Medicare is health insurance run by the federal government for people 65 and older

Medicare is a federal health insurance program. You become may be able to access at age 65, regardless of your income or health history. It covers hospital stays, doctor visits, prescription drugs, and some preventive care. You pay premiums (monthly fees), deductibles (what you pay before insurance kicks in), and copayments (your share of each visit or service).

Medicare is not the same as Medicaid. Medicaid is a separate program run by states for people with lower incomes. Some people may have access to for both, but they are different programs with different rules.

You do not have to wait until you turn 65 to sign up. You can sign up starting three months before your 65th birthday. If you miss that window, you may pay a penalty for the rest of your life, so timing matters.

Key Takeaways

  • Medicare has four parts: Part A covers hospital care, Part B covers doctor visits and outpatient care, Part D covers prescription drugs, and Part C (Medicare Advantage) is an alternative that combines A, B, and D through a private insurer.
  • You pay a monthly premium for Part B and Part D; Part A is usually free if you or your spouse paid Medicare taxes for at least 10 years while working.
  • You must sign up during your initial enrollment period (three months before through three months after your 65th birthday) or face a permanent penalty on your premiums.
  • Original Medicare (Parts A and B) lets you see any doctor who accepts Medicare, but you are responsible for costs after you meet your deductible.
  • Medicare Advantage (Part C) is offered by private insurance companies and often has lower out-of-pocket costs, but limits you to a network of doctors and hospitals.

The four parts of Medicare and what each covers

Part A covers inpatient hospital care, skilled nursing facility stays (up to 100 days per benefit period), hospice care, and some home health services. If you or your spouse paid Medicare taxes for at least 10 years while working, you do not pay a monthly premium for Part A. You do pay a deductible when you enter the hospital ($1,676 per benefit period in 2024, though this amount changes yearly).

Part B covers doctor visits, outpatient surgery, diagnostic tests, physical therapy, and durable medical equipment like wheelchairs or oxygen. You pay a monthly premium (the standard amount is $164.90 per month in 2024 for most people, but it is higher if your income is above a certain threshold). You also pay a yearly deductible ($240 in 2024) and then 20 percent of the cost of most services after that.

Part D covers prescription drugs. You choose a Part D plan from private insurers, and each plan has a different list of covered drugs and different costs. You pay a monthly premium that varies by plan, plus copayments when you fill prescriptions. Part D has a coverage gap (sometimes called the "donut hole") where you pay more out of pocket once you and your insurer have spent a certain amount on drugs in a year.

Part C, also called Medicare Advantage, is an alternative to Original Medicare. A private insurance company runs the plan and covers everything Part A and B cover, plus usually Part D. In exchange, you typically pay lower monthly premiums and out-of-pocket costs, but you can only see doctors and hospitals in the plan's network (except in emergencies). Plans vary widely, so comparing them matters.

Original Medicare versus Medicare Advantage

With Original Medicare (Parts A and B), you can see any doctor or hospital in the United States that accepts Medicare. There is no network to restrict you. You pay your deductible and then 20 percent of costs for most services. You must also buy Part D separately if you want prescription drug coverage, and you may want to buy a Medigap policy (supplemental insurance) to cover the costs Medicare does not pay.

With Medicare Advantage, a private company manages your coverage. You usually pay a lower monthly premium and lower copayments at the doctor's office. However, you can only see doctors and hospitals in the plan's network, and you need a referral from your primary care doctor to see a specialist. Plans often include dental, vision, or hearing coverage that Original Medicare does not. The tradeoff is less freedom to choose your doctors and more restrictions on which services are covered.

Neither choice is right for everyone. If you have a doctor you want to keep seeing and you are willing to pay more, Original Medicare gives you that freedom. If you want predictable, lower monthly costs and do not mind staying within a network, Medicare Advantage may cost less out of pocket.

How much Medicare costs and what you pay

Medicare costs vary depending on which parts you choose and your income. Part A is usually free. Part B costs a standard monthly premium of $164.90 in 2024 (higher if your income exceeds certain thresholds). Part D premiums depend on the plan you choose and range widely.

Beyond premiums, you pay deductibles and copayments. Part A has a hospital deductible of $1,676 per benefit period in 2024. Part B has a yearly deductible of $240 in 2024, and then you pay 20 percent of most services. Part D has copayments per prescription and a coverage gap where you pay more once you reach a spending threshold.

