Medicare is a United States national health insurance programme that was established in 1965 by the Social Security Administration (SSA) and is now administered by the Centers for Medicare and Medicaid Services (CMS).
It mostly covers Americans aged 65 and above, although it also covers some younger persons with disabilities as established by the Social Security Administration, such as those with end-stage renal illness and amyotrophic lateral sclerosis (ALS or Lou Gehrig’s disease).
According to the 2019 Medicare Trustees Report, Medicare provided health insurance to over 59.9 million people in 2018, including more than 52 million seniors and over 8 million younger people.
Medicare covers nearly half of individuals enrolled in healthcare spending, according to annual Medicare Trustees reports and study by the government’s Med PAC group. Most enrollees cover the remaining costs by purchasing supplementary commercial insurance and/or enrolling in a public Medicare Part C or Part D health plan.
The US federal government will spend $776.2 billion on Medicare in 2020.
Medicaid is a federal and state-run programme in the United States that assists persons with low income and resources with healthcare bills. Medicaid also provides services that are not covered by Medicare, such as nursing home care and personal care.
The fundamental distinction between the two programmes is that Medicaid covers healthcare costs for low-income people, whereas Medicare supports the elderly. Dual health insurance is available for persons who have both Medicaid and Medicare.
Medicaid is “a government insurance programme for citizens of all ages whose income and resources are insufficient to pay for health care,” according to the Health Insurance Association of America.
Medicaid is the largest source of funding for medical and health-related services for low-income people in the United States, providing free health insurance to 74 million low-income and disabled people (23 percent of the population) as of 2017, as well as funding half of all births in the United States in 2019.
It is a means-tested programme jointly funded by the state and federal governments and managed by the states, with each state now having broad discretion over who is eligible for the program’s implementation. Medicaid’s overall yearly cost was slightly over $600 billion in 2017, with the federal government contributing $375 billion and states contributing another $230 billion. Although all states have participated in the programme since 1982, they are not compelled to do so.
Medicaid recipients must be United States citizens or qualifying non-citizens in general, and may include low-income individuals, their children, and those with specific disabilities.
The Centers for Medicare & Medicaid Services (CMS) is a federal agency within the US Department of Health and Human Services (HHS) that administers Medicare and collaborates with state governments to administer Medicaid, CHIP, and health insurance portability rules.
CMS is also responsible for administrative simplification standards established by the Health Insurance Portability and Accountability Act of 1996 (HIPAA), quality standards in long-term care facilities (also known as nursing homes) through its survey and certification process, clinical laboratory quality standards established by the Clinical Laboratory Improvement Amendments, and oversight of HealthCare.gov, among other things. Until 2001, CMS was known as the Health Care Financing Administration (HCFA).
What is Medicare?
Medicare is a social security coverage program administered by the United States government, which provides health care to all people over 65 or younger who are considered disabled due to serious health problems, such as cancer, kidney failure requiring dialysis, etc. The program also funds training programs for physicians residing in the United States. Medicare operates as a people’s insurance.
The Social Security Act of 1965 was passed by Congress in the late spring of 1965 and passed into law on July 30, 1965 by President Lyndon B. Johnson, as an amendment to create new social security legislation.
At the signing ceremony, President Johnson enrolled former President Harry Truman as the first Medicare beneficiary and gave him the first Medicare card, and his wife Bess the second card.
Taxes set to fund Medicare
Medicare is funded in part by payroll taxes established by the Federal Insurance Contributions Act and the Self-employment Contributions Act of 1954. In the case of employees, the tax is equal to 2.9% (1.45% applied to the worker and the other 1.45% borne by the employer) of wages, salaries and other compensation.
Until 31 December 1993, the law provided for a maximum amount of wages, in which the Medicare tax could be imposed each year. As from 1 January 1994, the compensation limit was removed. A self-employed worker must pay the entire 2.9% tax on net earnings, but can deduct half of the income tax in the income tax calculation.
