Health care tends to take up a larger and larger part of your monthly budget as you get older. According to a survey by the Department of Health and Human Services, people over 65 spend, on average, more than $12,000 on health care every year. The federal government offers several programs to help you stay healthy and manage your costs.
Navigating the different programs isn’t easy. Here we break down how the main health care benefit programs work and how you can use them to your advantage.
Medicare
Medicare is the government health insurance program for people over 65. Some 67 million people have coverage through Medicare.
Who qualifies
Everyone age 65 or older is eligible. You may also qualify if you’re younger than 65 and have kidney failure or ALS, or if you get Social Security disability benefits.
What it covers
You have a choice between original Medicare and health plans offered through private companies known as Medicare Advantage Plans. Medicare has several parts:
Part A covers hospital stays, skilled nursing, hospice, and home health care services (in certain situations).
Part B covers doctor visits, preventive care, outpatient treatment, medical equipment, and home health care (in certain situations).
Part C (Medicare Advantage) includes the benefits of original Medicare and sometimes extras like vision and dental care.
Part D covers prescription drug costs.
Costs
What you pay out of pocket is different depending on your plan. With original Medicare, there’s no yearly limit on what you spend, and the price of premiums and deductibles is set each year.
You won’t pay a premium for Part A coverage as long as you, your spouse, or your former spouse worked and paid into Medicare for at least 10 years. You pay a deductible for each hospital stay, plus a daily charge if a stay lasts longer than a set number of days.
For Part B coverage, you pay a monthly premium based on your income. You have a yearly deductible and pay 20% of the cost of most covered services.
Part D prescription drug coverage is a separate, optional policy, with different costs depending on your income and the plan you choose. There’s a limit on your out-of-pocket costs for prescription drugs, after which they’re completely covered.
With Medicare Advantage (Part C), the different plans set their premiums, deductibles, and coinsurance rates. These do have a limit on what you pay out of pocket every year, and most include prescription drugs.
If you choose original Medicare, you can add a separate policy that helps cover your out-of-pocket costs. This is called Medicare Supplement Insurance, or Medigap. These plans are offered by private insurance companies and have different benefits and premiums.
How to apply
You sign up for Medicare Part A and Part B through the Social Security Administration, which confirms whether you qualify. You can do that online or over the phone. Then you decide whether you want original Medicare or a Medicare Advantage Plan.
You can get information about and enroll in Medicare Advantage, prescription drug, and Medigap policies on the Medicare website. Medicare plans renew automatically as long as you pay your premiums, but you have a chance to change your coverage or switch providers once a year or if you have certain life changes.
Most people sign up for Medicare around the time they turn 65, during a seven-month window called the initial enrollment period. If you miss this window, you’ll have to wait for certain coverage and may pay a penalty.
There are exceptions, though. For example:
- If you receive Social Security disability benefits, you’re automatically enrolled in Medicare after two years or when you turn 65. Coverage starts immediately if you become disabled because of ALS.
- You can apply for Medicare at any age if you have end-stage kidney disease.
- If you or your spouse is still working and you have insurance through your job, you can keep that coverage and wait to sign up for Medicare until after you retire.
- If you’ve been enrolled in Medicaid but lose that coverage, you have six months to get signed up for Medicare.
To apply, you’ll need:
- Your Social Security number
- The city, state, and country where you were born
- Information about the health insurance you have now
- An email address
Section Summary
- Medicare is the federal government insurance program open to people over age 65.
- It covers hospital care, doctor visits, preventive care, medical equipment, and much more. You can choose a separate policy for prescription drugs.
- Costs vary depending on whether you choose original Medicare or a Medicare Advantage Plan from a private insurance company.
Medicaid
Medicaid is government insurance for people with low incomes. The federal government sets minimum standards and pays half or more of the costs. But the states run these programs and make their own rules about who qualifies and what benefits they’ll offer.
