In the United States, Medicare is a national health insurance program administered by the U.S. federal government since 1966. United States Medicare is funded by a payroll tax, premiums and surtaxes from beneficiaries, and general revenue. It provides health insurance for Americans aged 65 and older who have worked and paid into the system through the payroll tax. It also provides health insurance to younger people with some disability status as determined by the Social Security Administration, as well as people with end stage renal disease and amyotrophic lateral sclerosis.
In 2015, Medicare provided health insurance for over 55 million — 46 million people age 65 and older and 9 million younger people. On average, Medicare covers about half of the health care charges for those enrolled. The enrollees must then cover their remaining costs either with supplemental insurance, separate insurance, or out-of-pocket. Out-of-pocket costs can vary depending on the amount of health care a Medicare enrollee needs. They might include the costs of uncovered services—such as for long-term, dental, hearing, and vision care — and supplemental insurance premiums.
Medicare and Medicaid are the two government sponsored medical insurance programs in the United States. Medicare is further divided into parts A and B — Medicare Part A covers hospital and hospice services; Part B covers outpatient services. Part D covers self-administered prescription drugs. Part C is an alternative to the other parts intended to allow experimentation with differently structured plans in an effort to reduce costs to the government and allow patients to choose plans with more benefits.
In general, all persons 65 years of age or older who have been legal residents of the United States for at least five years are eligible for Medicare. People with disabilities under 65 may also be eligible if they receive Social Security Disability Insurance (SSDI) benefits. Specific medical conditions may also help people become eligible to enroll in Medicare.
People qualify for Medicare coverage, and Medicare Part A premiums are entirely waived, if the following circumstances apply:
They are 65 years or older and US citizens or have been permanent legal residents for five continuous years, and they or their spouse (or qualifying ex-spouse) has paid Medicare taxes for at least 10 years.
They are under 65, disabled, and have been receiving either Social Security SSDI benefits or Railroad Retirement Board disability benefits; they must receive one of these benefits for at least 24 months from date of entitlement (eligibility for first disability payment) before becoming eligible to enroll in Medicare.
They get continuing dialysis for end stage renal disease or need a kidney transplant.
Those who are 65 and older who choose to enroll in Part A Medicare must pay a monthly premium to remain enrolled in Medicare Part A if they or their spouse have not paid the qualifying Medicare payroll taxes.
People with disabilities who receive SSDI are eligible for Medicare while they continue to receive SSDI payments; they lose eligibility for Medicare based on disability if they stop receiving SSDI. The 24-month exclusion means that people who become disabled must wait two years before receiving government medical insurance, unless they have one of the listed diseases. The 24-month period is measured from the date that an individual is determined to be eligible for SSDI payments, not necessarily when the first payment is actually received. Many new SSDI recipients receive “back” disability pay, covering a period that usually begins six months from the start of disability and ending with the first monthly SSDI payment.
Some beneficiaries are dual-eligible. This means they qualify for both Medicare and Medicaid. In some states for those making below a certain income, Medicaid will pay the beneficiaries’ Part B premium for them (most beneficiaries have worked long enough and have no Part A premium), as well as some of their out of pocket medical and hospital expenses.