Eligibility for Medicare
In general, everyone aged 65 or older who has been a legal resident of the United States for at least 5 years is eligible for Medicare. However, if neither they nor their spouse have paid Medicare taxes for a minimum of 10 years (40 quarters), then they must pay a monthly premium to be enrolled in Medicare.
Medicare Part A premiums will apply if the following circumstances apply:
- They are 65 years or older and are US citizens or have been legal permanent residents for 5 continuous years, and they or their spouses have paid Medicare taxes for at least 10 years.
- They are under 65, disabled, and have been receiving Social Security benefits or disability benefits from the Railroad Retirement Board for at least 24 months from the date of entitlement determination (first disability payment).
- They receive continuous dialysis for end-stage kidney disease or need a kidney transplant.
- They are eligible for Social Security for Disability and suffer from amyotrophic lateral sclerosis (known as ALS or Lou Gehrig’s disease).
The 24-month exclusion means that people who acquire a disability have to wait 2 years before receiving government health insurance, unless they have any of the listed diseases or are eligible for Medicaid.
Many of the beneficiaries are eligible for both Medicare and Medicaid. In some states, for those who are under a certain income level, Medicaid will pay the Part B premium from beneficiaries to them (most beneficiaries have worked hard enough and do not have the Part A premium), and also pay for medicines that are not covered by Part D.
In 2008, Medicare provided health coverage to 45 million Americans, making it the largest single-payer health system in the country. Registrations are expected to reach 78 million by 2030, when the baby boom generation is ready to retire.
If an individual has not yet met Medicare eligibility requirements, they may enroll in alternative programs, such as a Temporary Health Insurance, a Medicare Bridge Plan, or a travel insurance policy if they have recently moved to the United States.
Medicare has four parts: Part A is Hospital Insurance. Part B is Health Insurance. Part D covers prescription drugs. Medicare Advantage plans, also known as Part C, are another way for beneficiaries to receive benefits from Parts A, B, and D. All Medicare benefits are subject to medical need.
The original programme covered only parts A and B. Part D was added in January 2006; before that, parts A and B covered prescription drugs in only a few special cases.
Part A: Hospital Insurance
Part A covers patients’ stays in hospitals (at least overnight), including semi-private room, food, testing, and medical fees.
Part A covers short-term convalescence stays in a specialized nursing institution if certain criteria are met:
A previous stay in the hospital must be at least three days, three medianoches, not counting the date when you are discharged.
The clinical stay should be for something that has been diagnosed during the hospital stay or for the main cause of the hospital stay.
If the patient is not receiving rehabilitation but has some illness that requires specialized nursing supervision, then the cost of the stay in a nursing home is covered.
The care provided by the nursing home must be qualified.
Medicare Part A does not pay for custodial activities, unqualified care, or long-term activities, including daily living activities, such as personal hygiene, cooking, cleaning, etc.
Part B: Health Insurance
Part B health insurance helps pay for some services and products not covered by part A, usually on an outpatient basis. Part B is optional and may be deferred if the beneficiary or his or her spouse is still actively working. There is a lifetime penalty (10% per year) for not enrolling in Part B unless you are actively working.
Part B coverage includes medical and nursing services, x-rays, laboratory and diagnostic tests, influenza and pneumonia vaccines, blood transfusions, renal dialysis, outpatient hospital procedures, limited ambulance transport, immunosuppressive drugs for organ transplant recipients, chemotherapy, hormonal treatments, such as Lupron, and other outpatient medical treatments given in a doctor’s office.
Medication administration is covered by part B only if administered by the doctor during a consultation.
Part C: Medicare advantage plans
With the passage of the Balanced Budget Act of 1997, Medicare beneficiaries were given the option to receive their Medicare benefits through private health insurance plans, rather than through the original Medicare plan (Parts A and B).
