How It Works — Project Salus

You have been paying into this system your entire working life.

This page exists because the moment most Americans begin using their senior healthcare benefits is also the moment they discover how little they were ever told about them. Not because they were careless. Because the information was never put in one place and explained in plain language.

What follows is that explanation — the history of what you built, how the system works, what changed along the way, and what to pay attention to as you start using it. No acronyms without explanation. No assumptions about what you already know.

Why Project Salus exists
Education, accountability, and transparency — for the people who earned it.

Project Salus was built because the senior care system in the United States is genuinely difficult to navigate — and much of that difficulty is not inevitable. Federal coverage rules, state Medicaid programs, insurance plan structures, and provider networks are all matters of public record. The information exists. What has been missing is a single place where it is organized, translated into plain language, and kept current as things change.

The healthcare system that serves seniors — Medicare, Medicaid, home health, equipment suppliers, hospice, rehabilitation — has been quietly reshaped over decades by regulatory changes most beneficiaries never heard about. The entities with resources to engage in that process have shaped it accordingly. Project Salus exists to give individual beneficiaries the same information those entities have always had.

This is not a political project. It is an information project. You paid into this system. You deserve to understand it fully.


Who this is for

This page covers the federal Medicare and Medicaid programs — the coverage most Americans transition into at 65. Some people arrive at senior care through a different path. If you have coverage through the Department of Veterans Affairs, a Federal Employee Health Benefits plan, a government pension plan, or union retiree coverage, much of what follows still applies to you — but some of the enrollment decisions, coordination rules, and coverage priorities are different from what is described here. A dedicated guide for each of those situations is in development.

Approaching Medicare eligibility
You are 63 to 65 and this is new territory
Already enrolled in Medicare
You are enrolled but still figuring out how it all works
Helping a family member
You are navigating this on behalf of someone else
I have VA, FEHB, or pension coverage
Your coverage situation is more specific than standard Medicare

What you have been paying into

Medicare did not arrive fully formed. It was built over six decades through legislation, amendment, regulatory change, and budget negotiation — some of it designed to expand access, some of it designed to control costs. Understanding the history is not an academic exercise. It explains why the program works the way it does, and why some of what you expected is different from what you found.

1965
Medicare and Medicaid are signed into law
President Lyndon Johnson signs the Social Security Amendments of 1965, creating Medicare and Medicaid. Medicare covers Americans 65 and older with hospital insurance — funded by a payroll tax on every working American — and medical insurance for physician visits and outpatient care. The premise is explicit: you contribute during your working years, and the benefit is there when you need it. Medicaid, created at the same time, provides coverage for low-income Americans through a joint federal and state program.
1972
Coverage expands to people with disabilities and kidney disease
The Social Security Amendments of 1972 extend Medicare eligibility to Americans under 65 who have a permanent disability and to people of any age with end-stage renal disease — kidney failure requiring dialysis or transplant. The payroll tax continues to fund the expanding program. The principle of coverage as an earned benefit extends to those who cannot work due to disability.
1983
Hospital payment shifts from costs to fixed rates
Congress introduces the prospective payment system for hospital reimbursement. Instead of reimbursing hospitals for their actual costs, Medicare begins paying fixed amounts based on the patient's diagnosis category. The change is designed to control program costs. One direct result is pressure on hospitals to discharge patients faster — a structural reality that shapes the discharge experience to this day. The shift from cost-based to fixed-rate reimbursement gradually spreads to other care settings over the following decades.
1997
Significant cuts and the introduction of competitive bidding
The Balanced Budget Act of 1997 makes sweeping reductions to Medicare reimbursement across multiple care settings — home health agencies, skilled nursing facilities, hospitals, and home medical equipment suppliers. Many smaller providers close or consolidate. The act also introduces the concept of competitive bidding for durable medical equipment — the beds, wheelchairs, oxygen equipment, and medical devices that Medicare pays for in the home. The idea is that suppliers competing for contracts in geographic areas will drive down costs.
Competitive Bidding Program introduced here
2003
Prescription drug coverage and the expansion of private Medicare plans
The Medicare Modernization Act of 2003 creates Medicare Part D — prescription drug coverage — for the first time. Prescriptions had never been covered under the original program. The act also significantly expands Medicare Advantage, establishing the framework for private insurance companies to offer Medicare benefits as an alternative to the original federal program. Medicare Advantage enrollment begins growing rapidly, and continues to grow. By the 2020s more than half of all Medicare beneficiaries are enrolled in a Medicare Advantage plan rather than Original Medicare.
2010 — present
Ongoing changes — most without public awareness
The Affordable Care Act of 2010 expands preventive benefits under Medicare and introduces quality-based payment reforms. The Competitive Bidding Program for home medical equipment — first introduced in 1997 — begins national rollout, eventually covering most of the country. Reimbursement rates for equipment in competitive bidding areas drop by 40 to 50 percent in some categories. Prior authorization requirements expand significantly, particularly in Medicare Advantage plans. Coverage criteria for equipment and services are refined through administrative rule rather than legislation — changes that are published in the federal register but rarely reach individual beneficiaries. The program continues to be actively reshaped through a combination of legislation, regulatory guidance, and administrative determination.
What competitive bidding did to home medical equipment
The Competitive Bidding Program was designed to lower Medicare costs by requiring home medical equipment suppliers to compete for contracts in designated geographic areas. Only the lowest-bidding suppliers receive contracts. The result has been reimbursement cuts of 40 to 50 percent in many equipment categories over the program's rollout period. Many small, independent, locally-responsive suppliers — particularly in rural areas — have closed or been acquired by larger national companies as a result. For patients, this has meant in some areas a reduction in the number of available suppliers, longer response times for equipment issues, and reduced access to local service and support. The program achieved its cost-reduction goal. The tradeoffs in access and service quality were absorbed primarily by patients and small providers, not by the program's designers.
What this means for you
The average American worker contributes to Medicare through payroll taxes for 30 to 45 years before drawing a single benefit. That is not a government subsidy. That is a benefit you earned. The program has been amended hundreds of times since 1965 — some amendments expanded what it provides, many reduced it or shifted costs to beneficiaries. Most of those changes happened without notification to the people they most affected. Understanding the system you are entering — including how it has changed — is the foundation for using it effectively.

