Medicare

The Medicare program, created in 1965 as part of the Social Security Act, provides nearly all U.S. citizens age 65 or older with health insurance for hospitalization, medical services, and major doctor bills. Medicare is divided into five parts: Part A (hospital insurance), Part B (medical insurance), Medigap (supplemental insurance), Part C (Medicare Advantage), and Part D (prescription drug coverage). Individuals can choose between the original Medicare fee-for-service plan or Medicare Advantage plans, which are run by private companies under federal regulation. Eligibility requires at least 40 Social Security credits, though younger individuals with long-term disabilities or permanent kidney failure also qualify. Part A is premium-free for those with sufficient credits, while Part B requires a monthly premium based on income. Part B covers doctors’ services, outpatient care, lab tests, preventive care, and ambulance services, usually paying 80% after an annual deductible. Medigap insurance is offered by private companies to help cover deductibles, copayments, and coinsurance not included in Parts A and B. Medicare Advantage (Part C), created in 1997 and renamed in 2004, offers alternatives such as HMOs, PPOs, and private fee-for-service plans. In 2006, Part D was added to provide prescription drug coverage under the Medicare Modernization Act of 2003. Many Medicare participants also carry other health insurance, such as employer or retiree plans, raising the issue of which plan pays first.