Here you’ll learn about:

• Original Medicare
• Medicare Part A and Medicare Part B
• What Medicare doesn’t cover

Medicare is a federal program that began in 1965 to provide health insurance for older Americans. Today, Medicare is the nation’s largest health insurance program, covering more than 44 million people age 65 or older and those with certain disabilities.

Medicare has traditionally provided coverage for health care services such as hospital stays, skilled nursing care, and doctor’s visits. As a result of the Medicare Prescription Drug, Improvement and Modernization Act of 2003, Medicare also provides prescription drug coverage and additional health plan options. The Centers for Medicare & Medicaid Services (CMS) is the administrator of Original Medicare.

Original Medicare

Original Medicare has two parts — Medicare Part A and Medicare Part B. Medicare Part A helps pay for inpatient care in hospitals and skilled nursing facilities. Part A is available to most people who are eligible for Medicare at no cost. Medicare Part B helps pay for doctor visits, physician services, lab tests, durable medical equipment and outpatient hospital treatment. Part B is available to most people who are eligible for Medicare for a monthly premium.

You can enroll in Original Medicare up to three months before you reach age 65. You do not have to be retired to enroll in Original Medicare and you do not have to be receiving your Social Security benefits. The Social Security Administration automatically enrolls most people in Original Medicare when they request Social Security benefits. Learn more about enrolling.

Part A: Hospital Insurance

Medicare Part A pays for inpatient hospital stays, skilled nursing facility care and hospice care after you pay deductibles and coinsurance.

Hospital services

Part A provides coverage for a semiprivate room, meals and eligible care and services for up to 90 days per benefit period. For each benefit period:

• You pay a deductible of $1,100 in 2010
• For the first 60 days, eligible charges are covered in full (after you pay the deductible)
• For days 61 through 90, you pay $275 per day in 2010
• For your additional 60 lifetime reserve days, you pay $550 per day in 2010
• You pay any charges not covered by Medicare

Skilled nursing facility care

Part A covers up to 100 days for eligible care and services in a Medicare-certified skilled nursing facility after a hospital stay of at least three covered days. For each benefit period:

• For the first 20 days, eligible charges are covered in full
• For days 21 through 100, you pay $137.50 per day in 2010

Hospice care

Terminally ill patients may receive drugs for symptom control and pain relief, short-term respite care and home health services. Care must be provided by a Medicare-certified hospice program. Eligible hospice services are paid in full by Medicare.

Part B: Medical Insurance

Medicare Part B covers doctors’ services, outpatient hospital care, durable medical equipment, and some medical services and supplies not covered by Medicare Part A.

What you pay for Part B

• A monthly Part B premium of $96.40 to $353.60 in 2010 (determined by income and your eligibility date)
• An annual Part B deductible of $155 in 2010
• After your annual deductible, you pay 20 percent (Medicare pays 80 percent) of most Medicare-approved charges for eligible services and supplies

Services eligible for Part B coverage

• Doctors’ services, including hospital, clinic, office or home visits; surgery; osteopathy; and radiology
• Diagnostic X-rays, laboratory tests, radiation therapy and certain other procedures that are part of your treatment but are not covered under Part A
• Medical supplies and services, including surgical dressings; splints, casts and other devices; oxygen, ventilator-assist devices and durable medical equipment used in your home; prosthetic devices; and portable X-ray services
• Outpatient diagnostic or treatment services provided by certified hospitals, skilled nursing facilities, home health care facilities or rehabilitation facilities; and ambulance transportation
• Ambulatory surgical center services, including coverage for services furnished in connection with certain procedures performed at a Medicare-certified ambulatory surgical center
• Comprehensive outpatient rehabilitation facility services, including coverage of certain services furnished by a certified comprehensive outpatient rehabilitation facility
• Unlimited visits for home health care are paid at 100 percent when ordered by a doctor and provided by a nurse and/or therapist from a Medicare-certified home health care agency
• Some preventive care services including:

*After you have met the Part B deductible, you pay 20 percent of the Medicare-approved amounts for one physical exam within the first 12 months of your new Part B coverage.

What Original Medicare doesn’t cover

Original Medicare doesn’t cover all medical costs. As described above, there are deductibles, copayments and coinsurance you must pay when you receive health care services. Original Medicare also does not cover annual routine physicals, routine eye and hearing exams and most outpatient prescription drugs.

Your options

Your out-of-pocket expenses (the costs you pay) for these “coverage gaps” can add up quickly. Fortunately, people can enroll in private health plan options to help cover costs and services that Original Medicare does not cover. Some of these plan options include:

• Medigap plans
• Medicare Cost plans
• Prescription drug plans
• Medicare Advantage plans