A Primer on Medicare: Key Facts About the Medicare Program and the People it Covers

What does Medicare cover?

Medicare provides coverage of a comprehensive set of vital medical services, including care in hospitals and other settings, physician services, diagnostic tests, preventive services, and an outpatient prescription drug benefit. (See Appendix 1: Medicare Benefits and Cost-Sharing Requirements, 2015)
  • Part A benefits include inpatient care provided in hospitals and short-term stays in skilled nursing facilities, hospice care, post-acute home health care, and pints of blood received at a hospital or skilled nursing facility. In 2010, 19 percent of beneficiaries in traditional Medicare had an inpatient hospital stay, while 9 percent used home health care services, 5 percent had a skilled nursing facility stay, and 3 percent used hospice care (Figure 4).
Figure 4: Medicare Beneficiaries’ Utilization of Selected Medicare-Covered Services, 2010

Figure 4: Medicare Beneficiaries’ Utilization of Selected Medicare-Covered Services, 2010

  • Part B benefits include outpatient services such as outpatient hospital care, physician visits, and preventive services (e.g., mammography and colorectal screening). Part B benefits also include ambulance services, clinical laboratory services, durable medical equipment (such as wheelchairs and oxygen), kidney supplies and services, outpatient mental health care, and diagnostic tests (such as x-rays and magnetic resonance imaging). The ACA added a free annual comprehensive wellness visit and personalized prevention plan to the list of Medicare-covered benefits. The law also gave the Secretary of Health and Human Services (HHS) the authority to modify coverage of Medicare-covered preventive services to conform to the recommendations of the U.S. Preventive Services Task Force (USPSTF). A larger share of beneficiaries use Part B services compared to Part A services. For example, in 2010, more than three quarters (78%) of traditional Medicare beneficiaries had a physician office visit.
  • Part C (Medicare Advantage) private health plans cover all benefits under Medicare Part A, Part B, and, in most cases, Part D. Medicare Advantage plans are required to provide all Medicare-covered benefits, but are permitted to vary the benefit design as long as the core benefit package (excluding the value of supplemental benefits) is actuarially equivalent to traditional Medicare. Some Medicare Advantage plans also include extra benefits, such as dental services, eyeglasses, or hearing exams. (See What is Medicare Advantage? for additional information.)
  • Part D covers an outpatient prescription drug benefit through private plans. Plans are required to provide a “standard” benefit or one that is actuarially equivalent, and may offer more generous benefits. In 2010, 89 percent of traditional Medicare beneficiaries used prescription drugs. (See What is the Medicare Part D prescription drug benefit? for additional information.)
Despite the important protections provided by Medicare, there are significant gaps in Medicare’s benefit package.

Medicare does not pay for some services and supplies that are often needed by older people and younger beneficiaries with disabilities. For instance, Medicare does not pay for custodial long-term services and supports, either at home or in an institution, such as a nursing home or assisted living facility. Medicare also does not pay for routine dental care and dentures, routine vision care or eyeglasses, or hearing exams and hearing aids.

What are the characteristics of people with Medicare? How much do beneficiaries pay for Medicare benefits?

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