Who Uses Medicare?

Who uses Medicare?

The Medicare program was created in 1965 to provide health coverage to people 65 and older, as well as younger adults with disabilities or end-stage renal disease. It is comprised of Original Medicare (Parts A & B), Medicare Advantage (Part C) and Part D prescription drug coverage.

Coverage gaps

Medicare covers only about 80% of the cost of medical services, so many beneficiaries buy supplemental insurance to fill in the remaining 20%, often called Medigap policies. Supplemental plans are sold by private insurers and can fully or partially cover Medicare’s deductibles, copayments, and coinsurance for Part A and Part B benefits.

Funding

Traditional Medicare is financed by a 2.9 percent payroll tax on earnings paid by employers and employees (1.45% each). Higher-income taxpayers (income greater than $200,000 per individual or $250,000 per married couple) pay a higher payroll tax on earnings, which accounted for 90% of Part A revenue in 2021.

Coverage denials

In 2021, more than 13 percent of beneficiaries with find info on Medicare Part B Advantage plans were denied coverage for a health care service, such as an MRI or blood draw. A government report found that 18 percent of those denials were improper and should have been covered.

Cost sharing

Medicare’s cost-sharing requirements – including deductibles and copayments – are high, so some beneficiaries opt for supplemental coverage that limits their out-of-pocket costs for in-network Medicare benefits. These supplemental plans are usually sold by private insurance companies and are known as Medigap policies.