16.1 Medicare Parts A and B (Original Medicare)

Medicare Parts A and B (Original Medicare)

Medicare is the federal health insurance program created in 1965 under Title XVIII of the Social Security Act. It is administered by the Centers for Medicare & Medicaid Services (CMS), while Social Security Administration (SSA) field offices handle enrollment. Original Medicare refers specifically to Part A (Hospital Insurance) and Part B (Medical Insurance), the two government-run pieces. Exam questions almost always test eligibility ages, the cost-sharing structure, and what each part does and does not cover.

Who is eligible

Most people qualify for Medicare at age 65. You also qualify before 65 if you have received Social Security Disability Insurance (SSDI) benefits for 24 months, or immediately if you have End-Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS, Lou Gehrig's disease). ALS has no waiting period; ESRD generally has a short waiting period tied to dialysis. A common trap: Medicare is not means-tested for eligibility — income does not bar you, though high earners pay higher Part B premiums.

Part A — Hospital Insurance

Part A covers inpatient hospital care, skilled nursing facility (SNF) care, hospice, and some home health care. Most people pay no premium for Part A because they (or a spouse) paid Medicare payroll taxes for at least 40 quarters (10 years) of work. Those with fewer quarters can buy in for a monthly premium.

Part A is built around the benefit period, which begins when you are admitted as an inpatient and ends after you have been out of a hospital or SNF for 60 consecutive days. There is no limit to the number of benefit periods.

Part A cost-sharing (representative figures)

Use these structural numbers for exam scenarios; exact dollar amounts adjust yearly.

Worked example: A patient is inpatient for 65 days in one benefit period. She pays one deductible plus coinsurance for days 61-65 (5 days x ~$408 = ~$2,040). Days 1-60 carry no coinsurance.

Part B — Medical Insurance

Part B is voluntary and requires a monthly premium (standard ~$174.70; higher under the Income-Related Monthly Adjustment Amount, IRMAA, for high earners). Part B covers physician services, outpatient care, durable medical equipment (DME), diagnostic tests, and many preventive services.

Part B has an annual deductible (~$240) and then pays 80% of the Medicare-approved amount, leaving the beneficiary responsible for the 20% coinsurance with no out-of-pocket maximum. That open-ended 20% is the gap that Medicare Supplement policies exist to fill — a heavily tested linkage.

Enrollment periods and late penalties

• Initial Enrollment Period (IEP): 7 months — the 3 months before, the month of, and 3 months after the 65th-birthday month.
• General Enrollment Period (GEP): January 1 - March 31 each year, for those who missed the IEP.
• Special Enrollment Period (SEP): for those covered by an employer group plan past 65 who delay Part B without penalty.

Late Part B enrollment without an SEP triggers a lifelong premium penalty of 10% for each full 12-month period you could have had Part B but did not. Worked example: delaying Part B for 30 months (two full 12-month periods) adds 20% to the premium for life.

What Original Medicare does NOT cover

Expect a question listing exclusions. Original Medicare generally does not pay for long-term custodial care, most dental, routine vision and eyeglasses, hearing aids, and care outside the United States (with narrow exceptions). It also does not cover outpatient prescription drugs — that gap is filled by Part D. Custodial care being excluded is the single most common Medicare trap, because consumers assume "nursing home" care is covered when only skilled, rehabilitative SNF care is.