Yes, Medicare is health insurance, but it works differently than private plans

Medicare is a federal health insurance program run by the Centers for Medicare & Medicaid Services (CMS). It covers hospital stays, doctor visits, prescription drugs, and preventive care for people age 65 and older, some younger people with disabilities, and people with end-stage renal disease. Unlike private health insurance you might buy from an employer or an insurance company, Medicare is funded through payroll taxes and is the same program nationwide — your coverage does not change if you move to a different state.

The key difference is how it is structured. Medicare has four separate parts — Hospital Insurance (Part A), Medical Insurance (Part B), Medicare Advantage (Part C), and Prescription Drug Coverage (Part D) — and you choose which parts you need based on your situation. You do not get one card that covers everything automatically. Instead, you enroll in the parts that match your health needs, and each part has its own rules about what it pays for and what you pay out of pocket.

Key Takeaways

  • Medicare is federal health insurance for people 65 and older, some younger people with disabilities, and people with end-stage renal disease.
  • Part A covers hospital stays and skilled nursing care; Part B covers doctor visits and outpatient care; Part D covers prescription drugs; and Part C is an alternative plan that bundles A, B, and D together.
  • You must enroll during your Initial Enrollment Period (usually the three months before and after your 65th birthday) or pay a permanent penalty on your premiums.
  • Medicare does not cover everything — you will have deductibles, copayments, and coinsurance, and some services like dental and vision are not covered at all.
  • You can add Medigap (supplemental insurance) to cover costs Medicare does not pay, or you can choose Medicare Advantage instead of Original Medicare.

How Medicare Parts A and B work together

Part A is Hospital Insurance. It covers inpatient hospital stays, skilled nursing facility care after a hospital stay, hospice care, and some home health services. Most people do not pay a monthly premium for Part A because they or their spouse paid Medicare taxes while working. Part A does have a deductible — you pay a set amount before Medicare starts paying — and the amount changes each year.

Part B is Medical Insurance. It covers doctor visits, outpatient care, lab tests, imaging, durable medical equipment, and preventive services like screenings and vaccines. Part B requires a monthly premium, which is deducted from your Social Security check if you receive benefits. The standard premium amount changes each year based on your income. If you do not enroll in Part B when you first become may be able to access, you will pay a permanent 10 percent penalty on your premium for as long as you have Medicare.

Together, Parts A and B are called Original Medicare. You can use any doctor or hospital that accepts Medicare, and Medicare pays its share directly to the provider. You are responsible for your deductible, copayments, and coinsurance — the percentage of the cost you pay after Medicare pays its share.

Medicare Advantage and how it differs from Original Medicare

Part C is Medicare Advantage, also called MA. It is an alternative way to get your Medicare coverage. Instead of enrolling in Parts A and B separately, you join a private insurance plan (usually an HMO or PPO) that is approved by Medicare and covers everything Part A and Part B cover, plus usually Part D (prescription drugs). You get one card from the private plan, not separate Medicare cards.

Medicare Advantage plans often have lower or no monthly premiums than Original Medicare plus Medigap, and they include prescription drug coverage built in. However, they typically have smaller networks of doctors and hospitals, and you usually need a referral to see a specialist. Some plans require prior authorization before you can have a procedure. If you travel frequently or see doctors outside your plan's network, Original Medicare may be a better fit.

You cannot have both Original Medicare and Medicare Advantage at the same time. You choose one or the other during your Initial Enrollment Period or during the annual Open Enrollment Period (October 15 to December 7 each year).

Prescription drug coverage through Part D

Part D is Prescription Drug Coverage. If you choose Original Medicare (Parts A and B), you must enroll in a Part D plan separately through a private insurance company approved by Medicare. If you choose Medicare Advantage, prescription drug coverage is usually included. You do not have to enroll in Part D, but if you go without it and later want to sign up, you will pay a permanent penalty on your premium for each month you were not enrolled.