What this coverage actually is

Medicare is not a single program. It is a set of parts — each covering a different category of care — that were created at different times and work together only if you understand how to combine them. Most people enter Medicare without a clear picture of what each part covers, which ones require a separate enrollment step, and which ones carry a permanent financial penalty if ignored.

Tap any card for a plain-language explanation of that coverage type. No prior knowledge assumed.

Medicare Part A
Hospital coverage
Covers inpatient hospital stays, skilled nursing facility care after a qualifying hospital stay, and hospice care. Most people pay no premium for Part A.
Learn more
Medicare Part B
Medical coverage
Covers physician visits, outpatient services, preventive care, home medical equipment ordered by a physician, and home health. Requires a monthly premium. Has no out-of-pocket cap on its own.
Learn more
Medicare Part C
Medicare Advantage
A private insurance alternative to Original Medicare. Often includes dental, vision, and hearing. Has network restrictions and insurance company approval requirements for most services.
Learn more
Medicare Part D
Prescription drug coverage
A separate standalone program covering prescription medications. Has its own premium, deductible, and drug list. Carries a permanent premium penalty if enrollment is missed when first eligible.
Learn more
Medicaid
Low-income and long-term care
A joint federal and state program that fills critical gaps Medicare does not cover — including long-term custodial care and home-based support services. Eligibility and what is covered vary significantly by state.
Learn more
Medigap
The gap filler
Private insurance sold alongside Original Medicare that covers the cost-sharing gaps — copays, coinsurance, and the missing out-of-pocket cap. Works only with Original Medicare, not Medicare Advantage.
Learn more
Your state changes this significantly

Medicaid eligibility, managed care structures, and the programs available to supplement Medicare vary enormously by state. What is available in one state can be completely different in another.

Select your state to see what applies where you live →

What makes this different from what you had

For most people, healthcare has meant one thing for 30 or 40 years — a plan through an employer, an insurance card in a wallet, a copay at a front desk. That system built a set of assumptions about how healthcare works. Most of those assumptions do not carry over to Medicare. Understanding which ones no longer apply — before a situation makes it urgent — is one of the most valuable things this page can give you.

These differences apply whether you are coming from employer coverage, a spouse's plan, a union plan, or an individual market plan. The structure of Medicare is simply different from all of them.

