If you’re getting ready to bring your working or professional career to an end, you may be wondering what benefits will be available to you once you decide to make the leap into retirement. One of those benefits is Medicare.
Medicare is a federal health insurance program in the United States. It provides health insurance for Americans who are 65 years of age or older. The program also covers adults with approved disabilities or conditions. It consists of 4 different parts: Parts A, B, C, and D.
Medicare is considered an “entitlement” program. In this type of program, most Americans earn the ability to receive benefits by paying taxes through payroll over the lifetime of their career.
Even if you didn’t work long enough to be entitled to benefits, you could still be eligible – but you might have to pay more than someone who has earned enough working-credits.
Who Runs Medicare?
The program began in 1966 under the operation of the Social Security Administration (SSA), but since 1977, the Centers For Medicare and Medicaid Services (CMS), a division of the U.S. Department of Health and Human Services has coordinated Medicare services. However, the responsibility for enrolling Americans into Medicare and processing payments has remained with SSA.
CMS provides services related to Medicare, Medicaid, The Children’s Health Insurance Program (CHIP), administrative support for HIPAA laws, setting quality standards for clinical laboratories and nursing homes as well as oversight of The Center for Consumer Information & Insurance Oversight, which oversees contingencies related to private health insurance. They also oversee the website HealthCare.gov.
The Centers for Medicare and Medicaid Services is headquartered in Woodlawn, Maryland – with 10 regional offices located in: Atlanta, Boston, Chicago, Dallas, Denver, Kansas City, New York, Philadelphia, San Francisco and Seattle.
What are the Medicare Parts?
Medicare has 4 different parts. It is important to understand how those parts work together within the program, along with any other insurance you may have been provided by the government, your employer, or with something you have invested in yourself.
How you choose to get your benefits and who you get them from can affect your out-of-pocket costs and where you can get your care, so it is essential to pick your coverage carefully.
Coverage also depends on:
- Federal and state law
- National coverage decisions made by Medicare about whether something is covered
- Local coverage decisions made by companies in each state that process claims for Medicare (These companies decide whether something is medically necessary and should be covered in their area)
Medicare Part A
Part A is also called In-Patient Hospital/Hospice Insurance.
Part A Covers:
- Inpatient care in a hospital
- Skilled nursing facility care
- Inpatient care in a skilled nursing facility (not custodial or long-term care)
- Hospice care
- Home health care
A majority of Medicare Part A beneficiaries don’t have to pay a monthly premium to receive coverage. Generally, if you have worked at least 10 years (40 quarters) and paid Medicare taxes while you worked, you’re usually eligible for premium-free Part A.
You will have to pay a deductible before Medicare benefits begin, then Medicare will then pay 100% of your costs for up to 60 days in a hospital or up to 20 days in a skilled nursing facility.
After that, you will be charged a flat fee for each day up to the maximum number of covered days.
Maximum Number Of Covered Days By Medicare Part A:
- 90 days in a hospital
- 100 days in skilled nursing facility
- 60 “lifetime reserve days” – These are days you stay in a hospital longer than 90 days in a row. You will only have a total of 60 reserve days for your lifetime.
Medicare Part B
Part B is Medical Insurance.
Part B Covers:
- Medically necessary treatment
- Preventative services
Examples of these treatments/ services include:
- Outpatient physician services
- Visiting nurse
- X-rays
- Laboratory and diagnostic tests
- Influenza and pneumonia vaccinations
- Chiropractic care
- Blood transfusions
- Renal dialysis
- Outpatient hospital procedures
- Limited ambulance transportation
- Immunosuppressive drugs for organ transplant recipients
- Chemotherapy
- Hormonal treatments
- Any other outpatient medical treatments administered in a doctor’s office
You must pay a monthly premium for Part B coverage. Your premium amount may depend on:
- If you are currently receiving retirement benefits
- When you enrolled in Medicare Part B
- If you’re billed directly for your premiums
- If you get both Medicare and Medicaid benefits
- Whether the modified adjusted gross income on your tax return from two years ago is above a certain amount
You will need to pay your deductible before your Medicare Part B benefits start paying towards your medical bills. Once your deductible is paid, you will generally pay 20% of the bill when you visit a participating Medicare doctor.
Medicare usually pays the full cost of many lab tests and services requested by your doctor.
Medicare Part C
Part C is also known as Medicare Advantage coverage.
Medicare Advantage Plans provide all of your Part A and Part B benefits, but they are managed by private companies who contract with Medicare.
Types of Medicare Advantage Plans include:
- Health Maintenance Organizations (HMO)
- Preferred Provider Organization (PPO)
- Private Fee-for-Service Plans
- Special Needs Plans
- Medicare Medical Savings Account Plans
While Part C plans are required to cover services covered in Parts A and B, they could also have additional benefits available for those investing in a Part C plan. For example, eye exams, hearing aids, dental care, or health care received while traveling outside the United States (which are not covered by traditional Medicare) could be covered by some Part C plans.
