Medicare is a federal health insurance program for people 65 and older, some younger people with disabilities, and people with end-stage renal disease
Medicare is run by the Centers for Medicare & Medicaid Services (CMS), a federal agency. It is not one insurance plan — it is four separate parts, and you choose which ones you need. Part A covers hospital stays. Part B covers doctor visits and outpatient care. Part D covers prescription drugs. Part C (Medicare Advantage) is an alternative to Parts A and B offered by private insurance companies.
You do not have to do anything to get Part A if you are already receiving Social Security benefits — it starts automatically at 65. Part B requires you to sign up, and Part D requires you to choose a plan. If you miss the important date to sign up for Part B or Part D, you may pay a penalty for as long as you have Medicare.
Medicare is funded through payroll taxes (the Medicare tax you see on your pay stub), premiums you pay each month, and general federal revenue. The amount you pay depends on which parts you choose and your income.
Key Takeaways
- Part A covers hospital stays, skilled nursing care, and hospice; Part B covers doctor visits, lab tests, and outpatient procedures; Part D covers prescription drugs; Part C is a private alternative that bundles A and B.
- You are automatically enrolled in Part A at 65 if you receive Social Security, but you must sign up for Part B during your initial enrollment period or face a permanent penalty.
- You choose a Part D plan during the annual enrollment period (October 15 to December 7), and missing this important date can result in a lifelong surcharge on your premiums.
- Medicare has an annual deductible for Part A and Part B, and you pay coinsurance or copayments when you use care; coverage is not free.
- Original Medicare (Parts A and B) works with any doctor or hospital that accepts Medicare; Medicare Advantage (Part C) usually requires you to use doctors in a specific network.
Part A: Hospital and Skilled Nursing Care
Part A covers inpatient hospital stays, skilled nursing facility care (not regular nursing home care), home health services, and hospice. You pay nothing for the first three days of a hospital stay if you have been hospitalized within the past 60 days. After that, you pay a daily coinsurance amount set by Medicare each year. The amount changes annually.
Part A also covers up to 100 days in a skilled nursing facility after a hospital stay of at least three days, but only if you need skilled care (physical therapy, wound care, or similar services). It does not cover custodial care — help with bathing, dressing, or meals — unless it is part of a skilled service.
You do not choose a Part A plan. If you are 65 or older and a U.S. citizen or permanent resident, you are enrolled automatically when you turn 65 and receive Social Security. If you are not yet receiving Social Security, you can sign up for Medicare at your local Social Security office or online at Medicare.gov.
Part B: Doctor Visits and Outpatient Services
Part B covers doctor visits, preventive care (annual wellness visits, cancer screenings, vaccines), lab tests, X-rays, outpatient surgery, and durable medical equipment (wheelchairs, oxygen, diabetic supplies). It does not cover routine dental care, vision care, or hearing aids, though some preventive services like colorectal cancer screening are covered.
You pay a monthly premium for Part B. The standard premium in 2024 is $164.90 per month, but the amount changes each year and may be higher if your income is above a certain threshold. You also pay an annual deductible (currently $240) before Part B coverage begins, and then you pay 20 percent coinsurance for most services after that.
You must sign up for Part B during your initial enrollment period, which is the three months before the month you turn 65, the month you turn 65, and the three months after. If you delay and do not sign up when you are first may be able to access, you will pay a 10 percent penalty on your Part B premium for each year you were may be able to access but did not enroll. This penalty is permanent.
Part D: Prescription Drug Coverage
Part D covers prescription medications. You choose a Part D plan from private insurance companies during the annual enrollment period, which runs from October 15 to December 7 each year. Coverage begins January 1. If you do not choose a plan during this window, you cannot enroll until the next year, and you will pay a penalty surcharge on your premiums if you ever do enroll later.
Part D plans vary widely in cost and which drugs they cover. Each plan has a formulary — a list of covered medications — and you should check whether your current prescriptions are on the formulary before you choose. Some plans cover generic drugs at a lower cost than brand-name drugs. Most plans have a coverage gap (sometimes called the "donut hole") where you pay more out of pocket after you and your plan have spent a certain amount on drugs.
