What is Medicare?
Medicare is a federal program that pays for covered healthcare services of qualified beneficiaries. It was established in 1965 under Title XVIII of the Social Security Act to provide health insurance to individuals 65 and older, and has been expanded over the years to include permanently disabled individuals under the age of 65. Medicare, which consists of four parts (A-D), covers hospitalizations, physician services, prescription drugs, skilled nursing facility care, home health visits, and hospice care, among other services. Generally, individuals are eligible for Medicare if they or their spouse worked for at least 40 quarters in Medicare-covered employment, are 65 years old, and are a citizen or permanent resident of the United States. Individuals may also qualify for coverage if they are a younger person who cannot work because they have a medical condition that is expected to last at least one year or result in death, or have end-stage renal disease (permanent kidney failure requiring dialysis or transplant). The program is administered by the Centers for Medicare & Medicaid Services (CMS) within the Department of Health and Human Services (HHS) and by private entities that contract with CMS to provide claims processing, auditing, and quality oversight services.
Medicare covers 63.3 million people, or about 1 in 5 people in the United States.1
1CMS Fast Facts July 2021
There are over 820 Prepaid Medicare Plans (such as Medicare Advantage) and over 60 Prescription Drug Plans across the United States.2
2CMS Fast Facts November 2020
About 28% of Medicare benefit spending is for hospital inpatient and hospital outpatient services.3
3 Medicare Payment Advisory Commission, 2020
In 2019 federal Medicare spending accounted for about 14% of total federal spending and 3% of GDP.4
4 Peter G. Peterson Foundation, 2020
Medicare isn’t free. So how much will Medicare cost you? How will it affect your budget? In order to pick the right plan for you, consider some of the costs that dictate how much you will pay for your health care:
- Monthly Premium
- Yearly Deductible
- Copayment and Coinsurance
- Prescription Drug Coverage
- Possible Late-Enrollment Penalties