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Understanding Medicare

Read the Spanish version: Entendiendo Medicare

Medicare is a health insurance program for people age 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (ESRD). According to the federal Centers for Medicare & Medicaid Services (CMS), Medicare serves about 40 million beneficiaries.

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The large majority of Medicare beneficiaries have original Medicare. This is the traditional fee-for-service arrangement, which means you can go to any health care provider who accepts Medicare. You must pay a deductible, and then Medicare pays its share of the costs and you pay your share.

Medicare & You

You can call the Medicare Choices Helpline at (800) 633-4227 and ask for a Medicare handbook.

This toll-free number is staffed by English- and Spanish-speaking customer service representatives from 8 a.m. to 4:30 p.m.

Hearing-impaired individuals using a telephone device for the deaf can call (877) 486-2048.

You can also view the handbook on Medicare's official Web Site.

How does Medicare work?

Original Medicare, also called traditional Medicare and Medicare fee-for-service (FFS), is the most widely used and best understood choice through which Medicare beneficiaries receive their health care. Health care providers are paid based on the services they provide.

In general, your choices are less restricted with traditional Medicare than with other Medicare choices. For example, you can go to any doctor, hospital, or other health care provider who accepts Medicare. But your costs are likely to be higher than with other choices because you may also need to buy Medicare supplement (Medigap) insurance. Medigap policies can help defray some of the costs not covered by traditional Medicare.

Who pays for Medicare?

Medicare is financed by federal taxes and administered by the CMMS. Beneficiaries also have "out-of-pocket" costs: They must pay Medicare premiums, deductibles and co-payments, and Medigap premiums if they choose to purchase this supplemental insurance. Beneficiaries must also pay for their own routine physicals, custodial care, most dental care, dentures, routine foot care and hearing aids.

Who is eligible for Medicare?

To be eligible, you or your spouse must have worked for at least 10 years in Medicare-covered employment, be age 65 or older, and be a citizen or permanent resident of the United States. A younger person with a disability or with chronic kidney disease also might qualify for Medicare.

Are there income limits or medical requirements?

There are no income limits for Medicare. There are medical requirements for the delivery of services, because an individual must have a medical need for those services.

How do I enroll in Medicare?

Some people are enrolled in Medicare automatically. Enrollment is automatic if you are not yet age 65 and you already are receiving Social Security or Railroad Retirement benefits. If you are disabled, you will be automatically enrolled in both Part A and Part B of Medicare beginning with your 25th month of disability.

Most people have to enroll in Medicare. The enrollment period begins three months before you turn age 65 (or right away if you require regular dialysis or a kidney transplant) and continues for seven months. Applying early can help you avoid a possible delay in the start of your Part B coverage. If you have questions about Medicare eligibility or enrollment, call Social Security's toll-free number, (800) 772-1213, weekdays from 7:00 a.m. to 7:00 p.m., EST. You may also enroll online by visiting www.socialsecurity.gov.

To apply for Medicare, contact any Social Security Administration office. (If you or your spouse worked for the railroad, contact the Railroad Retirement Board.) If you don't enroll during these 10 months, you'll have to wait until the three months beginning on Jan. 1, and your Part B coverage won't start until July.

What happens if I wait to enroll?

Don't put off signing up for Medicare. If you wait 12 or more months to enroll, your premiums are likely to be higher. However, you have some options if you have group health insurance based on your own or your spouse's (or a family member's) current employment.

Even if you continue to work after your 65th birthday, you should sign up for Part A of Medicare. Part A might help pay some of the health care costs not covered by your employer plan.

Part B is a different story, however. It might not be a good idea to sign up for Medicare Part B if you have health insurance through your employer. You would be required to pay the monthly Part B premium, and your Part B benefits could be of limited value when the employer plan is the primary payer of your medical bills. However, under some circumstances you will have to pay an extra 10 percent per year penalty for not immediately signing up for Part B.

What is a Medicare HMO?

Medicare health maintenance organizations (HMOs), where available, provide all Medicare-covered services under Parts A and B and may provide additional benefits — such as prescription drug coverage — that are not offered with traditional Medicare. However, Medicare HMOs are not widely available in some regions of the country.

What is a Medicare private fee-for-service (PFFS) plan?

PFFS plans are Medicare plans offered by private health insurers and are hybrids of Medicare HMOs and traditional Medicare fee-for-service plans. There is no provider network, which could be particularly important to beneficiaries who live in rural areas that historically have lacked private Medicare insurance options.

Can I join more than one plan?

No, you can't join more than one Medicare health plan at the same time.

What if I want to leave a Medicare HMO or PFFS plan?

You must take care when you change how you receive Medicare services. This is particularly true when you leave a managed care plan, whether voluntarily or involuntarily. Because Medigap insurance is not needed when you're in a managed care plan, beneficiaries returning to traditional Medicare have certain rights to buy Medigap insurance.

Where can I get help when changing plans?

You should contact your State Health Insurance Assistance Program (SHIP) for help.

If you have questions about Medicare, or if you are interested in changing the way you receive Medicare-funded health care services, contact your local SHIP office. Special rules and consumer protections sometimes apply when you change health plans. Additionally, if you or your spouse have health insurance through a former employer or union, contact your benefits representative before you make any new plan choices. Otherwise, you could lose future options or benefits.

Financial help and benefits

There are several programs available to help low-income Medicare beneficiaries pay for some of their Medicare out-of-pocket expenses. For each of these programs the income requirements vary.

What programs can help you if your income is low and you can't afford the premiums, deductibles or Medigap?

The Qualified Medicare Beneficiary (QMB) Program pays for your Medicare premiums, deductibles, and coinsurance.

The Specified Low Income Medicare Beneficiary (SLMB) Program pays for your Medicare Part B premium.

The Qualified Individual 1 (QI-1) Program pays for your Medicare Part B premium.

The Qualified Individual 2 (QI-2) Program pays a small portion of your Medicare Part B premium. Individuals who may be qualified for any of these programs can apply at their local Medicaid offices.

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