Medicare is a Federal health insurance program that provides hospitalization, medical, and prescription drug insurance for the elderly and individuals with disability. It was created by Congress in 1965. The basic idea is for the Government to provide health insurance as part of Social Security. Get a short history of Medicare.
As insurance, it is not government assistance, unlike Medicaid and other plans which are assistance programs for people of limited income. For information on assistance, visit our Medicare vs. Medicaid page.
The “Original Medicare” program is administered directly by the government. It consists of separate hospital insurance called Medicare Part A, and medical insurance called Part B. It also includes prescription drug coverage called Part D.
Original Medicare is traditional ‘fee for service’ insurance where you are not limited to a network like an HMO. However, not every doctor and hospital participates in Medicare, so your choice may be limited. Most people get Part A free of charge, but Part B is optional and generally requires that you pay a monthly premium.
It is important to note that Medicare Parts A and B do not cover all your medical costs. Examples are deductibles, copays, etc. You should expect to help pay – which is why many people enroll in Supplemental Plans (Medigap Plans) through a private provider to help pay the costs.
Medicare Advantage is called Part C. It combines Part A and Part B into a single plan, along with Part D prescription drug coverage. It is administered by private companies under contract to Medicare. These are managed care or network plans like an HMO or a PPO. A Part C plan requires you to pay a monthly premium, but the “advantage” is that the cost may be lower than getting each part separately. Part C however, does not always cover Medicare Part D.
Coverage for prescription drugs is known as Part D. In 2006 Congress expanded Medicare to provide insurance for prescription drugs. However, there are currently over 1,800 different drug ‘plans.’ No one plan may cover all of the drugs you are taking, nor might it pay the full expense of the drugs that are covered.
Note that prescription drug coverage, like Part B coverage, is an optional plan. You do not have to choose it if you don’t want to. If you don’t choose Part D, it won’t affect your Part A or Part B coverage. If you do choose Part D, it probably will require that you pay a monthly premium. Note that if you choose a Medicare Advantage plan (Part C), you get combined coverage as if you selected Part A, Part B, and Part D separately.
Medicare and other government web sites provide free information on choosing a drug plan. The Kaiser Family Foundation* also offers a free report on the different Medicare drug plans that are being offered in 2013. It looks at premiums, cost of prescriptions, and other things that affect out-of-pocket costs and access to drugs for people with Medicare. You can get the free report at the link below.
Your Basic Options: Original Medicare Parts A and B vs Medicare Advantage Part C
Enroll In Original Medicare
|Part A – Helps with overnight hospitalization.||Part B Helps with outpatient care and doctor visits (Optional).|
|Provides – more flexibility as there is no requirement to stay within an HMO, PPO, etc.|
|Purchase a separate Part D Prescription Drug coverage – optional Add-on.|
|Purchase a Supplemental Insurance (Medigap) Plan – optional Add-on.|
Enroll in a Medicare Advantage Plan
|Combines Original Parts A and B with additional features and benefits.|
|May include Prescription Drug coverage, routine vision and hearing services, dental coverage, etc.
(Check with the provider on additional coverages)
*The Kaiser Family Foundation is a non-profit, private operating foundation dedicated to providing information and analysis on health care issues to policymakers, the media, the health care community and the general public. The Foundation is not associated with Kaiser Permanente or Kaiser Industries.