Understanding Medicare

How Medicare Works

Original Medicare is the traditional fee-for-service program offered directly through the federal government. It is sometimes called Traditional Medicare or Fee-for-Service Medicare. Medicare was signed into law by President Johnson on July 30,1965 in Independence, MO, but beneficiaries were first able to sign-up for the program on July 1, 1966.

Under Original Medicare, the government pays directly for the health care services you receive. You can see any doctor and hospital that takes Original Medicare (and most do) anywhere in the country. Medicare Part A and B have premiums that Centers of Medicare Service (CMS) will inform you of your cost. Part A generally has a $0 cost, but some do pay. If you are a higher income earner you may pay more premium for your Part B and Part D. In Original Medicare:

• You go directly to the doctor or hospital when you think you need care. You do not need to get prior permission/authorization from Medicare or your primary care doctor.

• You typically pay a coinsurance for each service you receive.

• There are limits on the amounts doctors and hospitals can charge for your care.

• Original Medicare includes:

  Part A (Inpatient/Hospital coverage)

  Part B (Outpatient/Medical coverage)

Medicare Supplements or Medigap plans are available to fill these all or some of the holes in original Medicare.

If you want Medicare prescription drug coverage (Part D) with Original Medicare, in most cases you will need to actively choose and join a stand-alone Medicare private drug plan (PDP).

Unless you choose otherwise, you will have Original Medicare. Instead of Original Medicare, you can decide to get your Medicare benefits from a Medicare Advantage Plan (Part C), also called a Medicare private health plan. Remember, you still have Medicare if you enroll in a Medicare Advantage Plan. This means that you must still pay your monthly Part B premium (and your Part A premium, if you have one). Each Medicare Advantage Plan must provide all Part A and Part B services covered by Original Medicare, but can do so with different rules, costs, and restrictions that can affect how and when you receive care.