What is Medicare?

Medicare is a federal government program that helps older folks and some disabled people pay their medical bills and drug prescription costs. The program is divided into three parts: Part A, Part B, and Part D. Part A is called hospital insurance and covers most hospital stay costs, as well as some follow-up costs. Part B, medical insurance, pays some doctor and outpatient medical care costs. Part D covers some prescription drug costs.

Who is eligible for Medicare Part A coverage?

Anyone age 65 or over is eligible for Medicare. Most people age 65 and over are covered under Medicare Part A for free, based on their work records or on their spouse's work records.

People over 65 who are not eligible for free Medicare Part A coverage can enroll in it and pay a monthly fee for the same coverage. The premium base rate depends on the number of work credits you've earned. However, this rate increases by 10% for each year after your 65th birthday that you wait to enroll. If you enroll in paid Part A hospital insurance, you must also enroll in Part B medical insurance, for which you pay an additional monthly premium.

How much of my bill will Medicare Part A pay?

All rules about how much Medicare Part A pays depend on how many days of inpatient care you have during what is called a "benefit period," or spell of illness. The benefit period begins the day you enter the hospital or skilled nursing facility as an inpatient and continues until you have been out for 60 consecutive days. If you are in and out of the hospital or nursing facility several times but have not stayed out completely for 60 consecutive days, all of your inpatient bills for that time will be figured as part of the same benefit period.

Medicare Part A pays only certain amounts of a hospital bill for any one benefit period -- and the rules are slightly different depending on whether the care facility is a hospital, psychiatric hospital, or skilled nursing facility or whether care is received at home or through a hospice.

All people covered by Medicare Part A must pay an initial amount before Medicare will pay anything. This is called the hospital insurance deductible. The deductible is increased every January 1.

For gaps in what Medicare Part A covers, including deductibles and co-insurance amounts, see Medigap: Covering the Gaps in Medicare.

Who is eligible for Medicare Part B coverage?

The rules of eligibility for Part B medical insurance are simpler than for Part A: If you are age 65 or over and are either a U.S. citizen or a permanent resident who has been here lawfully for five consecutive years, you are eligible to enroll in Medicare Part B medical insurance. This is true whether or not you are eligible for Part A hospital insurance.

What kinds of costs does Medicare Part B cover?

Part B medical insurance is intended to help pay doctor bills for treatment in or out of the hospital. It also covers many medical expenses you incur when you are not in the hospital, such as the costs of necessary medical equipment and tests and services provided by clinics and laboratories.

The lists of services specifically covered and not covered are long, and do not always make a lot of common sense, but making the effort to learn what is and is not covered can be important. You may get the most benefits by fitting your medical treatments into the covered categories whenever possible.

Part B insurance pays for:

• doctor services (including surgery) provided at a hospital, a doctor's office, or your home
• mammograms, pelvic exams, bone density tests, and PAP smears for women
• an annual flu shot
• a one-time physical exam (called a "wellness exam") done within six months of when you enroll in Medicare Part B
• medical services provided by nurses, surgical assistants, or laboratory or X-ray technicians
• outpatient hospital treatment, such as emergency room or clinic charges, X-rays, injections, and lab work
• an ambulance, if required for a trip to or from a hospital or skilled nursing facility
• drugs or other medicine administered to you at a hospital or doctor's office (for prescription drug benefits, consider enrolling in Medicare Part D, discussed below)
• medical equipment and supplies, such as splints, casts, prosthetic devices, body braces, heart pacemakers, corrective lenses after a cataract operation, glucose monitoring equipment, and therapeutic shoes for diabetics, and equipment such as ventilators, wheelchairs, and hospital beds
• some kinds of oral surgery
• some of the cost of outpatient physical and speech therapy
• a limited number of services by podiatrists and optometrists
• some care and counseling by psychologists, social workers, and daycare personnel
• some preventative screening exams, such as for cancer, glaucoma, and osteoporosis; as well as diabetes and heart disease, but only if your doctor says you're at risk for them
• manual manipulation of out-of-place vertebrae by a chiropractor
• Alzheimer's-related treatments
• scientifically proven obesity therapies and treatments, and
• part-time skilled nursing care, physical therapy, and speech therapy provided in your home.