Is Medicare Free for Seniors?
To start off, Medicare is a Federal government-sponsored program that is designed to help cover health care costs for Americans age 65 and older, as well as those who qualify as disabled and patients on dialysis.
Here’s the truth. Millions of Americans rely on Medicare in their retirement years. And millions more will do so in the future.
As to not confuse it with Medicaid, which is also funded by taxpayer dollars, let’s discuss how Medicare works, the coverage it provides, and the elements that are free and those costs that are not.
The four-part program of Medicare includes:
Part A: Hospitalization Coverage
Medicare Part A provides hospitalization coverage to individuals who are 65 years or older, regardless of income, as long as they or their spouse worked and paid Medicare taxes for at least 10 years.
You can get Part A at age 65 without having to pay premiums only if you are currently receiving retirement benefits from Social Security or the Railroad Retirement Board. However, while the hospital coverage for this part is free, without any monthly premiums, copays and deductibles for services still apply.
Part B: Medical Insurance
If you are eligible for Part A you also qualify for Part B, which covers medically necessary services and equipment. This can include doctor’s office visits, lab work, x-rays, wheelchairs, walkers, and outpatient surgeries, as well as other services like disease screenings or flu shots.
Unlike Part A, Part B requires monthly premium payments which are generally deducted from Social Security benefits or Railroad Retirement payments, as well as yearly deductibles. If you earn in excess of $85,000 per year ($170,000 for a married couple) you are obligated to pay for this program and service.
However, individuals are not required to sign up for Part B as soon as they are eligible if they are still covered by their employer’s insurance. But, it may cost more money to enroll later in life, due to a late-enrollment penalty.
Part C: Supplemental Insurance
Those individuals who are eligible for Medicare Part A and Part B are also eligible for Part C, also known as Medicare Advantage Plan (“MA Plans” like an HMO or PPO), which refers to private insurance plans rather than the federal government-sponsored programs.
Part C also offers vision and dental coverage. In that capacity, it functions very much like the health maintenance organizations (HMOs) and preferred provider organizations (PPOs), through which many people receive medical services during the course of their working years.
Enrolling in Part C can reduce the costs of purchasing services separately. However, individuals need to carefully evaluate their medical needs because Part C participants pay out-of-pocket prices for their associated services.
Part D: Prescription Drug Coverage
Medicare Part D provides prescription drug coverage. Participants pay for Part D plans out-of-pocket as well and must pay monthly premiums, yearly deductible, and copayments for certain prescriptions. Those enrolled in Part C are typically eligible for Part D.
For more information about Medicare or Medigap coverage, and the costs associated with them, visit our resource center.