How Medicare Works

Medicare is a social insurance program that is operated by the government of the United States of America. The Medicare program provides citizens of the United States medical and health insurance coverage once they reach the age of 65. There are many benefits to the Medicare program, but navigating the intricacies and details of the system and the benefits it provides can be complex and confusing.

How Medicare Works

Medicare was introduced by President Lyndon B. Johnson as part of the Social Security Act of 1965. The system is operated by the government and funded by the people, with special taxes imposed on the payroll income of all United States citizens. This system allows for the younger generation to pay for the Medicare of those who are retiring, and then have their Medicare paid for by the following generation and so on forever.

Eligibility and Coverage

To qualify for Medicare benefits, one must meet the following qualifications:

  • Be 65 years of age or older
  • Have been a legal resident of the US for at least 5 years

There are some exceptions to the qualifications. People under the age of 65 who receive Social Security Disability Insurance are eligible for Medicare while they are receiving SSDI, but once they stop receiving SSDI they will no longer be able to receive Medicare. Those who become disabled must wait 24 months before receiving SSDI and Medicare. Some people with certain disabilities that are under the age of 65 are eligible for Medicare to cover the expense of living and treating their qualifying disabilities. Generally, most Medicare participants receive the coverage for free because they have paid Medicare taxes previous to receiving benefits. Those who have not paid Medicare taxes previously can still enroll in Medicare and receive benefits, but they must pay a monthly premium. In addition to Medicare coverage, some people are eligible to receive Medicaid coverage as well. Eligibility to receive Medicaid depends on your family’s annual income.

Those who enroll in and qualify for Medicare automatically receive basic Medicare benefits. These benefits, called Part A and Part B are given to all who qualify. Part A is basic hospital insurance, which covers hospital stays, provides for a semiprivate room, covers doctors and nurses fees and other hospital fees. Part A may also cover fees associated with brief stays in skilled nursing facilities. Part B is Medical Insurance and generally covers services and products not covered by Part A. Part B Coverage will cover all expenses up to the totally amount of the deductible, whereupon the patient is required to pay 20% of all remaining costs, and the government pays the remaining 80%.

In addition to Parts A and B, you have the option to purchase Medicare Supplemental Insurance, which is insurance provided by private companies that have been approved by the US Government. Medicare Supplemental Insurance plans give you many more coverage options, but cost additional money each month and must be covered out of pocket. The government offers no programs or options to have these plans covered by Medicare.

If you choose to purchase Medicare Supplemental Insurance, you have the option to choose more coverage plans that offer additional resources and services. Two of the main plans that are most commonly used are Part C and Part D. Part C combines both Part A and Part B coverage into an HMO or PPO plan, which allows you to visit certain doctors and specialists that you otherwise would not be able to see if you were on basic Medicare coverage. Part D is prescription drug coverage, which allows you to receive prescription drugs for free or at a discounted price. This option is convenient if you are on a prescription that you must take every day that does not yet have a generic alternative. Your monthly premium cost for Part D coverage will most likely be less than the cost of your prescription, thus making it worthwhile to pay extra for Medicare Supplemental Insurance coverage for your prescriptions.

In addition to Parts C and D, there are many other Medicare Supplemental Insurance options that are less commonly used but are still available to increase your coverage.

Plan F Part F covers co payments that may not be covered by Medicare Part A. Also, Part F will allow you to receive free blood transfusions, as well as pay for your stay in skilled nursing facilities that Medicare Part A will not cover.

Plan G Similar to Plan F, Plan G offers the same coverage as Plan F but does not cover the cost of deductibles for Part B like Plan F does. This makes Part G plans much more affordable than Plan F, which can be quite expensive.

Plan K Plan K is a great plan if you think you might need extra time and attention in a hospital or skilled nursing home. Plan K works similarly to Part A insurance, but increases the amount of coverage allowed while simultaneously lowering the deductible and co pay by 50%. This allows you to receive significantly more coverage at a fraction of the cost. In addition to covering all of the services provided by Part A, Plan K also includes blood transfusions and hospice care coinsurance.

