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Medicare Health Insurance Program

 Health insurance in US is primarily employer based, hence, a special social insurance program called " medicare " was administered by the United States Government to ensure health insurance coverage for people aged 65 and over or who meet other special criteria. The medicare insurance program bears 80% of the health care costs and rest 20% needs to be borne by other means such as supplementary insurance or to be paid by the patient.

In general, all US citizens with 65 years of age or older who have been legal residents of the United States for at least 5 years are eligible for the medicare insurance program. Also, all people with disabilities in the United States, so long as their condition is congenital or otherwise permanent, are inherently entitled to Medicare, regardless of age. People with end stage renal disease (ESRD) are also eligible for this insurance program irrespective of their age.

The administration of the insurance program " medicare " is carried out by " The Centers for Medicare and Medicaid Services (CMS)" , a component of the Department of Health and Human Services. The Social Security Administration is responsible for determining program eligibility and processing premium payments for the insurance program. The Chief Actuary of CMS is responsible for providing accounting information and cost-projections to the Medicare Board of Trustees to assist them in assessing the financial health of the program.

The medicare insurance program is partially financed by payroll taxes imposed by the Federal Insurance Contributions Act (FICA) and the Self-Employment Contributions Act of 1954. In the case of employees, the tax is equal to 2.9% (1.45% withheld from the worker and a matching 1.45% paid by the employer) of the wages, salaries and other compensation in connection with employment. A self-employed individual must pay the entire 2.9% tax on self employed net earnings, but may deduct half of the tax from the income in calculating income tax.

Medicare is divided into four parts - Part A, Part B, Part C and Part D. Part A hospital insurance covers (at least overnight), including semiprivate room, food, tests and doctor's fees. Part B medical insurance helps pay for some services and products not covered by Part A, generally on an outpatient basis. Part B is optional and may be deferred if the beneficiary or their spouse is still working. There is a lifetime penalty (10% per year) imposed for not enrolling in Part B unless actively working.

Medicare Part D covers prescription drugs. In order to receive this benefit, a person with Medicare must enroll in a stand-alone Prescription Drug Plan (PDP) or Medicare Advantage plan with prescription drug coverage (MA-PD). These plans are approved and regulated by the Medicare program, but are actually designed and administered by private health insurance companies. Unlike Original Medicare (Part A and B), Part D coverage is not standardized. Advantage plans, also known as Medicare Part C, are another way for beneficiaries to receive their Part A, B and D benefits.

All Medicare benefits are subject to medical necessity. Medical necessity is a United States legal doctrine, related to activities which may be justified as reasonable, necessary, and/or appropriate, based on evidence-based clinical standards of care.

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