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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The federal government designed Medicare to provide affordable healthcare to people in the United States, including people aged 65 years or older as well as younger people with certain health conditions.
According to the Centers for Medicare and Medicaid Services, there were more than 60 million enrollees in the Medicare program in 2019.
Medicare has various parts and options for healthcare coverage. Original Medicare combines Part A (hospital insurance) and Part B (medical insurance). After an individual pays the deductible, Medicare pays a share of healthcare costs.
This article looks at the details of original Medicare, eligibility, enrollment options, and costs.
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.
Federally funded Medicare has four parts covering various healthcare services. In general, the program is for older people in the U.S., although younger people with disabilities or some medical conditions may also be eligible for Medicare.
The program consists of:
- Part A for hospital insurance
- Part B for medical insurance
- Part C, known as Medicare Advantage, as an alternative to original medicare (parts A and B)
- Part D for prescription drugs coverage
With original Medicare, people can visit any doctor, clinic, or hospital countrywide, providing they accept Medicare payment. The government pays the health provider directly for the service.
The original Medicare program began in 1965, which includes Part A and Part B.
A person enrolled in the program can generally use any doctor, clinic, hospital, or other healthcare providers enrolled in Medicare and accepting new Medicare patients. They also do not have to choose a primary doctor, and may not need a referral to see a specialist.
In general, prescription drug coverage is not included in original Medicare, although a person may enroll in a Medicare Part D plan. Some Part C (Advantage) plans also offer prescription drug coverage.
Medicare Part A covers inpatient stays in the hospital, skilled nursing facility, and home care and hospice services.
Hospital or skilled nursing facility
If a person enrolled in original Medicare is in the hospital, Part A covers:
- a semi-private room
- general nursing care
- some drugs and medical supplies
- rehabilitation services, such as physical therapy
- lab and imaging tests
- operating room fees
- specialist unit care, such as intensive care
In a hospice, Part A covers general nursing care, including medications, that help people with a terminal illness manage their symptoms and control pain.
For home healthcare, Part A covers:
- rehabilitation services, such as physical therapy
- skilled healthcare if a person cannot leave their home
- some medical supplies that are prescribed by a doctor as part of a person’s care, such as wound dressings
There are a few items or services not covered by original Medicare Part A, such as:
- private rooms, unless medically necessary
- cosmetic procedures
- private nursing care
- televisions or telephones in the room
- personal care items
- doctors fees during an inpatient stay, although Part B covers this
- long-term resident fees for nursing homes or assisted living facility
- the majority of dental care
Medicare Part B covers medically necessary services to diagnose or treat an existing medical condition, including doctor’s visits, chiropractors, and some preventive services. It also covers medically necessary care, such as cataract surgery or surgeries following an injury.
Part B coverage also includes:
- ambulance services for transport to a hospital or skilled nursing facility
- chiropractic services for lower back pain
- clinical research services, including drug trials and treatments
- diabetes supplies, such as blood sugar test strips and testing monitors
- emergency room services for illness or injury
- durable medical equipment, such as walking equipment, oxygen supplies, and beds
- mental health services, such as visits to a psychiatrist or specialist nurse practitioner
- screenings for bone density, diabetes, glaucoma, and some cancers
Medicare coverage continually evolves. For example, beginning in 2020, Part B now covers acupuncture for lower back pain.
Some of the gaps in Medicare Part B coverage include:
- routine vision, hearing, and dental services
- routine foot care, unless for foot problems triggered by health conditions such as diabetes, cancer, or chronic kidney disease
- home safety items, such as grab bars
- long-term care in nursing homes or assisted living facilities
- medically unnecessary services, such as cosmetic surgery
People typically become eligible for Medicare when they reach 65 years of age. Younger individuals may also qualify if they meet specific requirements, including:
- disability, for which a person must receive Social Security Disability Insurance (SSDI)
- illness, such as end stage renal disease (ESRD) or amyotrophic lateral sclerosis (ALS)
- family relationship coverage, when an individual’s parent or a spouse paid Medicare taxes for a certain period
This online tool can help a person check if they are eligible for Medicare.
Some individuals are automatically enrolled in original Medicare, while others may have to wait until they are eligible and sign up manually.
If a person gets SSDI for at least 24 months, they are automatically enrolled in original Medicare after they get their 25th SSDI check.
For a person with ALS or ESRD, Medicare cover begins automatically in the first month in which the SSDI benefits start.
People who receive retirement benefits from either Social Security or the Railroad Retirement Board are enrolled in Medicare Part A when they are 65 years old.
Medicare has set times during the year when eligible individuals can enroll. Enrolment dates include:
- Initial Enrollment Period (IEP): This enrollment period begins 3 months before a person turns 65, including their birth month, and extends a further 3 months, for a total of 7 months. People enrolling in original Medicare in the IEP avoid late enrollment penalties.
- General Enrollment Period (GEP): The GEP is from January 31 to March 31 each year, with original Medicare coverage starting on July 1.
- Open Enrollment Period (OEP): The OEP, also known as the Annual Enrollment Period, runs from October 15 to December 7 each year.
- Special Enrollment Period (SEP):Specific events trigger an SEP, such as divorce or moving to a new house. An SEP typically lasts for 8 months.
Medicare provides an online tool for people to review eligibility for the program and when they can enroll.
There are various costs associated with original Medicare.
Part A costs
Medicare Part A is usually premium-free, providing a person has paid Medicare taxes for 40 quarters or more.
People who receive retirement benefits from Social Security or the Railroad Retirement Board also receive premium-free Part A. If the individual or their spouse had Medicare-covered government employment, they could also receive premium-free Part A.
Part A premium
If a person has to pay a premium for Part A, the cost depends on how many quarters they paid Medicare taxes:
- If they paid taxes for 30–39 quarters, the monthly premium is $278 in 2024.
- If they paid taxes for fewer than 30 quarters, the monthly premium in 2024 is $505.
A person must also pay a deductible of $1,632 in 2024 for covered health services, per benefit period.
If a person stays in the hospital, there is no coinsurance for the first 60 days. For days 61–90, there is $408 daily coinsurance, increasing to $816 coinsurance per day from day 91.
The costs with Part B include premiums and deductibles.
An individual’s income determines what they pay for the Part B premium.
For people with an annual income of less than or equal to $103,000, the premium in 2024 is $174.70 per month. However, a person with a yearly income of $500,000 or more will have a monthly premium in 2024 of $594.00.
After payment of the Part B deductible of $240, a person will pay 20% of any Medicare-approved amount for healthcare.
Original Medicare provides healthcare coverage through Part A, which is hospital insurance, and Part B, which is medical insurance. Typically, people over 65 years of age qualify for coverage, although younger people may be eligible if they are living with a disability or medical condition.
People can enroll in original Medicare during specific periods during the year, including a 7-month period around when they turn 65 years of age.