Medicare 101
Medicare 101
We are going back to basics! Medicare is a tiny name for such a BIG program. The mammoth size program definitely deserves a 101, 102, 103 and many more. Today, let’s start with #Medicare101
Medicare is a federally sponsored insurance that has 4 parts : A, B, C, D
Depending on the plan and “parts” Medicare can provide coverage for hospital stays, outpatient medical/surgical office visits, prescription drugs, preventive services, skilled nursing facilities, home health care, and hospice care. Inpatient + Prescription Drug payments account for the largest benefit payments for Medicare! (details)
What is covered under Medicare Part A?
inpatient care in hospitals
skilled nursing facilities
hospice care & some home health care
Some home heath care if homebound + skilled need
No Premium but likely cost-sharing
What is covered under Medicare Part B?
Outpatient care and preventive services
Durable Medical equipment: walkers, wheelchairs, oxygen
Physical + occupational therapist services
Mental Health services
Monthly premium paid
What is covered under Medicare Part C?
Optional add-on benefit provided by private insurers (HMO, PPO)
Usually known as Managed Medicare or Medicare-Advantage
Usually includes prescription drug coverage
Includes Part A+B covered services
Monthly premium paid
What is covered under Medicare Part D?
Optional prescription drug plan
Each Part D plan has a formulary, or list of covered drugs. Formulary may change, requires min 2 drugs of each category
Must cover vaccines (those not covered by Part B)
Monthly premium paid
Source: KFF
Who is eligible for Medicare?
To qualify for Medicare, you must be:
Age 65 or older
Under age 65 with certain disabilities
If receiving disability benefits from Social Security or Railroad Retirement Board for 24 months
Patients with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a kidney transplant)
Patients with Amyotrophic Lateral Sclerosis (ALS) or Lou Gehrig's Disease
Also, to qualify:
Must be age 65 or older and self or spouse worked and paid Medicare taxes for at least 10 years.
Or, self or spouse had Medicare-covered government employment
How many people qualify for Medicare?
Medicare provides coverage for over 65 million people, nearly 20% of the U.S. population – a share that will grow larger in the coming decades.
Medicare beneficiaries pool is expected to grow from “around 63 million people in 2020 to just over 93 million people in 2060” (KFF)
Source: KFF
Furthermore, Medicare Advantage programs (Part C) are seeing rapid growth in enrollment for Medicare beneficiaries - in 2022, 48% of the Medicare enrollments were for the Part C program.
How large is the pie of Medicare in federal spending?
As of 2020, Medicare spending comprised 12% of the federal budget and 20% of national health care spending - second only to Social Security and is equal to defense spending
There are ongoing discussions about access to care and the cost of health care in the US and intermittently there is a resurgence of interest in creating a Medicare-like program/option or expanding Medicare coverage to all Americans.
Medicare per capita spending is projected to grow, and likely in the Medicare Advantage plans.
Net Medicare outlays are projected to increase from $689 billion in 2021 to nearly $1.6 trillion in 2032, due to growth in the Medicare population and increases in healthcare costs.
Source: KFF
Who pays for Medicare?
Medicare is “paid for” by a combination of payroll taxes, general revenues, and beneficiary payments (aka premiums).
Part A: payroll tax equally paid by employers and employees into the “Hospital Insurance Trust Fund”
Part B: general revenues + beneficiary premiums
Part C: payroll taxes, general revenues, and premiums
*Medicare Advantage enrollees generally pay the monthly Part B premium and also pay an additional premium directly to their plan
Part D: funded by general revenues, beneficiary premiums, and state payments
Source: KFF
Between 2002 and 2022, the total cost paid by beneficiaries for Medicare Part A & B deductibles + Medicare Part B premiums increased from 15% to 19% of the average Social Security benefit. This does not include: premiums for prescription drug coverage and cost-sharing for medications and physician visits, as well as costs for services not covered by Medicare, such as dental care and long-term services and supports.
In 2016, Medicare beneficiaries spent 45% of their out-of-pocket costs on premiums. Newer data is still pending, especially accounting for the pandemic-related changes.
Learn more here: Costs of Medicare, Medicare Interactive, Kaiser Family Foundation: Medicare