Because health insurance typically comes from an employer, retirement means a big change in healthcare coverage. For most Americans, that change includes Medicare, the American version of single payer health plans. This government administered health insurance is different from your other insurance, so it is important to understand your options and how Medicare works. Follow along with this guide to get a better understanding of the different options for Medicare.
Medicare is a health insurance plan from the United States government. It is designed for both retired and disabled Americans to have a reliable option for health coverage outside of a traditional employer. Around 155 million Americans get their health insurance through an employer, while 76 million are covered by Medicaid and 55 million are covered by Medicare. At a high level, Medicaid is an insurance program designed for low income families and children while Medicare is designed for the elderly and disabled.
For most working adults, the Medicare qualification age is 65 years old. If you are disabled and receiving Social Security Disability Insurance (SSDI), you qualify for Medicare when you receive your 25th monthly payment. Certain medical conditions including ALS and kidney failure qualify for Medicare regardless of age and time on disability, and special rules apply for former railroad workers.
If you are 65 or older or face a long-term or permanent disability, you likely qualify for Medicare. But Medicare does not work like traditional health insurance from work. There is a lot more you need to know.
Medicare comes in four flavors, called parts. These are lettered Part A through Part D. Each works differently and many people have a combination of multiple parts to make up their full coverage.
Medicare Part A – Part A includes coverage for hospital care. Most Americans receive Medicare Part A automatically when registering for Medicare and receive this part with no cost for coverage, though there is a deductible if you use Part A. Covered services under Part A include surgeries, medical tests, some home healthcare such as in-home hospice care, inpatient care at hospitals and skilled nursing facilities, and other specified home healthcare services.
Medicare Part B – Part B covers non-hospital related healthcare services. Major categories include doctor visits, outpatient care, ambulance rides, medical procedures, mammograms, tests, rehabilitation, and cancer treatments. Some forms of home healthcare fall under Part B as well.
Medicare Part D – Part D is focused on prescription drugs and medications. The drug coverage under Part D is administered by private insurance companies and is required if you have Medicare and no other source for prescription medications. Depending on your Medicare plan and income level, you may have a monthly cost or deductible. Your state may offer additional supplements to your coverage.
Medicare Part C – Part C is known as Medicare Advantage. Typically, this includes a combination of Part A, B, and D under one plan to offer a complete level of health coverage. Medicare Advantage plans are administered by private insurance companies who collect payment directly from the government. Medicare Advantage plans work similarly to an HMO like Kaiser Permanente in most cases. But beware that these plans do not cover you outside of the United States and on some other travel, so make sure you know what you’re getting and what your limits are. In many cases, you will want to add additional coverage when traveling or a supplement to round out your care.