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

Medicare is a federal health insurance program that covers hospital care, doctor visits, prescription drugs, and preventive services. You become may be able to access for Medicare the month you turn 65, regardless of your work history or income. Most people pay a monthly premium for Part B (doctor and outpatient care) and may pay premiums for Part D (prescription drugs) or Part C (an alternative plan). Some people with disabilities under 65 or with end-stage renal disease also may have access to.

You do not automatically receive Medicare at 65. You must sign up during your enrollment window, which begins three months before the month you turn 65 and ends three months after. If you miss this window, you may pay a penalty for the rest of your life. If you are still working and covered by your employer's health plan, you may be able to delay enrollment without penalty — but you must tell Medicare this applies to you.

Key Takeaways

  • Medicare starts the month you turn 65, but you must sign up during your enrollment window or face permanent penalties.
  • Medicare has four parts: Part A (hospital), Part B (doctor visits), Part D (prescription drugs), and Part C (an alternative that combines A, B, and D).
  • Original Medicare (Parts A and B) has deductibles and copays, and does not cover dental, vision, or hearing aids unless you add supplemental coverage.
  • You can sign up online at Medicare.gov, by phone at 1-800-MEDICARE, or in person at your local Social Security office.
  • If you delay enrollment without a valid reason, you will pay a 10 percent penalty on Part B premiums for every 12 months you were late.

The four parts of Medicare and what each one covers

Part A covers hospital stays, skilled nursing facility care, hospice, and home health services. Most people pay no monthly premium for Part A because they or their spouse paid Medicare taxes while working. Part A has a deductible: in 2024, you pay $1,676 for the first 60 days of a hospital stay in each benefit period. After 60 days, you pay coinsurance (a daily amount) until day 90, and then a higher daily amount for days 91 to 150.

Part B covers doctor visits, outpatient care, medical equipment, and preventive services like cancer screenings and vaccines. Part B has a monthly premium (in 2024, the standard amount is $164.90, though it varies by income). You also pay a yearly deductible ($240 in 2024) and then 20 percent of the cost of most services after that. Part B does not cover routine dental, vision, or hearing care.

Part D is prescription drug coverage. You choose a plan from private insurance companies, and the premium and coverage vary by plan and by year. Part D has a deductible, a coverage gap (sometimes called the "donut hole") where you pay more out of pocket, and a catastrophic coverage phase where your costs drop again. If you do not sign up for Part D when you first become may be able to access, you pay a penalty for every month you go without it.

Part C, also called Medicare Advantage, is an alternative to Original Medicare (Parts A and B). Private insurance companies offer Part C plans, which must cover everything Part A and B cover but often include Part D (drugs) and may include dental or vision. Part C plans usually have lower premiums than Original Medicare plus a Medigap plan, but they have networks — you may have to use doctors in the plan's network or pay more. Part C plans change their coverage and networks every year on January 1.

Original Medicare versus Medicare Advantage: the main differences

Original Medicare (Parts A and B) lets you see any doctor or hospital that accepts Medicare, anywhere in the country. You pay a deductible and coinsurance for each service. Most people with Original Medicare buy a Medigap policy (supplemental insurance) to cover the gaps — the deductibles, coinsurance, and copays that Medicare does not pay. Medigap premiums vary widely by plan and by insurance company, but a Medigap policy can cost $100 to $300 or more per month.

Medicare Advantage (Part C) is offered by private insurance companies and usually costs less in monthly premiums than Original Medicare plus Medigap. However, you must use doctors and hospitals in the plan's network, except in emergencies. If you see an out-of-network doctor, you pay more or the plan may not cover it at all. Medicare Advantage plans also require referrals for specialists in many cases. The trade-off is lower upfront costs but less flexibility in choosing providers.

If you have Original Medicare and want drug coverage, you must sign up for Part D separately. If you choose Medicare Advantage, most plans include Part D, so your drug coverage is bundled in. You can switch between Original Medicare and Medicare Advantage once per year during the Annual Enrollment Period (October 15 to December 7).