Who qualifies
Each state has its own income cutoffs that determine who’s eligible. They all include at least:
- People 65 and over who receive Supplemental Security Income
- Disabled people who receive Supplemental Security Income
- Pregnant people with a family income below 138% of the federal poverty line
- Parents and caretakers with very low incomes
- Children with a family income below 138% of the federal poverty line
Some states have more generous guidelines. For example, you may be covered if you’re a senior whose income is low, but not so low that you qualify for SSI benefits, or if you have very high medical expenses.
What it covers
States make their own rules about coverage, but the federal government requires them to offer certain benefits, among them:
- Doctor visits
- Services at a hospital (inpatient or outpatient), federally qualified health center, or rural health clinic
- Lab tests and X-rays
- Nursing home care
- Home health services
- Transportation to medical appointments
Depending on the state you live in, you might have many other services covered, such as physical therapy, vision and dental care, and personal care.
Difference between Medicaid and Medicare
The main differences between Medicare and Medicaid are in who runs the programs, who benefits, and what’s covered.
- Medicare is mainly for seniors and disabled people while Medicaid is for people with financial need.
- The federal government runs Medicare, while Medicaid is a partnership between the federal government and the states.
- Medicaid covers skilled nursing care as long as you need it, while Medicare pays for no more than 100 days. Many states also offer Medicaid benefits for other types of long-term care and home- or community-based services designed to help you live independently as long as possible.
Some low-income seniors qualify for both Medicare and Medicaid. This is called dual eligibility. In that case, Medicaid helps you pay for out-of-pocket costs that Medicare doesn’t.
How to apply
You apply for Medicaid through the agency in your state that manages the program. Medicaid.gov has links and contact information. You can also fill out an application for Marketplace health insurance at healthcare.gov. They’ll have your state get in touch with you if you qualify.
To apply, you’ll need:
- Your social security number
- Your date of birth
- Information about your income and assets
- Information about your monthly expenses, like housing and utilities
- Information about any government benefits you receive
- Proof of citizenship or immigration status
- Proof of disability, if you have one
Your state will check at least every year to be sure you still qualify.
Section Summary
- Medicaid is a government insurance program mainly for people with low incomes and disabilities.
- States manage their programs, and the federal and state governments share the costs.
- It covers some services that Medicare doesn’t, including long-term nursing care.
Affordable Care Act (ACA)
While it isn’t an insurance program, this law changed many things about how health insurance works in the United States. Its goal was to increase the number of people who have health insurance.
The ACA:
- Ensures everyone can get coverage, even if you have a preexisting condition
- Allows young people to stay on their parents’ insurance plans until they turn 26
- Does away with both yearly and lifetime caps on what insurance companies pay for your care
- Limits how much you pay out of pocket every year
- Makes many kinds of preventive care free for you
- Encourages states to qualify more people for Medicaid
Marketplace plans
The law also set up a place for people to buy health insurance where they can be sure all plans meet the requirements of the ACA. They’re called health insurance marketplaces or exchanges. The federal government runs the largest exchange, and many states run their own.
Marketplace plans must cover:
- Emergency care
- Hospital services, both outpatient and overnight stays
- Prescription drugs
- Lab tests
- Preventive care
- Mental health treatment
- Pregnancy and childbirth
- Physical, occupational, and speech therapy
- Assistive devices
- Pediatric care
Insurance companies that offer these plans set their premiums, deductibles, and other out-of-pocket costs, and can put limits on their coverage. You can compare plan options on the different marketplaces.
Subsidies and income limits
Another way the ACA tries to boost health insurance enrollment is by lowering the cost. That’s done through tax credits. When you apply for a marketplace plan, you estimate how much money you’ll make in the coming year. Depending on your income, you pay a lower premium every month. You settle up at tax time – either getting a larger refund if you guessed too high or paying the IRS if you guessed too low.
In general, people with incomes between 100%-400% of the federal poverty level qualify for a credit. If your income is 100%-250% of the federal poverty level, you may also qualify for lower deductibles and copays on certain plans.
