Medicare is federal health insurance program for Americans who are 65 and older, younger people with certain disabilities and people with end stage renal disease (permanent kidney failure that needs transplant or dialysis). Medicare, began in 1966 under Social Security Administration, currently covers over 58.5 million people. Medicare is not free and often referred to as an entitlement program. Most beneficiaries pay premiums, deductibles and coinsurance or copays for "parts" of their health care. In addition to the beneficiary premiums and taxes it is also funded by payroll tax and general U.S. treasury revenue.

Medicare covers health care expenses for elderly Americans. It also covers Americans with certain disabilities and serious diseases. The program is now carried on by the Centers for Medicare and Medicaid Services (CMS) and funded by two trusts — the Hospital Insurance (HI) Trust Fund and Supplementary Medical Insurance (SMI) Trust Fund — held and maintained by the U.S. Treasury. Medicare was created in 1966 to help elderly Americans pay for health care because during those times, U.S. residents relied almost solely on employers for coverage. These days, there are alternatives available such as Medicare and Medicaid. Americans can purchase health insurance every year on the federal and state exchanges created by former President Barack Obama’s health care law. Low-income residents are eligible for Medicaid all year round.

Medicare has four different parts. Each Part covers specific services

• Medicare Part A is hospital insurance which covers inpatient (hospital) care with room, food and tests, care in skilled nursing facility and hospice and home health care. Part A recipients don’t pay a premium, but there is a deductible and copay for hospital stays.
• Medicare Part B is medical insurance which covers outpatient (physician) care, clinical lab services, preventive care, home health care, medical supplies, physical and occupational therapy. Part A and part B together form Original Medicare. Recipients pay a monthly premium between $134 and $429, depending on income and tax filing status.
• Medicare Part C is an addition to Original Medicare. It is commonly referred to as Medicare Advantage. Participants get all of the same Medicare benefits as Part A and Part B, but coverage is provided by private health insurers approved by the program. Some recipients opt for one of these plans to upgrade coverage or lower out-of-pocket expenses. You have to enroll in Original Medicare to sign up for a Medicare Advantage plan
• Medicare Part D is prescription drug coverage, helps lower the cost of prescription drugs and shields against future cost increase. You can get coverage via a standalone Medicare Prescription Drug Plan or as part of a Medicare Advantage plan. Costs vary by insurer. Medicare rates all participating prescription drug plans on a scale of 1 to 5. The higher the number, the higher the plan’s quality.

To qualify for Medicare Part A and Part B, you should fulfill at least one of the following criteria

• If you are 65 or above and are a legal resident of United States for at least 5 continuous years.
• Anyone who is under 65 and is permanently disabled can qualify for Medicare if he is receiving Social Security Disability Insurance or SSDI for at least 2 years.
• Anyone with terminal kidney failure or Lou Gehrig’s disease is also eligible for the federal program.
• You are eligible for a premium free Medicare if
• If you are 65 or above and you or your spouse have paid Medicare taxes for at least 10 years while you worked.
• If you are eligible to receive retirement benefits from Social security or RailRoad Retirement Board.
• If you or your spouse were government employees with Medicare coverage.
• You will have to pay a monthly premium for Medicare if you or your spouse have not paid Medicare payroll taxes.

Most people get Medicare Part A premium-free, but are responsible for paying a deductible of $1,340 each benefit period. (Benefit period is the time you’re admitted to a hospital till you’ve been out for 60 days). Copayments vary, depending on the amount of time you’ve spent in the hospital, but they end after 150 days. Everyone pays a premium for Medicare Part B. The amount depends on your income, but the standard rate is $134 a month. There’s a $183 deductible per year, and 20% copay. The cost of Medicare Advantage and Medicare Part D varies by plan.

Medicare at a glance

You’ll get automatically enrolled in Original Medicare if you’re 65 and getting Social Security or Railroad Retirement Board benefits. You will receive your cards in the mail three months prior to your 65th birthday.

You’ll need to enroll if you’re 65 and not getting Social Security or Railroad Retirement Board benefits. Everyone gets a 7-month initial enrollment period which starts three months before you turn 65 and ends three months after your 65th birthday. Coverage starts on July 1 of the year you enroll.

You can apply for Medicare by

• Visiting your local Social Security office
• Calling Medicare at 1-800-772-1213.
• Online at government’s social security portal

You don’t need to re-apply for Medicare each year. You can easily review and change coverage each open enrollment period, which is from October 15 to December 7. Plans changeover on January 1.

Medicare has two major aspects the original Medicare which consists of Part A and Part B together and Medicare Advantage which is Part C. It provides additional coverage given by private health insurers. There are many types of Medicare Advantage Plans

• Health Maintenance Organization (HMO) – It is a low cost plan where you have to select a doctor from the plan’s network of service provider. Referral is needed to see a specialist.
• Preferred Provider Organization (PPO) – It is a higher cost plan where you can see any doctor outside the network but consulting a doctor within network will cost less. No referral is needed to see a specialist.
• Special Needs Plans (SNPs) – These plans are tailor made to meet the specific needs of a consumer.
• HMO Point-Of-Service (HMO POS) – It combines the features of HMO and PPO plans as it allows you to visit a out of network doctor at a high out of pocket cost.
• Medical Savings Account (MSA) – It is a high deductible health plan combined with your bank account. Medicare deposits a certain amount in your bank account every year which you can use for your medical expenses.

Medigap is Medicare supplement insurance. It’s offered by private insurers and helps cover expenses that are not covered in Medicare like out-of-pocket expenses incurred(your premiums, copays and deductibles). Medigap plans do not cover any costs associated with Medicare Part C and Medicare Part D.

Medicare is federal health insurance for senior citizens. It is not the same as Medicaid, which is a jointly-funded state and federal health insurance program for needy, low-income Americans. Because Medicaid is partially funded by the states, eligibility requirements — and covered services — vary across states. There is also a difference between the services covered and cost sharing in both the programs.

Low-income Medicare beneficiaries can get help paying out-of-pocket expenses associated with the federal health insurance Program under Medicare Savings Programs which provide assistance with Medicare Part A premiums, Medicare Part B premiums, deductibles, copays and/or coinsurance. Eligibility for a Medicare Savings program depends on income and assets. Specific requirements can vary across state and, in fact, you must check through your state's Medicaid office to see if you qualify for one of the four available programs. Medicare beneficiaries who do meet the requirements are considered "dual-eligible" for Medicare and Medicaid with Medicaid considered the payer of last resort. Low-income Medicare beneficiaries can also apply for Extra Help, a program that helps pay Medicare Part D prescription drug costs. You can apply for this program through the Social Security Administration's website.