You pay a monthly premium for Part D, a yearly deductible (which varies by plan), and then copayments or coinsurance when you fill a prescription. The costs depend on which plan you choose and which tier your drugs are on.
Part C: Medicare Advantage as an Alternative
Part C, also called Medicare Advantage, is an alternative way to receive your Part A and Part B benefits. Instead of Original Medicare (Parts A and B), you enroll in a plan offered by a private insurance company that has a contract with Medicare. The insurance company receives a fixed payment from Medicare for each person enrolled, and in exchange, it must cover everything Part A and Part B cover.
Medicare Advantage plans often include Part D (prescription drug coverage) and may also cover services that Original Medicare does not, such as dental, vision, or hearing care. However, most Medicare Advantage plans require you to use doctors and hospitals in their network, and you usually need a referral from your primary care doctor to see a specialist. If you go out of network, you may pay more or the plan may not cover the service at all.
You can enroll in Part C during your initial enrollment period (the same window as Part B) or during the annual enrollment period in the fall. If you have Original Medicare and want to switch to Part C, you can do so during the annual enrollment period. If you are in Part C and want to switch back to Original Medicare, you have a limited window to do so.
How You Pay: Premiums, Deductibles, and Coinsurance
Medicare is not free. You pay in three ways: premiums (monthly fees), deductibles (the amount you pay before coverage starts), and coinsurance or copayments (your share of the cost when you use care).
Part A has no monthly premium if you or your spouse paid Medicare taxes for at least 10 years. If you did not, you pay a monthly premium. Part A also has an annual deductible for hospital stays. Part B has a monthly premium and an annual deductible. Part D premiums vary by plan. Part C premiums vary by plan and may be zero, though you still pay Part B premiums unless your plan includes Part B.
If your income is above a certain level, you pay an additional amount called the Income-Related Monthly Adjustment Amount (IRMAA). This applies to Parts B, D, and C. The income thresholds and surcharge amounts change each year. You can find the current amounts on Medicare.gov or by calling 1-800-MEDICARE.
Enrollment Periods and important date
Your initial enrollment period is the three months before the month you turn 65, the month you turn 65, and the three months after — a total of seven months. During this time, you can enroll in Part B and Part D without penalty. If you miss this window, you will pay a permanent penalty.
The annual enrollment period (also called open enrollment) runs from October 15 to December 7 each year. During this time, you can change your Part D plan, switch from Original Medicare to Part C, or switch from Part C back to Original Medicare. Changes take effect January 1.
If you have a life event — such as losing employer coverage, moving out of your plan's service area, or getting married — you may be able to enroll outside these windows. Contact Medicare directly to ask whether you may have access to for a special enrollment period.
Frequently Asked Questions
Do I have to enroll in Medicare at 65 if I am still working?
If you or your spouse is still working and you have health insurance through that job, you may be able to delay Part B without penalty. However, you should still enroll in Part A, which is free if you may have access to. Contact Medicare to confirm your situation, because the rules depend on the size of your employer and whether you are the employee or the spouse of the employee.
What happens if I do not sign up for Part B or Part D on time?
You will pay a permanent penalty surcharge on your premiums for as long as you have Medicare. The penalty is 10 percent of the Part B premium for each year you were may be able to access but did not enroll, and 1 percent of the Part D premium for each month you were may be able to access but did not enroll. These penalties do not go away.
Can I use any doctor with Medicare?
With Original Medicare (Parts A and B), you can see any doctor or hospital that accepts Medicare. You do not need a referral. With Medicare Advantage (Part C), most plans require you to use doctors in their network and may require a referral to see a specialist. Check your plan's network before you choose.
Does Medicare cover dental, vision, or hearing care?
Original Medicare does not cover routine dental, vision, or hearing care. Some Medicare Advantage plans include these services, though coverage is usually limited. You can also buy a separate dental, vision, or hearing plan if you want this coverage.
What is the difference between Medicare and Medicaid?
Medicare is a federal program for people 65 and older and some younger people with disabilities. Medicaid is a joint federal and state program for people with low income. They are separate programs with different rules, may be able to access, and coverage. Some people may have access to for both.