, though, in cases where there are gaps in Medicare coverage. Some companies like Medigap designed their business for this reason.
Is Alcoholism Covered by Medicare?
Yes, Medicare covers alcoholism. Medicare covers inpatient and outpatient services for alcohol abuse disorders. Part A Medicare plans cover inpatient alcoholism services, while Part B Medicare plans cover outpatient alcoholism services.
Additionally, Part D Medicare programs cover medications prescribed by doctors for alcoholism and alcohol withdrawal. Keep in mind that there are limits; It’s up to what Medicare deems necessary.
Can Medicare be Used in Any Country?
No, you can’t use Medicare in any country. While some partners of the United States accept Medicare coverage, this isn’t true for every foreign nation. Ultimately, Medicare coverage outside the United States has limits. In these cases, Medicare Part C will cover gaps in coverage.
Are Medicare and Medicaid the Same?
Medicare and Medicaid are not the same. While both programs are run by the same agency (Centers for Medicare and Medicaid Services), the coverage is not the same. The key difference is that Medicare is for people over the age of 65, while Medicaid is for people who make under a certain amount of money each year.
Is Medicare a Federal Program?
Yes, Medicare is a federal program. Medicare is a federal health insurance program for people over the age of 65. It’s also a federal insurance choice for people who are receiving social security disability benefits.