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

Medicare is a federal health insurance program. If you are 65 or older, you are likely covered by it — either because you worked long enough to earn it, or because a spouse or parent did. Some younger people with disabilities or end-stage renal disease also get Medicare.

The program has four main parts, and each one covers different things. Part A covers hospital stays. Part B covers doctor visits and outpatient care. Part D covers prescription drugs. Part C (called Medicare Advantage) is an alternative way to get Parts A, B, and D through a private insurance company instead of the government directly. Most people do not pay a monthly premium for Part A if they or their spouse paid Medicare taxes while working, but Parts B and D have monthly costs.

Medicare is not the same as Medicaid. Medicaid is a separate program run by states for people with lower incomes, regardless of age. The two programs have different rules, different costs, and different coverage.

Key Takeaways

  • Medicare Part A covers hospital stays, skilled nursing care, and hospice; Part B covers doctor visits and outpatient services; Part D covers prescription drugs.
  • Most people become covered at age 65 if they or a spouse paid Medicare taxes for at least 10 years, but you must sign up during your enrollment window or face late penalties.
  • You can get Medicare coverage through Original Medicare (Parts A and B from the government plus Part D from a private insurer) or through a Medicare Advantage plan (Part C), which is an all-in-one private alternative.
  • Medicare does not cover everything — dental, vision, hearing aids, and long-term care are not included, though some plans offer limited coverage for these services.
  • Your costs include monthly premiums, annual deductibles, copayments, and coinsurance, and the amounts change each year.

How you become covered and when to sign up

You become covered by Medicare automatically at 65 if you are already receiving Social Security benefits. If you are not yet receiving Social Security, you must sign up for Medicare yourself during your Initial Enrollment Period, which runs for seven months — three months before the month you turn 65, the month you turn 65, and three months after.

If you miss this window, you can still sign up later, but you will pay a permanent penalty on your Part B and Part D premiums for as long as you have Medicare. The penalty is 10 percent per year for every 12 months you were late. This penalty does not go away, so signing up on time matters.

If you are still working and have health insurance through your job, you may be able to delay Part B without penalty — but you must tell Medicare that you are doing this. The rules are different for Part D (drug coverage), so check with Medicare directly before you decide to wait.

What Part A covers: hospital and skilled nursing care

Part A covers inpatient hospital stays, skilled nursing facility care (not regular nursing home care), hospice, and home health services under certain conditions. You do not pay a monthly premium for Part A if you or your spouse paid Medicare taxes for at least 10 years.

When you use Part A, you pay a deductible — a set amount you pay out of pocket before Medicare starts paying. For a hospital stay in 2024, the deductible was $1,632 for the first 60 days. After that, you pay coinsurance — a daily amount — for days 61 through 90, and a higher daily amount for days 91 and beyond. These dollar amounts change each year.

Part A does not cover a regular nursing home stay if you only need help with daily activities like bathing or dressing. It covers a skilled nursing facility only if you need skilled care (like wound care or physical therapy) after a hospital stay of at least three days, and only for up to 100 days per benefit period.

What Part B covers: doctor visits and outpatient services

Part B covers doctor visits, preventive care (like screenings and vaccines), outpatient surgery, emergency room visits, lab tests, X-rays, and durable medical equipment like wheelchairs or oxygen. You pay a monthly premium for Part B — the standard amount in 2024 was $164.90, but it varies based on your income.

After you meet your annual deductible (which was $240 in 2024), Medicare pays 80 percent of the cost of most services, and you pay 20 percent as coinsurance. For some services like office visits, you may pay a copayment — a flat fee — instead. These amounts change yearly.

Part B also covers mental health services, including therapy and psychiatric care, at the same 80/20 split after your deductible. Preventive services like mammograms, colonoscopies, and flu shots are covered at no cost to you after you meet your deductible, or sometimes with no deductible at all.

What Part D covers: prescription drugs

Part D is prescription drug coverage. You get it either by joining a standalone Part D plan (if you have Original Medicare) or as part of a Medicare Advantage plan. You must have Part D or pay a permanent penalty if you go without it for more than 63 days in a row.

Part D plans are run by private insurance companies, and each plan has a different list of covered drugs, different costs, and different pharmacies. You choose a plan during your enrollment period, and the plan you pick affects how much you pay for each drug.

Most Part D plans have a monthly premium, an annual deductible, and then you pay a copayment or coinsurance for each prescription. There is also a coverage gap (sometimes called the "donut hole") where you pay more out of pocket once your total drug costs reach a certain amount — though this gap has been shrinking in recent years.

Original Medicare versus Medicare Advantage: which path to choose

Original Medicare means you get Part A and Part B directly from the federal government. You then choose a separate Part D plan for drugs. You can see any doctor or hospital that accepts Medicare, and there are no networks to worry about.

Medicare Advantage (Part C) is an all-in-one alternative run by private insurance companies. It includes Parts A, B, and D in one plan. Most Medicare Advantage plans have lower monthly premiums than Original Medicare plus a separate Part D plan, but they usually have networks — you must use doctors and hospitals in the plan's network, or pay more. Some Medicare Advantage plans also cover dental, vision, or hearing aids, which Original Medicare does not.

The choice depends on your situation. If you have a preferred doctor or hospital, check whether they are in the Medicare Advantage plan's network before you sign up. If you travel a lot or live part of the year in different places, Original Medicare may be simpler because it works anywhere in the country. If you want lower premiums and do not mind using a network, Medicare Advantage may save you money.

What Medicare does not cover

Medicare does not cover dental care, vision care (including eyeglasses and contact lenses), or hearing aids. It does not cover long-term care in a nursing home or assisted living facility. It does not cover routine foot care, cosmetic surgery, or most acupuncture.

Some gaps can be filled by buying a Medigap policy (also called supplemental insurance), which is sold by private insurance companies and helps pay the costs that Original Medicare does not cover — like coinsurance and deductibles. Medigap does not cover the things Medicare itself does not cover, like dental or vision.

If you are on a tight budget and need dental, vision, or hearing help, ask your doctor or local Area Agency on Aging about low-cost clinics in your area. Some communities have programs that offer these services on a sliding fee scale.

Frequently Asked Questions

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

If you are still working and have health insurance through your job, you can delay Part B without penalty — but you must tell Medicare you are doing this. Part A has different rules; you can usually delay it without penalty if you are still working. Part D (drug coverage) has strict rules: if you go without it for more than 63 days, you pay a permanent penalty. Check with Medicare before you decide to wait.

What is the difference between Medicare and Medicaid?

Medicare is federal health insurance for people 65 and older (or younger people with disabilities). Medicaid is a separate program run by states for people with lower incomes, regardless of age. The two have different rules, different costs, and different coverage. You can have both at the same time.

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 your Part D plan. If you have a Medicare Advantage plan and want to switch to Original Medicare, you have a limited window and may need to buy a Medigap policy right away to avoid gaps in coverage.

What happens if I do not sign up for Medicare on time?

If you miss your Initial Enrollment Period and do not have a valid reason for the delay, you pay a permanent penalty on your Part B and Part D premiums — 10 percent per year for every 12 months you were late. This penalty stays with you for life, so signing up during your enrollment window is important.

Does Medicare cover preventive care like cancer screenings?

Yes. Medicare Part B covers many preventive services at no cost to you, including mammograms, colonoscopies, blood pressure checks, diabetes screening, and flu and pneumonia vaccines. You do not pay a copayment or coinsurance for these services, and usually do not have to meet your deductible first. Your doctor can tell you which screenings are right for you.