How Medicare Works
By Stephanie Miles, Caring.com senior editor
Medicare is the government’s contract to provide healthcare insurance coverage for Americans over the age of 65. But, as with all contracts, it’s always smart to read the fine print.
Medicare pays for about half of all medical costs for older Americans, including hospitalization, doctors, some nursing care, some prescription drug costs, and medical equipment and supplies. But there’s much that Medicare doesn’t cover, as well as an alphabet soup of coverages, premiums, deductibles, and eligibility requirements that can be difficult to navigate — especially for someone facing a health crisis.
Here are the basics everyone should know about Medicare, and where to look for more information if you need it:
What is Medicare?
Medicare consists of four categories:
Part A covers hospitalization, some skilled nursing facility and home health care, and hospice.
Part B covers doctors’ services and outpatient care such as X-rays, laboratory work, some home health care, physical and occupational therapy, and some preventive screening.
Then there’s Part C, also known as Medicare Advantage, which is Medicare received through a private managed care system such as an HMO (health maintenance organization) or PPO (preferred provider organization). When someone enrolls in a Medicare Advantage plan, they receive all the benefits of Medicare Parts A and B, as well as some additional coverage provided by the private plan. As with other managed care, however, Medicare Advantage plans limit where and how their members may receive care.
Finally, there’s Medicare Part D, which consists of private insurance plans that partially cover prescription drug costs.