Medicare is a medical insurance benefit for Americans 65 years of age or older, but it also provides coverage for those with severe disabilities, ALS (Lou Gehrig’s disease), and ESRD (end-stage kidney disease) at any age. The premiums for what is known as Part A are paid throughout the insured’s working career, with Part B available as a supplement at low cost.
Once you’re over 65, this becomes your medical insurance unless you’re still on an employer’s plan. Medicare provides coverage for in-patient procedures and short stays in the hospital, as well as hospice care and a few other small benefits for home health care. That is just for Part A—the “free” portion of Medicare people pay into over their working lives as part of their FICA taxes.
People are also automatically enrolled in Part B unless they choose to Opt-out, but this coverage has monthly premiums that have historically increased slightly year-to-year, with premiums based on the household’s taxable income. The benefits include hospital stays, physician’s visits, blood-work, most of the cost of durable medical equipment, and home healthcare expenses for a short duration each year.
Most people also pick up “Medigap” plans from private insurance companies, which cover some of the expenses that are not covered by Medicare. People also frequently get Part D prescription plans.
There are also Medicare Advantage plans from private insurers, but these have higher deductibles and out-of-pocket expenses. Medical expenses are among the largest expenses incurred by retirees as they get older, as medical care, procedures, and medications are needed more and more frequently the older people get.
A large reason Medicare was instituted was to force Americans to pay into insurance coverage for their care in old age, because otherwise the number of bankrupt and state-dependent elderly would be exponentially higher than it is today.
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