How older adults can benefit
Most people who are old enough to qualify for Medicare aren’t allowed to get an insurance plan through the marketplace. The exception is people who have to pay a premium for Medicare Part A. In that case, you can stay on a marketplace plan, but you may end up paying more in the long run because of late-enrollment penalties with Medicare.
You can, however, benefit from other changes that the ACA brought about. People with Medicare can now get many different preventive care services at no cost, including an annual wellness visit and many cancer and other screenings.
To apply, you’ll need information about you and everyone in your household, including:
- Social security numbers
- Birth dates
- Income
- Information about insurance you already have or that you qualify for through your job
Section Summary
- The Affordable Care Act ensures everyone can get health insurance and lowers costs.
- You can shop and apply for a plan on a marketplace run by the federal government or your state.
- Depending on your income, you’ll get a tax credit that lowers your monthly premium.
Other Plans to Know
Several other federal programs benefit smaller groups of people.
Veterans Affairs benefits. If you served on active duty in the military, you may qualify for health care benefits through the Department of Veterans Affairs. Government funding for VA health care is limited, so priority is given to people with a service-related disability or a low income.
Tricare. Tricare is a health insurance program run by the Department of Defense. It has several different plans that cover active duty military members, members of the National Guard and Reserves, and retired servicemembers, plus their families.
If you have Medicare, you may qualify for a plan called Tricare for Life, which is similar to a Medicare Supplement policy and helps pay for health care costs Medicare doesn’t cover.
PACE (Programs of All-Inclusive Care for the Elderly). Most states participate in the Medicare and Medicaid program that supports people who qualify for nursing home care but would rather live at home. A team of doctors and social workers coordinates your care and any payments you have to make. Those are rolled into a monthly fee you pay for the program, which, depending on your financial situation, could be nothing.
PACE programs include all Medicare and Medicaid benefits, and usually also offer things like adult day care, meals, and social services.
Indian Health Service. If you’re a member of a federally recognized Native American or Alaska Native tribe, you can get care at health centers and hospitals that are part of this program.
Where to Find Help
Federal health care programs can have a lot of details, and some things change each year. But if you stay informed and keep track of deadlines, you can save money and make sure you don’t miss out on coverage.
Here are some places you can go to get information and advice:
Medicare.gov. Run by the Centers for Medicare and Medicaid Services, this is the main website for the Medicare program. You’ll find detailed information about benefits and costs, and links you can follow to sign up for original Medicare and shop for Medicare Advantage, prescription drug, and Medicare supplement policies. You can also connect with a representative to answer your questions by phone or through an online chat.
Medicaid.gov. This website is also run by the Centers for Medicare and Medicaid Services and has information about the Medicaid program, plus links to your state program.
Healthcare.gov. The federal government runs this website to help you find health insurance under the ACA. It explains how the Health Insurance Marketplace works and allows you to sign up for a plan. If your state runs its own marketplace, it directs you there.
You can also follow links to get connected to someone who can help you understand the program and your options, or to an agent who can sell you a plan.
SHIPhelp.org. State Health Insurance Assistance Programs (SHIPs) help you navigate Medicare benefits. They have counselors who can explain how the program works and give you information to help you decide among the different options.
NCOA.org. The National Council on Aging is a nonprofit that helps people age well. It outlines many different ways to get federal assistance for things like bills and rent, and also health care programs such as Medicare and VA benefits.
Recap
- Health care can take up more of your budget as you get older, but there are several federal programs that can help.
- Medicare is the largest, providing insurance to most people ages 65 and over, along with some younger people with disabilities.
- Medicaid is a federal and state program that supports people with low incomes and disabilities.
- The Affordable Care Act helps make sure everyone in the United States can get health insurance.
Show Sources
Photo Credit: zimmytws/Getty Images
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American Council on Aging: “Dual Eligibility for Medicare and Medicaid: Requirements & Benefits for Long Term Care,” “What Is the Program of All-Inclusive Care for the Elderly (PACE)?”
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U.S. Department of Veterans Affairs: “Eligibility for VA health care.”
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Indian Health Service: “Frequently Asked Questions.”
