A Guide to Medicare Coverage

Signed into law by then-President Lyndon B. Johnson on July 30, 1965, Medicare coverage began as a social insurance program for American citizens age 65 or older. Today Medicare also covers citizens who may not be 65 years old but demonstrate need. Those suffering with Lou Gehrig’s Disease, in need of a kidney transplant or have been receiving Social Security benefits for at least 24 months are all examples of people who qualify for Medicare.

Originally, Medicare coverage applied only to Hospital Insurance (known as Part A) and Medical Insurance (Part B). Former President Harry S. Truman was the first recipient of an official Medicare card, which then rarely entitled the holder to prescription drug coverage. As of early 2006, more comprehensive drug coverage was provided.

Medicare Part A

Part A of Medicare is Hospital Insurance, which will cover hospital stays, nursing home or assisted-living home care for a period of time. To receive the benefits of Medicare Part A, there are four main criteria that must be met, the first of which addresses only hospital visits:

  1. The hospital stay must be a minimum of three days and three midnights, not including the day you are discharged
  2. A nursing-home stay is covered only if the problem is diagnosed during the hospital visit outlined above. For example, if a respiratory issue sent you to the hospital, Medicare would cover a nursing home stay to help rehabilitate your lungs.
  3. If you don’t need rehabilitation at a nursing home but have an ailment that requires constant medical assistance or supervision, the stay would be covered.
  4. Those caring for you at the nursing home have to be skilled. Part A of Medicare does not cover long-term, unskilled or custodial care.

Regarding nursing-home stays, Medicare will only cover 100 days per ailment. The first 20 days are paid for by Medicare in full; the next 80 days require a copayment of $128 per day (as of 2008). Whenever you go 60 days without using Medicare to help pay for a nursing home stay, the 100-day clock is reset and you qualify for a new 100 day period.

Medicare Part B

Part B of Medicare deals with Medical Insurance. This section covers most outpatient services and medically necessary products that Part A leaves untouched. Everything from doctor’s visits to immnuosuppressive drugs for organ-transplant recipients are covered by Part B, including limited ambulance transportation.

In addition to outpatient doctor’s services and treatments like chemotherapy, Part B helps you to pay for durable medical equipment (DME). Examples of DME include mobility scooters, prosthetic limbs, canes and oxygen.

Medicare Part C

Part C of Medicare deals with Medicare Advantage plans. After the Balanced Budget Act of 1997 passed, Medicare recipients were given the choice to either keep their original Medicare plan (Parts A and B) or receive their benefits through a private health insurance plan. After the Medicare Prescription Drug, Improvement and Modernization Act was enacted in 2003, those using private health insurance through Part C became known as Medicare Advantage (MA) recipients.

If you choose Medicare Advantage, Medicare will pay a set amount each month toward private health insurance. You’re required to pay any additional premiums, and in many cases you’ll have to pay a fixed copayment amount (usually around $10 or $20) each time you see a doctor. By law, the private insurance company you choose must offer a benefit package that is at least as good as the one provided by Medicare Parts A and B.

Medicare Part D

Medicare Part D provides coverage for prescription drug plans and went into effect at the beginning of 2006. If you use Medicare Part A or B, you are eligible for Part D. If you’re using an MA Plan, you can adjust your benefits to take advantage of Part D, in which case the overall plan becomes an MA-PD.

To get Medicare Part D, you need to enroll in a Prescription Drug Plan (PDP) or change your MA coverage to MA-PD. Costs and benefits vary between the different plans, and medications that you need may not be covered by all plans. Some drugs, such as cough suppressants, benzodiazepines and barbiturates, aren’t covered at all.

To get the best Medicare Part D coverage at the best price, you should compile a list of your prescriptions and talk to your pharmacist, MA provider or a Medicare representative. You can get a head start by visiting http://formularyfinder.medicare.gov/formularyfinder/selectstate.asp, which provides a list of Medicare Part D options by state when you provide your prescriptions.


Each year that you work, 2.9% of your wages are taxed under the Federal Insurance Contributions Act (FICA) and applied to your future Medicaid coverage. This 2.9% is split between employers and employees. Those who are self-employed have to pay the full 2.9% on their own. There is no limit to the amount of your wages that must be paid to FICA tax.

Once you’re eligible for Medicare, it works like private health insurance. Your care provider bills Medicare for expenses, and you make up any differences that aren’t covered.

Medicare coverage is limited, and while it can provide some protection for routine expenses or a minor injury, such as a broken leg, it’s not a solution for long-term care needs. For this reason, it’s a good idea to look into supplemental coverage, known as Medigap, to cover additional costs. While the monthly premiums for Medigap insurance can be high, they’re still far lower than the medical bills that pile up in the event of a catastrophic illness or if you need long-term care.

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