Use Medicare’s Plan Finder to find a plan that’s right for you.
Medicare Part D
Part D is also known as Prescription Drug Coverage.
Part D is optional and helps decrease out-of-pocket costs for medications not covered under Medicare Parts A and B.
Some Medicare Advantage plans will have all of your Medicare Part A, Part B, and Part D benefits covered under one plan.
With the plan you select, you will usually have the following out-of pocket costs:
- Monthly premium
- Yearly deductible
- Copayments or coinsurance
- Costs in the coverage gap
- Costs if you get Extra Help
- If you pay a late enrollment penalty
Your actual drug plan costs will vary depending on:
- The drugs you use
- The plan you choose
- Whether you go to a pharmacy in your plan’s network
- If the drugs you use are on your plan’s formulary
- Whether you get Extra Help paying your Medicare Part D costs
Find out which plans cover your drugs here.
What is Not Covered By Medicare?
If you need certain services Medicare doesn’t cover, you’ll have to pay for them yourself unless you have other insurance that covers them (or you have a supplemental health plan that covers them).
Some of the items and services that Medicare doesn’t cover include:
- Long-term care
- Most dental care
- Eye exams related to prescribing glasses
- Dentures
- Cosmetic surgery
- Acupuncture
- Hearing aids and exams for fitting them
- Routine foot care
Learn if your condition is covered here.
Who is Eligible For Medicare?
Medicare is available for people age 65 or older, younger people with disabilities and people with End Stage Renal Disease (permanent kidney failure requiring dialysis or transplant).
You are eligible for premium-free Part A if you are age 65 or older and you or your spouse worked and paid Medicare taxes for at least 10 years.
While most people do not have to pay a premium for Part A, everyone must pay for Part B if they want it. This monthly premium is deducted from your Social Security, Railroad Retirement, or Civil Service Retirement check. If you do not get any of these payments, Medicare sends you a bill for your Part B premium every 3 months.
Since January 1, 2006, everyone with Medicare, regardless of income, health status, or prescription drug usage has had access to prescription drug coverage.
Use Medicare’s Eligibility Tool to find out if you’re eligible.
How Do You Enroll in Medicare?
Depending on the situation, some people can receive benefits automatically, and others need to apply. The first time you can enroll is called your Initial Enrollment Period. Your 7-month Initial Enrollment Period usually begins 3 months before the month you turn 65 and ends 3 months after the month you turn 65.
If you don’t enroll when you’re first eligible, you may have to pay a Part B late enrollment penalty, and you may have a gap in coverage if you decide you want Part B later.
There are a few ways to apply for Medicare in 2022:
- Fill out the Online Application.
- Visit your local Social Security office.
- Call Social Security at 1-800-772-1213 (TTY: 1-800-325-0778)
- If you worked for a railroad, call the RRB at 1-877-772-5772.
- Complete an Application for Enrollment in Part B (CMS-40B)
You don’t need to sign up for Medicare each year. However, each year you’ll have a chance to review your coverage and change plans.
Learn more by visiting the website: www.medicare.gov, or by calling toll-free number: 1-800-MEDICARE (1-800-633-4227).
TTY number: 1-877-486-2048
What Are the Out-of-Pocket Costs for Medicare Parts A and B?
Moving into 2022, costs have increased for Medicare. CMS states, “Enrollees age 65 and over who have fewer than 40 quarters of coverage and certain persons with disabilities pay a monthly premium in order to voluntarily enroll in Medicare Part A. Individuals who had at least 30 quarters of coverage or were married to someone with at least 30 quarters of coverage may buy into Part A at a reduced monthly premium rate…”
2022 Rates:
Reduced Premium Rate for someone with at least 30 quarter hours = $274/month
Full Premium Rate (for those with less than 30 quarter hours, those who are uninsured, and those with disabilities that have exhausted all other entitlement benefits) = $499/month
Medicare Part A Plan Coverage (Updated 2022)
Inpatient Hospital Deductible |
$1,556 |
Daily Coinsurance for days 61-90 |
$389 |
Daily Coinsurance for lifetime reserve days |
$778 |
Skilled Nursing Facility Coinsurance |
$194.50 |
2022 Medicare Part B Plan Coverage
*Note: Part B costs are based on income.
Standard Monthly Premium |
$170.10 |
Annual Deducible |
$233 |
Kate writes about retirement benefits for retirementinsurance.org. She has a Masters Degree in Social Work (MSW). She has over a decade of experience in assisting elderly and disabled populations navigate governmental and private programs to obtain the monetary assistance they need to lead better lives. As she watched her parents begin their own retirement journeys and navigate similar systems to obtain Social Security, Medicare and other retirement benefits, she gleaned a further personal knowledge about the topic and is eager to share what she has learned with others.