Previously, we learned that government insurance programs are run and funded by federal and state governments. Now, let's break them down further to understand it better:
Government Insurances are divided into 4 major parts which are as following:
- Medicare
- Medicaid
- Rail Road Medicare
- Tricare & CHAMPVA
Each part has its own rules and regulations for health care coverages.
Medicare
Definition:Medicare is a federal health insurance that is administrated by CMS (Center for Medicare and Medicaid Services). President Lyndon B. Johnson signed the Medicare and Medicaid Act, also known as the Social Security Amendments SSA of 1965, into law on July 30, 1965. This act established two healthcare programs, Medicare & Medicaid. These programs are funded by a taxes.
Eligibility Criteria:
- Medicare covers individuals who has age of 65 or older.
- It also covers individuals under 65 if they have any certain disabilities or suffering from end-stage renal disease.
Medicare Parts / Plans / Episodes
Part A (Hospital Insurance (HI))
Definition:This part covers Hospital Services (Ex. Bed Charges, & equipment charges). It cover inpatient care in hospital, skilled nursing facility and some home health cares. Claim will be submit through UB-04 or CMS-1400 Form.
In short, Part A covers institutional billing.
Part B (Supplemental Medical Insurance (SMI)
Definition:This part covers outpatient medical services like doctor visits, durable medical equipment, preventive services, lab tests, and more. In other words, it covers all medical related service except hospital, drugs, dental, hearing or routine eye care or long term care like services. Typically Medicare pays 80% of Medicare approved amount and 20% will be paid by yourself for medical services. Patient usually pay a monthly premium for Part B. Claim will be submit through CMS 1500 Form.
In short, Part B covers professional billing.
Part C (Medicare Advantage (MA), Medicare Health Plans)
Definition:Medicare Part C also known as Medicare Advantage (MA) plan, is an alternative to original Medicare. It is offered by private insurance companies approved by Medicare and these insurances follow rules set by Medicare. However, each plan can have different out of pocket costs and rules for how you get services.
Coverage:It bundles the benefits of Medicare Part A (hospital insurance) and Part B (medical insurance), and often includes Part D (prescription drug coverage). Additionally, it may offer extra benefits like vision, hearing, dental, and wellness programs.
In short, Part C covers all three parts A, B, D with other benefits through private insurances on the behave of Medicare.
Part D (Prescription Drug Coverage (PDC)
Definition:Part D covered with drug program (supply for medicines). It helps cover the cost of prescription drugs, including both brand-name and generic medications. Each plan has a list of covered drugs, known as a formulary, which can vary from plan to plan.
Note: For this part you must be enrolled in either part A or Part B.
In short, Part D covers pharmacy billing.
Medicare Part A Premiums and Deductibles
Premiums: About 99% of Medicare beneficiaries do not have a Part A premium since they have at least 40-quarters of Medicare-covered employment, as determined by the Social Security Administration.
Deductibles: The annual deductible for all Medicare Part A beneficiaries will be $1,676 in 2025, an increase of $44 from the annual deductible of $1,632 in 2024 (for inpatient hospital)
Part A Coinsurance Pattern:
After met Part A deductibles, first 60 days of hospital stays are fully covered by Medicare. Afterward, coinsurance applies as following:
| Coinsurance Applied: | Year 2024 | Year 2025 |
|---|---|---|
| Daily Hospital Coinsurance for 61st to 90th days | $408 | $419 |
| Daily Hospital Coinsurance for 91st to 150th days (Lifetime reserve days) |
$816 | $838 |
| For Skilled nursing facility - daily coinsurance (days 21-100) | $204 | $209.50 |
| Note: first 60 days of hospital stay is has zero coinsurance, similar first 20 days of skilled nursing facility has no coinsurance, Medicare will cover after deductibles met. | ||
Medicare Part B Premiums and Deductibles
Premiums: The standard monthly premium for Medicare Part B enrollees will be $185.00 for 2025, an increase of $10.30 from $174.70 in 2024 (income adjusted).
Deductibles: The annual deductible for all Medicare Part B beneficiaries will be $257 in 2025, an increase of $17 from the annual deductible of $240 in 2024.
Part B Coinsurance: Medicare applies 20% coinsurance for approved services. (some services are totally covered by Medicare such as Preventive care/ Wellness Visits).
Does Medicare made PR 3 (Copay)?
No, Original Medicare (Part A, B, & D) does not made PR3 (Copay). However, Medicare Advantage plan (Part C) can make PR 3 accordingly.
Medicare Insurance Card:
Medicaid
Definition:Medicaid is a joint federal and state program that helps cover medical costs for some people with limited income and resources such as children, pregnant women, older adults, needy families, etc. People who receive Medicaid have most or all of their health care services paid for by US federal, state, and local governments. The federal government has general rules that all state Medicaid programs must follow, but each state runs its own program. Medicaid is also known as Public Health Insurance Program.
Eligibility Criteria:
Medicaid covers peoples whose income is lower than property set by their state or local government.
Medicaid Managed Care Plan
A Medicaid managed care plan is a healthcare program where a state contracts with a private insurance company to manage and deliver Medicaid benefits to its beneficiaries. Instead of the state directly paying healthcare providers, it pays a set amount to the managed care organization (MCO), which is then responsible for providing or arranging for the necessary medical services. This approach aims to control costs and potentially improve care coordination for Medicaid recipients.
In short: If person is poor, Medicaid will cover it and if person is 65+ or have any disability then Medicare will cover it. Also these programs help out the government to insure that no tax filer will be escape.
(Beneficiary, & recipient are all other names used by Medicare and Medicaid to call a patient. Also billers called a Medicare "MCR" and Medicaid "MCD" in short form.)
We will learn a lot in deeper about Medicare and Medicaid in up coming lessons.
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