These programs were known as “Medicare+Choice” or “Part C Plans”. Under the Medicare Prescription Improvement and Modernization Act, signed in 2003, the “Medicare+Choice” plans were more attractive to Medicare beneficiaries by adding prescription drug coverage and became known as “Medicare Advantage” (MA) plans.
Part D: Prescription drug plans
Part D of Medicare came into effect on January 1, 2006. Anyone with Part A or B is eligible for Part D and was made possible by the passage of the Medicare Prescription, Improvement and Modernization Act. To receive this benefit, a person with Medicare must enroll in a Prescription Drug Plan or Medicare Advantage plan with prescription coverage.
These plans are approved and regulated by the Medicare program, but are actually designed and managed by private health insurance companies. Unlike original Medicare (Parts A and B), part D coverage is not standardized. Plans choose which drugs (or even classes of drugs) they want to cover, up to what level they want to cover, and are free to choose not to cover some drugs.
Neither part A nor part B pay for all medical expenses of a covered person. The program contains premiums, deductibles and coinsurance, which the covered individual must pay out of his own pocket. Some people may qualify for other government programs (such as Medicaid) to pay premiums and some or all Medicare-related costs.
What is Medicaid?
Medicaid is a United States government health insurance program for people in need. United States President Lyndon B. Johnson established Medicaid, a part of the Social Security Act. Medicaid and the Child Health Insurance Program (CHIP) serves more than 31 million children.
Many states secured permission from the federal government to establish Medicaid managed care programmes beginning in the 1980s. Medicaid beneficiaries are enrolled in a commercial health plan that gets a fixed monthly premium from the state under managed care. The health plan is thereafter in charge of covering all or most of the recipient’s medical expenses.
Managed care is now used by all but a few states to offer coverage to a considerable share of Medicaid beneficiaries.
As of 2014, 26 states had signed agreements with managed care organisations (MCOs) to provide long-term care to the elderly and disabled. The states pay the MCOs a monthly capitated payment per member, in exchange for complete treatment and the risk of total cost management.
Approximately 80% of Medicaid recipients in the United States are enrolled in managed care plans.
Expansion of coverage under the Affordable Care Act (ACA)
As of December 2019, 37 states and the District of Columbia had agreed to expand Medicaid under the Affordable Care Act.
In the first quarter of 2016, states that expanded Medicaid had a 7.3 percent uninsured rate among persons aged 18 to 64, while non-expansion states had a 14.1 percent uninsured rate.
Several states declined the option after a 2012 Supreme Court ruling that stated that states would not forfeit Medicaid money if they did not expand Medicaid under the Affordable Care Act. These states are home to more than half of the country’s uninsured.
According to the Centers for Medicare and Medicaid Services (CMS), the cost of expansion in 2015 was $6,366 per person, up 49 percent over previous estimates.
Medicaid coverage had been extended to an estimated 9 to 10 million people, the majority of whom were low-income adults. In October 2015, the Kaiser Family Foundation predicted that 3.1 million more people were uninsured in states that refused to expand Medicaid.
In several states, the poverty line was much lower than 133 percent of the median income. Medicaid was not offered in many states to non-pregnant people without impairments or dependent children, regardless of their income. Because such people were not eligible for subsidies on commercial insurance plans, they had few options for medical coverage.
In Kansas, for example, only able-bodied adults with children and incomes below 32 percent of the poverty line were eligible for Medicaid; those with incomes between 32 percent and 100 percent of the poverty line ($6,250 to $19,530 for a family of three) were ineligible for both Medicaid and federal insurance subsidies.
Implementation by the states
States may combine the administration of Medicaid with other programmes, such as the Children’s Health Insurance Program (CHIP), so that the same entity that manages Medicaid can also manage the other programmes. Separate programmes that are supported by the states or their political subdivisions to offer health coverage for indigents and minors may exist in some locations.
State participation in Medicaid is voluntary; but, since 1982, when Arizona established the Arizona Health Care Cost Containment System (AHCCCS) programme, all states have participated. Medicaid is subcontracted to private health insurance firms in certain states, while it is paid directly to providers (doctors, clinics, and hospitals) in others.