When and how to sign up for Medicare

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, your enrollment period runs from March through September. 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.

If you are still working at 65 and covered by your employer's health plan, you may delay Part B enrollment without penalty. You must have creditable coverage (health insurance through your employer or your spouse's employer) and you must tell Medicare you are still covered. When you leave your job or lose coverage, you have eight months to sign up for Part B without penalty. If you do not tell Medicare about your employer coverage, you will be charged a penalty even though you had a valid reason to delay.

If you miss your Initial Enrollment Period and do not have a valid reason to delay, you pay a permanent penalty. The Part B penalty is 10 percent of the standard premium for every 12 months you were late. The Part D penalty is 1 percent of the national average premium for every month you were late. These penalties stay with you for life, even if you sign up later.

What Medicare does not cover

Original Medicare does not cover routine dental care, vision exams, eyeglasses, hearing aids, or routine hearing exams. It does not cover long-term care (nursing home care for non-medical reasons), custodial care, or most prescription drugs (unless you add Part D). It does not cover cosmetic surgery, most weight-loss surgery, or acupuncture. It does not cover travel outside the United States, except in limited cases in Canada, Mexico, and the Caribbean.

If you want dental, vision, or hearing coverage, you can buy a Medigap plan that includes some of these services, or you can choose a Medicare Advantage plan that may offer them. Some Medicare Advantage plans include dental and vision benefits, though the coverage is usually limited. You can also buy standalone dental or vision plans from private insurance companies, though these are separate from Medicare.

Income-based premiums and extra help with costs

If your income is above a certain level, you pay a higher Part B and Part D premium. This is called Income-Related Monthly Adjustment Amount (IRMAA). In 2024, if your modified adjusted gross income is above $97,000 (single) or $194,000 (married filing jointly), you pay more. The higher your income, the higher your premium. Medicare uses your tax return from two years ago to calculate IRMAA.

If you have low income and limited resources, you may be able to get help paying Medicare premiums and cost-sharing through programs like the Medicare Savings Program or the Low-Income Subsidy (also called Extra Help). These programs are run by your state, not by Medicare. You can learn about them by calling 1-800-MEDICARE or visiting your state's Medicaid office. The income limits vary by state.

Frequently Asked Questions

Do I have to sign up for Medicare at 65 if I am still working?

You do not have to sign up for Part B if you are covered by your employer's health plan and your employer has 20 or more employees. You must tell Medicare you are still covered. When you leave your job, you have eight months to sign up for Part B without penalty. You should still sign up for Part A (hospital insurance) at 65, since it is usually free and covers hospital stays.

What happens if I miss my enrollment window?

If you miss your Initial Enrollment Period and do not have a valid reason (like employer coverage), you pay a permanent 10 percent penalty on Part B premiums for every 12 months you were late. This penalty stays with you for life. You can sign up during the General Enrollment Period (January 1 to March 31 each year), but the penalty applies.

Can I switch from Original Medicare to Medicare Advantage or back again?

Yes. You can switch once per year during the Annual Enrollment Period (October 15 to December 7). If you switch from Original Medicare to Medicare Advantage, your Medigap policy ends and you cannot use it with Medicare Advantage. If you switch back to Original Medicare, you may not be able to buy a Medigap policy again, depending on your state and age.

Does Medicare cover eye exams and glasses?

Original Medicare does not cover routine eye exams, eyeglasses, or contact lenses. It covers one pair of glasses or contact lenses after cataract surgery. Some Medicare Advantage plans include vision benefits, though coverage is usually limited to an eye exam and a discount on glasses. You can also buy a standalone vision plan from a private insurance company.

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 and state program for people with low income and limited resources. You can have both — this is called "dual may be able to access." Medicaid covers services Medicare does not, like long-term care and dental care, but only if your state's Medicaid program covers them.