Medicare is a federal health insurance program for seniors 65 years or older, and younger people with permanent disabilities, End-Stage Renal Disease (kidney failure), and Amyotrophic Lateral Sclerosis (ALS, Lou Gehrig’s disease). Medicare helps pay for a majority of healthcare services like emergency room visits and hospital stays, doctor office visits, annual preventive check-up visits, urgent car, prescription drugs, home healthcare, and hospice care.
Medicare: Federal Health Insurance Covering Over 65 Million Americans
Approximately one in every five Americans is covered by Medicare. In fact, Medicare is the government’s largest budgetary obligation at 16.5% of total spending. In 2022, Medicare accounted for $1.5 trillion of the federal government’s $9 trillion budget. In comparison, Social Security received $1.3 trillion, Defense $1.2 trillion, Education $657 billion, and Veteran Affairs $284 billion. Federal Medicare spending increase approximately $100 billion every year as the baby boomer generation continues to age into retirement.
Medicare was signed into law in the summer of 1965, after congress and President Lyndon Johnson worked together to create a health insurance program for people age 65 and older, as well as ‘Medicaid’ for low income citizens. The following summer of 1967, 19 million Americans enrolled in Medicare. It wasn’t until 1972 when President Nixon’s administration extended Medicare to people under age 65 who had disabilities and received SSDI (Social Security Disability Insurance) payments for over 24 months, as well as people with kidney failure (ESRD). Almost 60 years later, Medicare covers over 65 million Americans, and Medicaid covers almost 70 million Americans across both federal and state programs.
When Do I Need to Enroll in Medicare?
Most people approaching retirement look forward to enrolling and receiving Medicare benefits. To maximize these healthcare benefits, they should also understand the importance of signing up for the right Medicare options and enrolling at the right time.
Contact Social Security to apply for Medicare benefits. The Social Security Administration can determine eligibility and process applications.
TrustMedicare’s Guide to Medicare Enrollment Periods
Initial Enrollment Period: When you first become eligible for Medicare, you can join a plan.
Open Enrollment Period: From October 15 – December 7 each year, you can join, switch, or drop a plan. Your coverage will begin on January 1 (as long as the plan gets your request by December 7).
Medicare Advantage Open Enrollment Period: From January 1 – March 31 each year, if you’re enrolled in a Medicare Advantage Plan, you can switch to a different Medicare Advantage Plan or switch to Original Medicare (and join a separate Medicare drug plan) once during this time. Note: You can only switch plans once during this period.
How to get a Medicare Card
If you automatically enroll in Medicare, you’ll receive a Medicare card in the mail approximately trhe months before your 65th birthday. For individuals younger than 65 years old, Medicare cards will be issued upon the 25th month of disability.
4 Words That Confuse Every Medicare-Eligible Person
It’s completely normal to be confused by the words Premium, Deductible, Coinsurance, and Copayment. These words are used a lot in detailing the cost and coverage levels of different Medicare plans. An experienced Medicare insurance agent recognizes that most people on Medicare are confused by the difference between a ‘deductible’ and ‘coinsurance’. Everyone should feel perfecting comfortable to ask the Medicare agent to explain the differences in detail — as many times as it takes to understand.
Premium: Premiums are the amount you pay for coverage (generally monthly). It doesn’t matter if you use the insurance or not, you will still have to pay a premium.
Deductible: Even though you pay for insurance through monthly premiums, there is often a deductible you’ll have to pay ‘first’ when you go to the doctor or pharmacy. You’ll pay a deductible (set amount for a year) before either Medicare or your healthcare plan starts to pay (e.g. Medicare Advantage; Part D Stand-Alone Drug Plan). If you’re wondering, the purpose of a deductible is to ensure insurance policyholders don’t get frivolous with health insurance coverage. Insurance companies want their customers to have “skin in the game” and think twice before going to the doctor for “just any health condition”.
After you completely pay out the full amount of your deductible, you then pay coinsurance or copayments when you go to the doctor or pharmacy, and finally then your insurance company pays for the rest.
Coinsurance: Coinsurance the share of cost you’ll pay with your insurance company for any doctor bill. Coinsurance the amount remaining — after your deductible is met.
Copayment: A copayment is the amount you’ll pay every time you go to the doctor or to the pharmacy. You’ll commonly hear the words: “Okay Mr. or Mrs. Smith, today’s doctor’s appointment has a copayment of $30 (example); how would you like to pay?”
Source: USASPENDING.GOV, FY 2022 spending by Budget Function