A note on insurance
The information on this website may assist you in making personal decisions about insurance, but it is not intended to provide advice regarding the purchase or use of any insurance or insurance products.
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Original Medicare is a federal health insurance program, with Part A and Part B. Both parts have monthly premiums, although not everyone has to pay them.
More than 58 million people were enrolled in Medicare in 2017.
In this article, we discuss original Medicare, costs, eligibility, and enrollment.
We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:
- Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
- Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
- Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Medicare was signed into law in 1965 by President Lyndon B. Johnson. The first program was basic insurance to help people pay healthcare costs.
In 1972, Medicare began offering benefits to people with certain disabilities.
In 2003, the Medicare prescription drug improvement and modernization Act (MMA) expanded Medicare to include two new programs, called Medicare Part C and Medicare Part D.
Medicare Part A and Part B are called original Medicare because they were the programs that began in 1965.
Part A
Medicare Part A is hospital insurance, and generally helps a person pay for hospital costs and other services.
Coverage includes:
- hospital admission care
- hospice care
- skilled nursing facility care
- nursing home care that is not custodial
- home healthcare
Part B
Medicare Part B pays for medically necessary care to diagnose and treat medical conditions. It also covers preventive services, such as flu shots or cancer screenings. In addition to doctor visits, Part B can cover:
- ambulance services
- clinical research
- durable medical equipment
- mental health services
- limited outpatient medications
Medicare’s standard costs include premiums, deductibles, and copays. A person has to pay the costs when they get the healthcare service.
A person can use the online tool at MyMedicare.gov to check deductibles, the status of any claims, and out-of-pocket costs.
Another online tool at Your Medicare coverage shows how much Medicare pays for a specific item or service.
Part A
Part A has monthly premiums, and deductibles, and may have a late enrollment penalty.
A person who has paid Medicare taxes for 10 years does not pay a monthly premium for Part A. However, if a person paid taxes less for than 10 years, they may have to pay a premium, which is a maximum of $505 per month.
A person pays a deductible of $1,632 for inpatient hospital, or mental health stays for each benefit period.
If a person did not sign up for Part A during the Initial Enrollment Period (IEP), they may have to pay a 10% monthly penalty. The penalty is paid for two times the number of years a person delayed enrollment.
Part B
Part B also has monthly premiums, and deductibles, and may have a late enrollment penalty.
The standard monthly premium for Part B in 2024 is $174.70. An increase in the premium is based on the modified adjusted gross income reported to the IRS.
The 2024 Part B deductible is $240 per year. After a person pays the deductible, Medicare pays 80% of Medicare-approved services.
A person who did not enroll during the IEP may have to pay a premium penalty as long as they have Part B.
There are several enrollment periods for original Medicare. A person may sometimes be automatically enrolled.
Initial Enrollment Period
If a person is eligible for Medicare when they turn 65, they can enroll for original Medicare during the IEP, which runs for 7 months. It begins 3 months before a person’s birthday, includes the birthday month, and then extends for another 3 months.
General Enrollment Period
If a person did not enroll during the time they were first eligible, then they can enroll for either Part A or Part B, or for both parts, during the General Enrollment Period (GEP). This is the time between January 1 and March 31 each year.
There may be higher costs, and coverage may not be immediate. A person who enrolls during this time may have to pay higher premiums for late enrollment.
A person who enrolls during this time will get coverage from the beginning of July.
Special Enrollment Period
Medicare offers special enrollment periods (SEP) for a person who meets certain criteria. Generally, people who are eligible during this time period do not pay late penalty premiums. Reasons for eligibility may include:
- if a person’s plan changes coverage
- if a person moves to a new area
- if a person looses their current coverage
In addition, there are other special situations when a person can enroll during the SEP.
Automatic enrollment
If a person gets certain benefits, they may be automatically enrolled in original Medicare.
If a person gets social security benefits when they turn 65, they will be automatically signed up for parts A and B. They will get a ‘Welcome to Medicare’ pack 3 months before their birthday month.
A person who is getting retirement benefits from the Railroad Retirement Board is automatically signed up for parts A and B.
When a person is eligible for Medicare, they can sign up through the Social Security Administration online or at their local office.
Original Medicare, Part A and Part B, is a federally managed health insurance plan.
Part A helps pay for hospital, skilled nursing facilities, and hospice care. Part B helps pay for the diagnosis and treatment of medical conditions and preventive services.
Premium amounts vary depending on when a person enrolled and other factors. If a person delays enrollment they may pay a penalty.