What you were used to
Your premium was largely invisible
Employers typically pay 70 to 80 percent of the health insurance premium. The employee sees a modest paycheck deduction and assumes that is what coverage costs. When Medicare premiums begin arriving as direct monthly bills, they often feel shocking — even when the total cost is similar to or less than what was always being paid collectively.
What you were used to
Everything was under one plan
Employer insurance typically covered medical care, prescription drugs, and some dental and vision under a single insurance card and a single enrollment process. Medicare separates these into distinct parts — and some categories, like dental and hearing, are not covered at all under Original Medicare without additional enrollment or a separate plan.
What you were used to
There was a ceiling on what you could owe
Every employer health plan is required to have an annual out-of-pocket maximum. Once you reach it, the plan covers everything for the rest of the year. This protection — which most people have had their entire working lives — does not exist in Original Medicare Part B without a Medigap supplement plan. The 20 percent patient share of outpatient costs has no ceiling.
What you were used to
Missing enrollment had no permanent consequences
On an employer plan, you could change coverage, miss open enrollment, or leave and rejoin without any lasting financial penalty. Medicare has strict enrollment windows. Missing the enrollment window for Medicare Part B or Medicare Part D prescription coverage — without a qualifying exception — creates a permanent premium penalty that is added to your costs for as long as you have that coverage. There is no equivalent in the employer insurance world.
The most important thing to know

None of these differences are your fault for not knowing. They are the result of a system that was designed separately from the one you spent your career in, built over six decades of legislation, and never consolidated into a plain-language transition guide for the people entering it. That is what this page is attempting to be.


What is actively changing and why it matters

Medicare is not a fixed program. It is being actively reshaped — through legislation, through regulatory guidance issued by the Centers for Medicare and Medicaid Services, through coverage determinations that establish what is and is not a covered benefit, and through reimbursement changes that affect which providers can afford to serve Medicare patients. Most of these changes receive little or no direct communication to the people they most affect.

Why this site exists
The information exists. The gap is access and translation.

Every coverage determination CMS issues is public record. Every Medicare Advantage plan's prior authorization denial rate is now required to be disclosed. Every state Medicaid program's coverage rules are published. The Competitive Bidding Program's impact on supplier networks is documented. None of this is hidden.

What has been missing is a single place where it is organized, translated into plain language, connected to the situations people actually find themselves in, and kept current as things change. That is what Project Salus is attempting to build.

This is not a complaint about the system. It is a decision to understand it — because understanding it is the most effective form of accountability available to an individual beneficiary. You paid into this. You have the right to know exactly what you built, how it works, and where to look when something is not working the way it should.


What catches people off guard

These are the moments that consistently surprise people as they move into and through the Medicare system — not because the information is unavailable, but because nobody explains it proactively. Each one shows what most people expect, what is actually true, and what to do about it.

Employer insurance
Every employer health plan has an annual out-of-pocket maximum. Once you reach it, the plan covers everything for the rest of the year. A cancer diagnosis, a serious surgery, or a chronic illness does not result in unlimited bills.
Original Medicare
Medicare Part B — which covers outpatient care, physician visits, and medical equipment — covers 80 percent of approved costs. You pay 20 percent with no annual ceiling. A serious illness or extended specialist care under Original Medicare alone can result in significant uncapped out-of-pocket expense.
What to do about it

A Medigap supplement plan — private insurance sold alongside Original Medicare — covers the 20 percent coinsurance and effectively restores an out-of-pocket cap. The best time to purchase one is during the six-month guaranteed issue window that opens when you first enroll in Medicare Part B. After that window closes, insurers can decline to sell you a plan or charge more based on your health history in most states.

Employer insurance
Routine dental cleanings, annual eye exams, prescription glasses, and sometimes basic hearing coverage are standard features of most employer health plans.
Original Medicare
Routine dental care, standard vision exams and glasses, and hearing aids are not covered under Original Medicare. A hearing aid can cost $3,000 to $8,000 out of pocket. Major dental work — crowns, implants, dentures — is entirely private pay. This gap affects nearly everyone who transitions from employer coverage.
What to do about it

Some Medicare Advantage plans include dental, vision, and hearing benefits as part of their supplemental offerings — this is one of the reasons many people choose Medicare Advantage over Original Medicare. Standalone dental and vision plans are also an option. Neither fully replaces the coverage most employer plans provided, but both are worth evaluating carefully before you need them.

Employer insurance
Prescription drug coverage is bundled into the main health plan. Missing open enrollment or changing plans has no lasting financial consequences.
Medicare Part D
Part D is a separate program with its own enrollment window. If you go without creditable prescription drug coverage for more than 63 days after becoming eligible, a permanent late enrollment penalty is applied — one percent of the national base premium for every month you went without coverage, added to your Part D premium for as long as you remain enrolled. The penalty never goes away.
What to do about it

Enroll in a Part D plan when you first become eligible — even if you currently take no prescription medications. The cheapest available plan typically costs $10 to $20 per month. The penalty you would accumulate by waiting a year or more is almost always more expensive than the plan itself. The clock starts at eligibility, not at the moment you first need medication.

