What Is the Purpose of Medicare?
Not to be confused with Medicaid, Medicare is a federally funded health care program that provides basic medical insurance to qualified residents. Providing coverage for approximately 40 million individuals nationwide, Medicare has become America's leading health care insurance program. Yet despite the number of recipients, many U.S. citizens are unfamiliar with the program. To fully understand how Medicare works, you should first consider the program's history and the purpose of Medicare in general.
History
After 20 years of debate, the Medicare program was created in 1965 by President Lyndon Johnson. An amendment to the Social Security program, which provides retirement benefits to U.S. residents, the idea for Medicare spawned from a desire for a national health care plan. Despite harsh criticism about socialized medicine, Johnson believed it was the government's duty to provide medical insurance to its elderly residents. As a result, the Medicare program was signed into effect, offering residents 65 and older more affordable health care options.
Types
When originally developed, the Medicare program consisted of two parts: Part A and Part B. Today, however, the program has expanded to include two additional types of policies known as Part C and Part D Medicare. Also called hospital insurance, Part A Medicare covers all hospital expenses such as diagnostic tests, doctors' fees, inpatient stays and meals. The Part B plan then offers standard medical coverage for expenses such as outpatient surgery, medical equipment and primary care. Meanwhile, the Part C plan allows users to choose between an HMO or PPO plan to customize an insurance policy that fits their needs. And for prescriptions, the Part D plan uses private insurance companies to help recipients pay for their medications.
Eligibility
To receive Medicare benefits, an individual must have lived in the United States for five continuous years and be a permanent resident of the country. In addition, qualified recipients must be at least 65 years old or have a permanent disability. For an individual to be considered permanently disabled, he or she must be entitled to receive Social Security benefits and must have received those benefits for at least two years. In addition, any person suffering from end-stage kidney disease who requires dialysis or a kidney transplant is also eligible for Medicare benefits.
Process
To receive any type of Medicare benefits, individuals must apply through their local Social Security office. The only exception to this rule applies to those receiving Social Security benefits, as they are automatically enrolled when they turn 65. All others, however, must submit an application for coverage during the open enrollment period, which begins three months before the applicant's birthday and ends seven months afterward. Once approved, the recipient is enrolled in Part A and Part B Medicare, then has the option to add Part C or Part D insurance to her plan.
Misconceptions
Despite what many people believe, Medicare is not a free health care program. In fact, the majority of the program's costs are paid by U.S. citizens. Known as the Federal Insurance Contributions Act, or FICA, the 2.9 percent payroll tax is automatically deducted from every working citizen's paycheck and used to fund the Medicare program. This money, in turn, pays for the doctors, hospitals and private insurance companies that Medicare recipients use. Overall, the program accounts for approximately 13 percent of the federal budget, with an estimated annual cost of $277 billion.
Tags: health care, Medicare program, Part Part, Social Security, Medicare benefits, Part Medicare, Part plan