Plan L Plan L is a great option for people who are in reasonably good health. Plan L covers all of the benefits of Part A as well as any additional expenses after Part A limits are reached, but will only cover 75% of the costs until a certain deductible amount is reached. At this point, Plan L covers all costs acquired. Because there is a minimum limit before Plan L takes over payments, this option is much cheaper than comparable alternatives.

Plan M Instituted on June 1, 2010, Plan M is an option for those who want great coverage at a low price. This plan offers great coverage for a very low monthly premium, but with a higher out of pocket cost should medical attention be required. In addition, any procedures or treatments not covered by Plan M must be covered entirely by the policy holder. This is an attractive plan, however, because the policy holder can choose to visit any hospital and any doctor as long as they accept Medicare.

Plan N Introduced on June 1, 2010, Plan N basically covers all expenses for any procedures including co payments. Plan N also provides coverage for the cost of one full year of expenses even after limits have been exceeded. While this plan is quite robust and has many benefits, it is, understandably, very expensive.

Debate over Necessity

Recently, there has been debate as to whether or not the government should continue providing Medicare. With the United States Federal deficit well into the trillions of dollars, the government has been discussing whether it is worth spending hundreds of billions of dollars each year to provide coverage to people who may not even need it. In addition, the Baby Boomer generation is beginning to retire, and with the huge number of expected Medicare applicants, it may be impossible for the following generations to pay for Medicare expenses without raising taxes.  Without sufficient income from taxes and with the huge number of people expected to apply for benefits that both Social Security and Medicare funds will be depleted. This is frustrating because those who are currently paying taxes to fund Social Security and Medicare benefits may not even be able to receive these benefits for themselves when they reach the age of eligibility. The debate is ongoing and has yet to reach a decision.

Other Options

In addition to the government issued Medicare benefits, there are other insurance options that you should consider if you are thinking about protecting the future of yourself and your loved ones. One less known, but quite popular, form of insurance is Burial Insurance for Seniors. Burial Insurance is a form of life insurance that is used to cover the costs of a funeral once a loved one passes away. Many people assume that because funerals are so common, they are quite cheap. This could not be further from the truth. The average funeral cost is $4,999. These costs include body removal and preparation, casket, vault, grave site expenses and memorial and funeral services. Because we respect our loved ones and wish to honor them in death, we are willing to pay these prices, but often times even a simple funeral can be a tremendous financial hardship on a family.

Benefits

Burial Insurance is a great way to ensure that your family will not need to worry about finances should you pass away. Funeral insurance costs just a few dollars a month, and the typical policy is worth enough to cover all the expenses of a modest funeral and its associated fees. Because life insurance premiums are so expensive, burial insurance is becoming more and more popular. It is much cheaper than typical life insurance costs, and still allows policy holders to ensure that their families are taken care of upon their passing. The best part about these policies is that everybody can and should take one out, whereas only people will families and children who depend on them to earn a living need to purchase a life insurance policy. Burial insurance is a great way for young people and seniors alike to help ensure a financially secure future for their families.

How to Purchase a Policy

The process of purchasing a burial insurance policy is quite simple. All you need to do is speak with a licensed insurance professional and decide on a coverage amount. Typically, no medical or physical exam is required to purchase a plan unless some kind of life threatening issue or disease has been previously discovered. This makes securing a plan quite simple and only takes a moment to arrange all the details. These plans are especially good for seniors because, unlike life insurance, the premiums are raised very little because of age. A senior can get a great insurance plan at a reasonable price, whereas a life insurance policy would cost huge amounts of money each month. Unlike some types of life insurance, burial insurance cannot expire, and the policy is good until you die unless otherwise specified by your provider.

If you are interested to see if you qualify for Medicare, visit the official US Medicare website and apply online. Now is the time to take advantage of the health benefits that are offered to you for free by the government. If you are already enrolled in Medicare, take some time to investigate and learn about Medicare Supplemental Insurance and see if you could benefit from the advantages of a policy. If you find that you don’t want to purchase a Medicare Supplemental Insurance policy, learn a little bit about burial insurance for seniors and see if you would benefit from a burial insurance policy. Don’t miss out on benefits that you could be receiving for free or for a very low cost.