There are a variety of services that might be covered by Medicaid, and some states provide more programmes than others.
States must abide by federal law, which mandates that each participating state operate its own Medicaid programme, set eligibility rules, specify the breadth and types of services it will cover, and determine the rate of compensation for physicians and other health-care providers. Differences across states are frequently impacted by the state’s political ideology and the general population’s cultural ideas.
The federal Centers for Medicare and Medicaid Services (CMS) keeps a close eye on each state’s programme and sets service delivery, quality, funding, and eligibility requirements.
The cost and eligibility of tax-funded health care are influenced by a number of political variables. According to Gideon Lukens’ research, “party control, state citizen ideology, the presence of women in legislatures, the line-item veto, and physician interest group size ” were all important determinants of eligibility.
The findings of Lukens’ study backed up the widely held belief that Democrats favour generous eligibility policies while Republicans do not. When the Supreme Court enabled states to choose whether or not to expand Medicaid in 2012, northern states with Democratic-controlled legislatures did so disproportionately, frequently also extending existing eligibility.
Coverage and eligibility
The rules governing Medicaid eligibility are extremely convoluted. In general, a person’s Medicaid eligibility is linked to their eligibility for AFDC (Aid to Families with Dependent Children), which provides financial assistance to children whose families have a low or no income, and SSI (Supplemental Security Income), which provides benefits to the elderly, blind, and disabled.
Under federal law, states must give Medicaid coverage to all AFDC and SSI participants. Because AFDC and SSI eligibility effectively guaranteed Medicaid coverage, comparing AFDC and SSI eligibility/coverage differences by state is a good approach to compare Medicaid variances.
What is CMS(Centers For Medicare & Medicaid Services)?
The Centers for Medicare & Medicaid Services (CMS) is a federal agency of the United States Department of Health & Human Services (HHS) that administers the Medicare program and works in partnership with state governments to administer the Medicaid program, the Children’s Health Insurance Program (CHIP) and health insurance portability standards.
In addition to these programs, CMS has other responsibilities, including the administrative simplification rules of the 1996 Health Insurance Portability and Liability Act (HIPAA), quality standards in long-term care facilities (more commonly known as nursing homes), the certification process and clinical laboratory quality standards under the amendment for the improvement of the clinical laboratory and the supervision of the website of the department of health and social services (HHS).
The CMS was formerly known as the Medical Care Financing Administration (HCFA) until 2001.
Workforce of CMS
CMS employs around 6,000 employees, with about 4,000 working in its Woodlawn, Maryland headquarters. The remaining personnel are spread across the United States, including the Hubert H. Humphrey Building in Washington, D.C., the ten regional offices listed below, and several field offices.
The Administrator of the Centers for Medicare & Medicaid Services is in charge of CMS. The president appoints the position, which must be confirmed by the Senate. Chiquita Brooks-LaSure, the first black woman to serve as Administrator, was sworn in on May 27, 2021.
Offices in the regions
CMS’s headquarters are in Woodlawn, Maryland, and it has ten regional offices across the country:
- Region I – Boston, Massachusetts
- Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island and Vermont
- Region II – New York, New York
- New York State, New Jersey, U.S. Virgin Islands and Puerto Rico
- Region III – Philadelphia, Pennsylvania
- Delaware, Maryland, Pennsylvania, Virginia, West Virginia and the District of Columbia
- Region IV – Atlanta, Georgia
- Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina and Tennessee
- Region V – Chicago, Illinois
- Illinois, Indiana, Michigan, Minnesota, Ohio and Wisconsin
- Region VI – Dallas, Texas
- Arkansas, Louisiana, New Mexico, Oklahoma and Texas
- Region VII – Kansas City, Missouri
- Iowa, Kansas, Missouri, and Nebraska
- Region VIII – Denver, Colorado
- Colorado, Montana, North Dakota, South Dakota, Utah, and Wyoming
- Region IX – San Francisco, California
- Arizona, California, Hawaii, Nevada, American Samoa, Guam, and the Northern Mariana Islands
- Region X – Seattle, Washington
- Alaska, Idaho, Oregon, and Washington
Centers for Medicare and Medicaid Services address and phone number
Through Medicare, Medicaid, the Children’s Health Insurance Program, and the Health Insurance Marketplace, the Centers for Medicare and Medicaid Services (CMS) offers health coverage to more than 100 million individuals. The CMS aims to update and strengthen the nation’s health-care system in order to increase access to high-quality care and better health at a lower cost.