These amounts change every year. The Social Security Administration announces new premiums and deductibles in October for the following year. If you receive Social Security, your Part B premium is usually deducted automatically from your check.

Many people buy a Medigap policy (supplemental insurance) to cover the costs that Original Medicare does not pay. Medigap premiums vary by plan and location but typically range from $100 to $300 per month. You cannot use Medigap with Medicare Advantage.

When to sign up and what happens if you miss the important date

Your initial enrollment period is seven months long: it starts three months before the month you turn 65 and ends three months after. For example, if you turn 65 in June, you can sign up starting in March and until the end of September. You should sign up during this window, even if you do not plan to use Medicare right away.

If you miss your initial enrollment period, you can sign up during the general enrollment period, which runs from January 1 to March 31 each year. However, you will pay a late enrollment penalty for the rest of your life. For Part B, the penalty is 10 percent of the standard premium for each year you were may be able to access but did not sign up. For Part D, the penalty is 1 percent of the national average premium for each month you were may be able to access but did not sign up. These penalties add up.

There is one exception: if you are still working and covered by your employer's health plan, you may be able to delay signing up without penalty. You must sign up within eight months of leaving your job or losing that coverage. Talk to your employer's benefits office about your situation.

How to sign up for Medicare

You can sign up online at Medicare.gov, by phone at 1-800-MEDICARE (1-800-633-4227), or in person at your local Social Security office. You will need your Social Security number, proof of citizenship or legal residency, and information about any current health coverage.

If you are already receiving Social Security benefits, you are usually signed up for Part A and Part B automatically three months before you turn 65. You will receive a Medicare card in the mail. Check it carefully to make sure the information is correct.

If you are not yet receiving Social Security, you must sign up for Medicare separately. Do this even if you do not plan to use it right away, to avoid the late enrollment penalty.

For Part D and Medicare Advantage, you choose a plan during your enrollment period. You can compare plans on Medicare.gov. Plans change every year, so even if you are happy with your current plan, review your options each fall during the annual enrollment period (October 15 to December 7).

Questions to ask your doctor and when to contact Medicare

Before you turn 65, ask your current doctor whether they accept Medicare. If you are considering Medicare Advantage, ask whether they are in the plan's network. Ask about any ongoing treatments or prescriptions and whether they will be covered under the plan you are thinking about.

If you receive a bill you think Medicare should have paid, contact Medicare at 1-800-MEDICARE. If you disagree with a coverage decision, you have the right to appeal. Keep all paperwork related to your care and any bills you receive.

If you need help understanding your options, the State Health Insurance information Program (SHIP) offers free counseling. You can find your state's SHIP by calling 1-877-839-2675 or visiting the Eldercare Locator at 1-800-677-1116.

Frequently Asked Questions

Do I have to sign up for Medicare when I turn 65?

You must sign up during your initial enrollment period (three months before through three months after your 65th birthday) to avoid a permanent penalty on your premiums. If you are still working and covered by your employer's health plan, you may be able to delay, but you should confirm this with your employer's benefits office.

Can I change my Medicare plan after I sign up?

Yes. During the annual enrollment period (October 15 to December 7 each year), you can switch between Original Medicare and Medicare Advantage, or change which Part D plan you use. Changes take effect January 1. Outside this window, you can only change plans if you have a may have access to life event, such as moving out of your plan's service area.

What is the difference between Medicare and Medicaid?

Medicare is federal health insurance for people 65 and older, regardless of income. Medicaid is a joint federal-state program for people with lower incomes of any age. Some people may have access to for both programs. They have different rules, different covered services, and different costs.

Will Medicare cover all my medical costs?

No. Medicare covers many services, but not all. It does not cover dental care, vision care, hearing aids, or long-term custodial care in a nursing home. You may want to buy supplemental insurance (Medigap) or choose Medicare Advantage to cover some of these gaps, but you should review what each plan covers.

What happens if I do not sign up for Part D when I first become may be able to access?

You will pay a late enrollment penalty on your Part D premium for the rest of your life. The penalty is 1 percent of the national average premium for each month you were may be able to access but did not sign up. If you go without prescription drug coverage for more than 63 days in a row, the penalty applies even after you sign up later.