One of the largest financial assistance programs in the federal health care industry is Medicare. This government health care program covers millions of Americans for comprehensive health care services.
The main difference between Medicaid and Medicare is that Medicaid is primarily based on income, while Medicare is primarily based on age. Most eligible Medicare recipients qualify upon reaching 65 years of age. However, you can qualify for Medicare in other ways.
To qualify for Medicare, you must belong to one of the following eligibility groups:
- Be 65 years of age or older
- Have a disability
- Have End Stage Renal Disease (ESRD)
This healthcare financial assistance program is composed of four parts, each of which contains different cost-sharing requirements and coverage options. They are:
- Part A – This is also known as “hospital insurance” because it covers hospital stays, hospice care, care provided at skilled nursing facilities (SNFs) and some home health care services.
- Part B – This part encompasses outpatient care, doctors’ services, preventive services and medical supplies.
- Part C – Also known as Medicare Advantage plans, you can choose to purchase a Part C plan to replace both Part A and Part B.
- Part D – This part provides prescription drug coverage. Drug coverage includes both generic and brand-name drugs, and drugs are categorized into tiers based on affordability.
Medicare Parts A and B are also known as Original Medicare. You can replace Original Medicare with a private Part C plan if you so choose. Medicare Advantage plans are offered by private companies approved by Medicare.
Medicare is considered a financial assistance program because it can significantly reduce your out-of-pocket medical expenses.
The amount you pay for coverage varies depending on a few things. Most people do not pay premiums for Medicare Part A. You can access premium-free Medicare Part A if you or your spouse paid Medicare taxes while you were employed.
Most people pay a standard premium for Part B coverage, unless they have high incomes. Those with incomes higher than the federal income limit will pay the standard premium plus an Income Related Monthly Adjustment Amount (IRMAA).
Original Medicare does not pay for all covered health costs. Although it can provide financial help to lower your expenses, you typically must pay coinsurance or a percentage of costs for services.
To help pay for coinsurance, you may consider purchasing a Medicare Supplement Insurance policy, also called a Medigap plan. However, in order to purchase a Medigap policy, you must have Medicare Part A and Part B.
The way in which you apply for financial help through Medicare may vary. You may be automatically enrolled in Medicare coverage or need to apply yourself.
You will be automatically enrolled in Medicare when you:
- Apply for retirement benefits.
- Apply for disability benefits.
Otherwise, you will need to sign up for Medicare within three months of turning 65. If you do not sign up when you first become eligible, you may need to wait to apply and may face a late enrollment penalty.