Centers for Medicare and Medicaid Services (CMS)
Contact the Centers for Medicare and Medicaid Services (CMS)
Contact State Medicaid Offices
Office of External Affairs
7500 Security Blvd.
Baltimore, MD 21244
1-800-447-8477 (Medicare Fraud Hotline)
Centers for Medicare and Medicaid Services Forms
Executive Department Sub-Office/Agency/Bureau
Particular points to consider
Medicare premiums grow each year as healthcare costs continue to rise. Between 2019 and 2028, the CMS predicts that healthcare spending would increase by 5.4 percent per year. By 2028, it is expected that healthcare will cost $6.2 trillion.
Because Part B premiums are deducted from Medicare beneficiaries’ Social Security earnings, it’s critical that they stay informed and understand how they function. This is why the CMS makes premiums and deductibles for various elements of Medicare available to the general public every year.
The yearly deductible for 2022 is $233 (up from $203 in 2021), while the Part B standard monthly premium is $170.10 (up from $148.50 in 2021). Greater-earning individuals must pay higher premiums based on the income shown on their tax returns.
Part A premiums are only due if a Medicare recipient hasn’t worked for at least 40 quarters over the previous year. Premiums for those individuals will vary from $274 to $499 per month in 2022 (up from $259 to $471 in 2021). Hospital stays in Part A are also subject to deductibles. Inpatient hospital deductibles will be $1,556 in 2022 (up from $1,484 in 2021).
The CMS helps to administer the Affordable Care Act’s (ACA) provisions governing private health insurance and provides instructional materials to the public through its Center for Consumer Information & Insurance Oversight in the federal and state health insurance marketplaces. By assisting in the implementation of the Affordable Care Act’s private health insurance laws, the CMS has a role in insurance exchanges.
The 2020 CARES Act
President Trump signed the CARES (Coronavirus Aid, Relief, and Economic Security) Act, a $2 trillion coronavirus emergency stimulus programme, into law on March 27, 2020. It increases Medicare’s ability to cover COVID-19-related treatment and services. The CARES Act also includes the following provisions:
- Allows Medicare to cover telehealth services with more flexibility.
- Authorizes physician assistants, nurse practitioners, and certified nurse specialists to provide Medicare certification for home health services.
- Increases Medicare payments for hospital stays and durable medical equipment connected to COVID-19.
The CARES Act reaffirms that non-expansion states can use Medicaid to provide COVID-19-related services for uninsured persons who would have qualified if the state had opted to expand. Under this state option, other populations with limited Medicaid coverage are also eligible for coverage.
A healthcare facility’s eligibility to participate in the federal Medicare programme may be determined. The Secretary of the Department of Health and Human Services, through the Centers for Medicare and Medicaid Services, instructs state health agencies or other relevant agencies to conduct surveys and complaint investigations to assess if health care entities satisfy federal criteria.
Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and the state and federal health insurance exchanges are all overseen by the CMS. CMS collects and analyses data, prepares research papers, and seeks to eradicate instances of healthcare fraud and abuse.
When the State Survey Agency publicly recommends its findings on whether health care entities fit the Social Security Act’s provider or supplier definitions, as well as whether they comply with Federal rules, this is referred to as certification.