How Medicare Works, from Life in the USA: The Complete Guide for Immigrants and Americans

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Life in the USA
Retirement and Aging
Medicare

How Medicare Works
Medicare is the primary federal health care program for people over age 65 or people under 65 with certain disabilities. It runs according to a set of complicated financial calculations, but, in essence, Medicare will pay most health-care costs in the case of catastrophic illness. Medicare is funded primarily from mandatory payroll and self-employment taxes in a manner similar to Social Security. Unlike Social Security, for which a person needs to apply at the appropriate age, Medicare coverage is automatic. Just like Social Security, funding and other financial problems plague the system, often making Medicare a “hot” political issue.

Medicare terminology as popularly used refers to certain “parts” of the program:

  • Medicare Part A helps cover inpatient care in hospitals, care in skilled nursing facilities, hospice, and home health care.

  • Medicare Part B helps cover doctors' services, hospital outpatient care, and home health care, as well as certain preventive health services.

  • Medicare Part C is an optional “Advantage Plan” giving greater coverage, but requiring payment of additional premiums. Eligible persons may switch to Medicare Part C from standard Medicare, or back, during a short period of enrollment early in each calendar year.

  • Medicare Part D helps cover the cost of prescription drugs.
A number of private insurers offer policies to cover expenses not covered by Medicare.

The Centers for Medicare & Medicaid Services (CMS), a branch of the U.S. Department of Health and Human Services, administers the Medicare program. This organization has a web site and many publications that explain the workings of the system, but probably the best place to find reliable information will be your local senior center or public library.



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