Part D plans vary widely in which drugs they cover, how much you pay, and which pharmacies you can use. You can change your Part D plan every year during Open Enrollment. If your health needs change or your current plan stops covering a drug you take, you may be able to switch plans outside the enrollment period.

What Medicare does not cover

Medicare is comprehensive for hospital and doctor care, but it has significant gaps. It does not cover dental care, vision care (including eyeglasses and contact lenses), hearing aids, or long-term care in a nursing home or at home. It does not cover routine foot care, cosmetic surgery, or most weight-loss surgery. Prescription drugs are only covered if you enroll in Part D, and even then, you pay out-of-pocket costs depending on which tier your drug is on.

Many people buy Medigap (supplemental insurance) to cover the costs that Original Medicare does not pay — deductibles, copayments, and coinsurance. Medigap is sold by private insurance companies and is separate from Medicare. You can only buy Medigap if you have Original Medicare (Parts A and B); if you have Medicare Advantage, you cannot use Medigap.

When you must enroll in Medicare

You become may be able to access for Medicare the month you turn 65. Your Initial Enrollment Period is the three months before your 65th birthday, the month you turn 65, and the three months after — a total of seven months. If you enroll during this window, your coverage starts the month you turn 65 (or the first day of the month you turn 65 if your birthday is the first of the month).

If you miss your Initial Enrollment Period, you can enroll during the annual General Enrollment Period (January 1 to March 31 each year), but your coverage will not start until July 1 of that year, and you will pay a permanent penalty on Part B and Part D premiums. The only exception is if you are still working and covered by your employer's health plan — in that case, you may be able to delay enrollment without penalty, but you must enroll within eight months of leaving your job or losing that coverage.

How to understand your costs under Medicare

Medicare costs include premiums (monthly payments), deductibles (what you pay before Medicare starts paying), copayments (a set dollar amount per visit or service), and coinsurance (a percentage of the cost). The amounts change each year. For 2024, Part A has a deductible, Part B has a deductible and a monthly premium, and Part D plans have their own deductibles and cost-sharing structures.

If you choose Original Medicare and want to limit your out-of-pocket costs, Medigap can help — different Medigap plans cover different combinations of deductibles and coinsurance. If you choose Medicare Advantage, your out-of-pocket costs are capped at a maximum amount per year, which can be helpful if you have high medical expenses.

You can see your estimated costs for different plans by using the Medicare Plan Finder tool on Medicare.gov. This tool lets you enter your current doctors and medications and see which plans cover them and what your costs would be.

Frequently Asked Questions

Do I have to enroll in Medicare when I turn 65?

You do not have to, but if you delay past your Initial Enrollment Period and do not have may have access to coverage (like an active employer plan), you will pay a permanent penalty on your Part B and Part D premiums. If you are still working and covered by your employer's health plan, you can delay without penalty, but you must enroll within eight months of leaving that job.

Can I switch from Medicare Advantage back to Original Medicare?

Yes, during the annual Open Enrollment Period (October 15 to December 7) you can switch from Medicare Advantage to Original Medicare. If you switch, you can also enroll in a Medigap plan during a limited window. Outside of Open Enrollment, you can switch only if you have a may have access to life event, such as moving out of your plan's service area.

What happens if I do not enroll in Part D?

If you go without Part D coverage and later want to enroll, you will pay a permanent penalty on your Part D premium for each month you were not enrolled, even if you had no prescriptions during that time. The only exception is if you had other creditable prescription drug coverage (like from an employer or union plan) during the time you were not enrolled in Part D.

Does Medicare cover my doctor if I travel outside the United States?

Original Medicare generally does not cover care outside the United States, except in limited situations near the border. Some Medicare Advantage plans offer limited coverage for emergency care abroad. If you travel internationally, you may want to buy a travel health insurance policy or choose a plan with international coverage.

How do I know if my doctor accepts Medicare?

You can search for doctors and hospitals that accept Medicare using the Medicare Provider Search tool on Medicare.gov. You can also call your doctor's office directly and ask. If you have Medicare Advantage, check whether your doctor is in your plan's network before you enroll.