Common expectation
Medicare is comprehensive coverage. If someone needs ongoing help at home or in a care facility as they age, Medicare will cover it the way a good health plan covers medical care.
Reality
Medicare covers skilled care — nursing visits, physical therapy, wound care. It does not cover custodial care — help with bathing, dressing, toileting, and eating. A full-time home care aide costs $25 to $35 per hour privately. A nursing home averages $8,000 to $12,000 per month. Medicare covers none of this on an ongoing basis.
What to do about it

Long-term care insurance — purchased before it is needed, which often means before 65 — is the primary private mechanism for covering custodial care costs. After assets are spent down to program eligibility levels, Medicaid can cover nursing home care and some home-based custodial services depending on your state. Planning ahead significantly changes what options are available.

Common expectation
If you are in a hospital bed receiving care from hospital staff, you are admitted as an inpatient. That status determines your coverage.
Reality
A hospital can place a patient in observation status — receiving care in the same bed, from the same staff — while billing the stay as outpatient under Medicare Part B rather than inpatient under Part A. Observation days do not count toward the three qualifying inpatient days required for Medicare to cover a skilled nursing facility stay after discharge. The patient may not be informed of this classification unless they specifically ask.
What to do about it

Ask directly at any hospital admission: am I being admitted as an inpatient or placed under observation status? Medicare law requires the hospital to provide written notice if you are under observation for more than 24 hours — this notice is called the Medicare Outpatient Observation Notice, or MOON. If a skilled nursing facility stay is anticipated after discharge, observation status can directly affect whether Medicare will cover it.

Employer insurance
Prior authorization exists but applies to a limited set of services. Most routine and even moderately complex care does not require insurance approval before it is provided. The process is largely invisible in most years.
Medicare — especially Medicare Advantage
Prior authorization is required for most home medical equipment, many imaging studies, specialist procedures, and in Medicare Advantage plans — which now cover more than half of Medicare beneficiaries — for a wide range of services. Authorization can take days to weeks. A denial does not mean the care will not happen. It often means the documentation submitted was not specific enough, and more information is needed.
What to do about it

When a provider tells you that something requires prior authorization, ask when the request was submitted and what the expected response timeline is. Most authorization delays are administrative rather than clinical — a documentation gap that needs to be resolved, not a judgment that the care is inappropriate. A denial can be appealed. Roughly 60 percent of appealed Medicare denials are overturned at the first or second review level when additional documentation is provided.


Before you go — things worth having in place

These are not administrative boxes to check. They are the things that consistently make the difference between a family that can navigate a difficult situation and one that cannot. None of them require a crisis to address. All of them become significantly harder to address once a crisis begins.

Do you know which Medicare plan you are on and what it actually covers?
Original Medicare and Medicare Advantage behave very differently when significant care is needed. Knowing which you have — and what the tradeoffs mean — changes how you use the system.
Understanding your coverage — coming soon
Do you have a primary care physician who accepts your insurance?
The primary care physician is the center of the Medicare care network — the person who orders referrals, documents medical necessity, and coordinates care. Not having an established relationship is a meaningful gap.
What to ask a primary care physician →
Is there an advance directive in place?
An advance directive is a legal document that records your wishes for medical care if you are unable to speak for yourself. Without one, medical decisions default to whoever is present — which may not reflect what you would have chosen.
Advance directives explained — coming soon
Does your family know where your documents are?
Insurance cards, Medicare information, advance directives, medication lists, and emergency contacts need to be accessible to the people who may need to act on your behalf — ideally before a situation makes finding them urgent.
Readiness guide — coming soon
Do you know what Medicaid covers in your state and whether you might qualify?
Medicaid covers the long-term custodial care that Medicare does not. Eligibility is based on income and assets, varies by state, and often requires planning years in advance to navigate effectively.
Select your state to see Medicaid rules →
If care were needed tomorrow, would someone know what to do?
A hospital discharge, a fall, a new diagnosis — these situations require decisions within hours. Families who have talked through the basics in advance navigate them significantly better than those who have not.
I need help now →

Where to go from here

This page is the foundation. Each path below goes deeper into a specific part of what you just read.

Not sure where to start? Start with your state.

Coverage rules, Medicaid programs, and provider availability vary by state. Select yours on the home page to see what applies where you live.