What Is Federal Medicare?

The federal Medicare program is health insurance for the elderly and disabled in the United States designed to bring economic and health stability to their lives. Medicare is funded entirely by the federal government. According to the Kaiser Family Foundation, as of 2006, over 43 million Americans receive coverage under Medicare.

History

• Medicare for Americans 65 and older was signed into law in 1965 by President Lyndon B. Johnson. President Harry Truman, one of the early advocates for a national health care program, was the first Medicare enrollee. In 1972, the law was amended to allow those with disabilities and end-stage renal disease to enroll in the Medicare program. In 1997, Medicare+Choice, which will eventually be known as Medicare Advantage, was enacted to relieve the federal government from funding parts of Medicare. The Medicare Modernization Act was passed in 2003, overhauling Medicare and creating the Part D prescription-drug benefit.

Part A

• Part A is the inpatient hospital benefit offered by Medicare. For most Medicare recipients, the monthly Part A premium is free, as long as they've worked at least 10 years in the United States. Part A covers 90 days of a hospital stay every benefit period, which includes meals, medication, a semiprivate room, and any services or supplies needed. Part A also covers skilled-nursing facility stays, home health care and hospice care.

Part B

• Part B covers services that patients receive in a doctor's office or any services done on an outpatient basis, including skilled therapies. Some of the coverage includes laboratory tests, chiropractic services (in limited cases), mental health care and covered preventive care. In addition to doctors' services, Part B also covers durable medical equipment (wheelchairs, oxygen equipment, for example), 3 pints of blood and some prescription drugs. Unlike Part A, Part B is not free and has a monthly premium. Consumers can also expect a 20 percent coinsurance payment for most services (45 percent for mental health services).

Part C

• Part C is not an additional benefit. Rather, it is the name of the Medicare law that gives Medicare recipients the option to receive their benefits through a Medicare private plan called a Medicare Advantage plan. Medicare Advantage plans are required to cover everything that traditional Medicare covers. However, they usually offer their benefits at a higher cost and with different rules, though the plans themselves must follow Medicare rules as well.

Part D

• Medicare offers an optional prescription-drug program known as Part D. This coverage is offered through private insurance companies. Those with traditional Medicare can purchase a stand-alone Part D plan, while Medicare Advantage plans typically are all-inclusive and have a Part D plan packaged in.