Benefits Highlights

What is Medicare?

Medicare is our country’s health insurance program for people age 65 or older, certain people with disabilities who are under age 65 and people of any age who have permanent kidney failure. It provides basic protection against the cost of health care, but it doesn’t cover all medical expenses or the cost of most long-term care. The Medicare program is financed by a portion of the Federal Insurance Contributions Act (FICA) taxes paid by workers and their employers. It also is financed in part by monthly premiums paid by beneficiaries. The Center for Medicare and Medicaid Services or CMS (formerly the Health Care Financing Administration or HCFA) is the federal agency in charge of the Medicare program. However, the Social Security Administration determines who is eligible for Medicare, enrolls people in the program, and disseminates general Medicare information.

There are two parts of Medicare. Medicare “Part A” which is also known as Hospital Insurance or HI helps pay for care in a hospital and skilled nursing facility, home health care and hospice care. Medicare “Part B” which is also known as supplemental medical insurance or SMI helps pay for doctors, outpatient hospital care and other medical services. Anyone who is eligible for premium free Medicare hospital insurance (Part A) can also enroll in Medicare medical insurance (Part B) by paying a monthly premium.

In addition to the monthly premiums, there are other “out-of-pocket” costs for Medicare. These are the amounts a person pays when medical services are actually received, known as “deductibles” and “coinsurance payments”. The monthly premiums, deductibles and coinsurance for Medicare change each year. The current Medicare charges can be found at The Official U.S. Government Site for People with Medicare website or by calling the Medicare toll free number at 1-800-633-4227.

For more information you may want to review the VCU-BARC Briefing Paper: Understanding Medicare, Vol. 1, Number 2. July, 2003.