fbpx

Medicare Basics to Know

medicare basics

Medicare Part A and Part B

President Lyndon B. Johnson signed Medicare into law in 1965. Medicare is a federal program that provides health coverage for Americans aged 65 and older.

The original program included Part A (Hospital Insurance) and Part B (Medical Insurance). Today these 2 parts are called “Original Medicare.

Over the years, congress has expanded coverage to people younger than 65 with permanent disabilities. Examples include people with end-stage renal disease (ESRD) or amyotrophic lateral sclerosis (ALS).

Medicare Part C and Part D

In 2003, the Medicare Prescription Drug Improvement and Modernization Act (MMA) was introduced. This enabled private health plans that were approved by Medicare to be known as Medicare Advantage Plans. These “MA Plans” plans are sometimes called “Part C” of Medicare.

Then in 2006, MMA expanded again to include an optional prescription drug benefit, “Part D”.

Who Administers Medicare?

Medicare is administered by the Centers for Medicare and Medicaid Services (CMS). CMS also administers the Children’s Health Insurance Program (CHIP) and the Affordable Care Act (ACA).

Funding the Program

Funding for Medicare is handled differently for each part. 

Part A (Hospital Insurance) is funded through the Hospital Insurance (HI) Trust Fund primarily by payroll taxes. 

Part B (Medical Insurance) is funded through the Supplementary Medical Insurance (SMI) Trust Fund from the premiums paid by beneficiaries along with federal and state tax revenue. 

Part C (Medicare Advantage) is funded by the premiums that beneficiaries pay for Medicare Advantage health care plans along with federal revenue.

Part D (Prescription Drug Plan) is funded through the SMI Trust Fund from federal/state revenues and the premiums paid by beneficiaries.

Medicare by the Numbers

  • 67.7 Million Americans are currently covered by Medicare
  • Projected enrollment by 2060 is 93.8 Million
  • 24 Million people enrolled in Medicare Advantage plans
  • 6072 Medicare hospitals in the US in 2018
  • $796 Billion in Medicare spending in 2019
  • RX drug spending in 2018 was $107 Billion

Finishing up

This is just a brief article on the basics of Medicare. Please stay tuned for additional articles on Medicare, Medicaid and Prescription Drug plan information.

If you have specific questions please contact us anytime.