Medicare is a federal health insurance program for people age 65 or over and is the major insurer of health care for elders and certain disabled people. However, it includes various programs with different requirements for different purposes and different groups of people.

Despite what many people believe, Medicare does not pay for long-term care in a nursing home or home care services. An elder is required to pay out-of-pocket for care until he or she has "spent down" to Medicaid eligibility. For more information about long-term care, see Long-Term Care Insurance.

For complete information about Medicare, go to its Web site or call 800-633-4227 toll free and request a copy of the publication, "Medicare and You" for your state. Here is a brief overview of Medicare's major components:

Original Medicare Plan

The Original Medicare Plan is a fee-for-service plan managed by the federal government that is used by the majority of elders. An individual is enrolled in the Original Plan by the Social Security Administration at the age of 65 unless he or she elects to enroll in another type of plan (see Part C). There are deductibles, co-payments, and health services such as hearing aids and eyeglasses, that are not covered by the Original Medicare Plan, but supplemental insurance can provide coverage for these services.

Medicare Part A: Hospital Insurance

Hospital Insurance helps pay for hospital care, some home health services, certain short-term stays in a skilled nursing facility (nursing home), and hospice care. There is no monthly premium charge for Part A coverage if the elder or spouse paid Medicare taxes while working. As of 2008, there was a $1,000 deductible for hospital stays, co-pays for stays beyond 60 days in hospitals and 20 days in skilled nursing facilities, and limits on the number of days covered.

Medicare Part B: Medical Insurance

Medical Insurance helps pay for doctors, outpatient services, and supplies. Consumers pay a monthly premium for Part B (premiums vary by income, but an individual in 2008 would typically pay between $97 and $238 per month), plus a $135 annual deductible. Some co-pay charges apply for equipment, therapies, and preventative services.

Home health services included in parts A and B are most frequently used to provide short-term follow-up care after discharge from a hospital or skilled nursing facility. Medicare covers expenses if four conditions are met:

  1. The individual is confined to home
  2. The individual needs intermittent skilled nursing care, physical, occupational or speech therapies
  3. The individual is under the care of a physician who determines the need and establishes a home health care plan
  4. The home health agency providing services is Medicare-certified

Medicare Part C: Medicare Advantage Programs

Medicare Advantage Programs are managed health care plans approved by Medicare and run by private companies to provide all of the medically necessary services provided in Parts A and B. Providers can charge different co-payments and deductibles and may require the use of providers in the plan. They can also offer additional services, such as prescription drug, vision, hearing, and dental coverage. There are five different types of Medicare Advantage Programs, and many different plans and providers. You can switch or join plans during defined periods of the year. Note that if an elder drops employer or union coverage or Medigap insurance by joining a Medicare Advantage Plan, he or she may not be able to get it back. The Web site Medicare provides a comparison of the plans, or you can call Medicare's consumer hotline at 800-633-4227 toll free.

Medicare Part D: Prescription Drug Coverage

Prescription Drug Coverage has been available since 2006. People in either the Original Medicare Plan or Medicare Advantage Programs can add drug coverage through Part D. Part D insurance plans, which include co-payments and deductibles, are run by private companies approved by Medicare. A number of plans are available, but they need to be assessed carefully. For help with this complex decision, call the Medicare hotline, the Medicare Rights Center, or your State Health Insurance Assistance Program (SHIP) counselors.

Other Medicare Health Plans

There are some types of Medicare Health Plans that aren't part of Medicare Advantage. When you are researching Medicare coverage in your area, ask the counselor for details on Medicare Cost Plans and Demonstration or Pilot Programs.

Continue to Other Government Plans...