Traditional Medicare coverage is divided into two parts; Part A covers hospital expenses, skilled nursing facilities, hospice and home health care services and part B covers outpatient medical care (e.g. doctor visits, x-rays, bloodwork).
On July 30, 1965, President Lyndon B. Johnson signed into law the bill that led to Medicare and Medicaid.1
The Omnibus Reconciliation Act of 1980 expanded Medicare coverage to include home health services. It also required states to “buy-in” to the Medicare system by using Medicaid funds to cover Medicare premiums and cost-sharing for impoverished Medicare beneficiaries. These individuals are known as Qualified Medicare Beneficiaries (QMB). QMBs have income that doesn’t exceed 100 percent of the federal poverty level.1
It is assumed that by age sixty-five many individuals will have retired, Medicare was established to ensure access to care in the absence of employer-provided insurance.
Part A is sometimes referred to as “hospital insurance,” because coverage is exclusive to hospital stays and inpatient treatment. Part B is known as “medical insurance” because it covers doctor visits and medical care outside the hospital. In addition to the aforementioned services, part B also comprises: ambulance services, durable medical equipment, lab tests, mental health and substance abuse treatment, outpatient surgery, and preventive care services (e.g. flu shots, cancer screenings, and nutrition therapy).2
Medicare Part A is free for most U.S. citizens age 65 or older. To be eligible for Medicare Part A for free, you must be over age 65 and meet one of the following requirements:
You or your spouse paid Medicare taxes while employed with the government.
You are eligible for Social Security or Railroad Retirement Board benefits but haven’t started collecting them yet.
You currently receive retirement benefits from Social Security or the Railroad Retirement Board.2
If you worked at least ten years (40 quarters) while paying taxes, you don’t pay a premium for Part A. If you worked for fewer than 30 quarters, you generally pay $471 per month in 2021. If you worked more than 30 but fewer than 40 quarters, your premium is $259 per month in 2021.3
Most people don't get Part B for free, coverage is contingent upon payment of a monthly premium. The standard premium is $148.50 in 20212, up from $144.60 in 2020.3 If your income is above a certain amount (based on your income tax returns from two years ago), you might pay a higher Part B premium. An enrollee can choose to have the premium deducted automatically from their Social Security benefits.The annual deductible for Part B is $203 in 20213, up from $198 in 2020.2 Once this is paid, an enrollee will pay a coinsurance of 20% for covered expenses.
In 2021, 58% of Medicare beneficiaries were enrolled in traditional Medicare while the remaining 42% (26.4 million people out of 62.7 million) are enrolled in Medicare Advantage plans.4
A person under age 65, might still be eligible for Part B benefits if they have received Social Security or Railroad Retirement Board benefits for two years or have End-Stage Renal Disease.2
Anderson S. A brief history of Medicare in America. medicareresources.org. https://www.medicareresources.org/basic-medicare-information/brief-history-of-medicare/. Published 2021.
Medicare Part A vs Part B - What's the Difference? | Eligibility. Eligibility. https://eligibility.com/medicare/medicare-part-a-vs-part-b. Published 2020.
Medicare Part A and Part B – What's the Difference?. EHIM. https://www.ehealthinsurance.com/medicare/resources/medicare-part-a-and-part-b-whats-the-difference. Published 2021.
Freed M, Fuglesten Biniek J, Damico A, Neuman T. Medicare Advantage in 2021: Enrollment Update and Key Trends. KFF. Kaiser Family Foundation. https://www.kff.org/medicare/issue-brief/medicare-advantage-in-2021-enrollment-update-and-key-trends/. Published 2021.