In 1965, then-President Lyndon Johnson signed a bill into law that created the health insurance program for seniors known as Medicare. It’s changed slightly over the last 50 years by offering coverage to more Americans and the addition of prescription drug coverage.
Today, more than 50 million people are enrolled in Medicare and that number is expected to rise. According to AARP, only 1 in 10 beneficiaries relies solely on Medicare for health care coverage. The vast majority of Americans have a supplement for additional expenses.
Medicare is broken down into several parts, sometimes resembling alphabet soup. You’re probably familiar with some of them, but here’s an overview:
Medicare Part A
Medicare Part A is hospital insurance, which means it covers a stay in a hospital, nursing home or skilled nursing facility. It also covers home health care and hospice services. It won’t, however, cover a nursing home stay if you need personal care that can be provided by someone without special training. Examples of that include help with: bathing, eating and using the bathroom.
It also doesn’t cover extra amenities, such as a private room.
The cost: If you've paid Medicare taxes for about a decade -- you can get Part A for free. If not, you’ll have to pay a premium. The standard premium in 2017 is either $227 or $413 per month, depending on how long you’ve worked and paid Medicare taxes.
Medicare Part B
Medicare Part B covers ambulance services, doctor visits, rehabilitation, lab tests and surgeries. Part B also covers doctor-prescribed medical devices and supplies you need to treat an illness or health problem, such as crutches or blood sugar monitors.
The cost: No matter how long you’ve worked, you’ll have to pay for Part B. The standard premium in 2017 is $134 a month or higher depending on your income. Those who receive Social Security benefits can expect to pay less of a fee – about $109 a month.
(Together, Medicare parts A and B are known as “traditional Medicare.” It’s important to note that some care is not covered by “traditional Medicare” such as routine dental visits, eye exams, hearing aids and routine foot care.)
Get started with a
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Medicare Part D
Medicare Part D is prescription drug coverage, which means that it covers prescription drugs, vaccines not covered under Part B, and drugs you get as a hospital outpatient, such as during a visit to the ER.
The cost: You’ll also have to pay a Part D premium. Costs vary depending on the plan. The average premium in 2017 is about $40 a month.
Medicare Part C (also known as Medicare Advantage)
All of your Medicare coverage can be provided through a plan from a private health insurance company. These plans include coverage for parts A, B and D rolled into one plan. If your plan includes Part D coverage, you must take that coverage in order to stay on the plan.
These plans must provide all of the same items that traditional Medicare covers. In addition, some Medicare Advantage plans pay for care not covered under traditional Medicare, such as dental work, hearing related services and vision care.
The cost: Premiums vary by plan, so you’ll have to shop around. If you enroll in a Medicare Advantage plan, you pay an extra premium in addition to your Part B premium.