Medicare is the Federal health insurance program for Americans age 65 and older and it is also available for certain disabled Americans. If you are eligible for Social Security or Railroad Retirement benefits and are age 65, you and your spouse automatically qualify for Medicare.

Medicare has three parts:

  • hospital insurance, known as Part A,
  • supplementary medical insurance, known as Part B, which provides payments for doctors and related services and supplies ordered by the doctor, and
  • prescription drug coverage, known as Part D which covers both brand-name and generic prescription drugs at participating pharmacies in your area.

If you are eligible for Medicare, Part A is free, but you must pay a premium for Part B
and Part D.

Medicare will pay for many of your health care expenses, but not all of them. In particular, Medicare does not cover most nursing home care, long-term care services in the home or prescription drugs. There are also special rules on when Medicare pays your bills that apply if you have employer group health insurance coverage through your own job or the employment of a spouse.

Medicare usually operates on a fee-for-service basis. HMOs and similar forms of prepaid health care plans are now available to Medicare enrollees in some locations.

The best source of information on the Medicare program is the Medicare Handbook. This booklet explains how the Medicare program works and what your benefits are. To order a free copy, go to: www.medicare.gov. You also can contact your local Social Security office for information.

Some people who are covered by Medicare buy private insurance, called "Medigap" policies, to pay the medical bills that Medicare doesn't cover. Some Medigap policies cover Medicare's deductibles; most pay the coinsurance amount. Some also pay for health services not covered by Medicare. There are 10 standard plans from which you can choose. (Some States may have fewer than 10.) If you buy a Medigap policy, make sure you do not purchase more than one.

You need to shop carefully before deciding on the best policy to fit your needs. You may get another booklet, Guide to Health Insurance for People with Medicare, to help you in making the right choice. To order a free copy, go to: www.medicare.gov.

Another good source of information on the same topic is The Consumer's Guide to Medicare Supplement Insurance. To order a free copy, go to: www.medicare.gov.