9 Questions You Should Be Asking About Medicare
The idea of a national health care system was being tossed around back in the early 1900s. But Medicare would not exist until 1965. And the health care program has endured some growing pains ever since. Many presidents have tweaked it here and there.
Medicare is a mixed bag of misunderstanding for a lot of us. The information is vast. The majority of U.S. citizens know the bare minimum when it comes to the program: You get it when you turn 65, if you are disabled, or if you have a specific medical condition. While the overall premise seems pretty straightforward, the details and fine print are important to understand.
Here’s a peek at what you need to know about Medicare.
1. Who is eligible for the Medicare program?
- 55 million people received Medicare in 2015
Initially, the program was designed to provide medical insurance for seniors. As the program has been revised, the scope of those who are eligible for benefits has expanded. According to the Kaiser Family Foundation, there were well over 55 million recipients of Medicare in 2015.
While there are some caveats, you are likely eligible if you meet any of the following criteria:
- You’re 65 years or older and have paid Medicare taxes for at least 10 years.
- You’re younger than 65 but have a disability.
- You have end-stage renal disease.
- You have amyotrophic lateral sclerosis.
- You’re receiving (or are eligible for) Social Security or Railroad Retirement Board benefits.
2. What is covered?
- You’ll have to pay for prescription drug coverage.
The coverage provided by Medicare is riddled with dips and dives that make selecting the right plan more difficult than you’d anticipate. Making sure you receive the proper coverage for your needs means understanding the different parts of Medicare and what they cover. Here’s a quick breakdown:
- Part A: This is hospital insurance. It covers a range of inpatient hospital care and some in-home care.
- Part B: This is coverage outside the hospital. It covers outpatient care, preventative screenings, and diagnostic tests. Parts A and B go hand in hand and are often called Original Medicare.
- Part C (Medicare Advantage) This is a plan from a private company contracting with Medicare that combines Part A and Part B benefits. Most plans offer prescription drug coverage.
- Part D: This is prescription drug coverage. Original Medicare doesn’t typically cover prescriptions, so members will want to purchase a private prescription coverage plan.
- Medigap: This is supplemental Medicare insurance. The purpose of Medigap is to offset the costs when certain portions of care aren’t covered, including deductibles, copays, and other unforeseen costs associated with health care.
3. How much does Medicare cost?
- The average Medicare beneficiary spent $4,734 on out-of-pocket costs in 2010.
The Original Medicare program aimed to keep costs for enrollees low — the annual deductible for Part A was $40 in 1965, and monthly Part B premiums were $3. However, that is not really the case anymore. As new costs arise, such as prescription drugs and unforeseen illnesses, supplementing your coverage starts to add up. In 2010, the out-of-pocket expenses averaged around $4,734 for all Medicare beneficiaries, according to Kaiser Family Foundation.
4. What are the pros?
- Part B premiums can be as low as $134 a month.
The positives of Medicare are great in number. When it comes to the Original Medicare plan, the premiums are low. Because Part A is typically free and Part B coverage starts as low as $134 per month, it’s hard to beat that price if you’re over 65 or have a disability. Furthermore, enrollees are able to choose practically any provider they want. Nine out of 10 providers accept Medicare coverage.
5. What are the cons?
- Prescription drug plans cost $34 a month, on average.
The great pitfall of Medicare is the gaps in services that are not covered. As a result, many recipients have to pay quite a bit out of pocket for additional plans that cover the gaps in service. For instance, the cost of a prescription plan can be around $34 per month, but this can vary depending on which plan is selected. Beyond the expense of additional coverage, some Medicare recipients under 65 won’t even qualify for the gap coverage.
6. How much do tax payers fork out for Medicare?
- Most people pay 2.9% in Medicare tax, but some pay more.
Being curious about how much Uncle Sam is receiving from U.S. taxpayers for the Medicare program is a reasonable inquiry. The percentage is standard across the board: 2.9% of every paycheck. Your employer actually pays half of this tax, but if you’re self-employed, you’ll have to pay the full 2.9%. If you like to invest your cash, you’ll also find there is an additional tax on unearned income of 3.8% above a certain threshold. High-income earners also pay an additional 0.9% in Medicare tax on income above $200,000.
7. How do the Affordable Care Act and Medicare interact?
- Most Medicare recipients meet minimum coverage requirements under the Affordable Care Act.
All the hullabaloo surrounding the Affordable Care Act certainly impacts Medicare recipients. If those with Medicare are enrolled in the Original Medicare or Advantage plans, that complies with the Affordable Care Act. On the other hand, if a recipient is only enrolled in Part B, they’re subject to penalty, as Part B doesn’t provide the minimal coverage required under the law.
8. Trump and Medicare
- Getting rid of Obamacare could increase Medicare spending by $800 billion.
President Donald Trump came out determined with the GOP to get rid of the Affordable Care Act. But repealing it could increase Medicare spending by over $800 billion over the next 10 years, according to the Kaiser Family Foundation. That increase would lead to higher deductibles and premiums for recipients.
9. Is the future bright?
It might not be all sunshine and butterflies (Medicare Part A will face funding shortfalls in the future), but the program as a whole is OK. The Affordable Care Act has managed to lower the spending associated with Medicare. In fact, between 2010 and 2015, Medicare spending went down, according to Kaiser Family Foundation. And though spending is projected to increase, the Affordable Care Act is helping to moderate projections.
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