Medicare is federal health insurance for people 65 and older, some younger people with disabilities, and people with end-stage renal disease

Medicare is a health insurance program run by the federal government through the Centers for Medicare & Medicaid Services (CMS). You become may be able to access at age 65 if you are a U.S. citizen or permanent resident who has lived in the country for at least five years. If you are younger than 65, you may be may be able to access if you receive Social Security Disability Insurance (SSDI) for at least 24 months, or if you have end-stage renal disease or amyotrophic lateral sclerosis (ALS).

Medicare is not means-tested, which means your income and savings do not affect whether you can join. You pay premiums, deductibles, and copayments depending on which parts of Medicare you choose, but the program itself is available to anyone who meets the age or disability criteria.

Key Takeaways

  • Medicare has four parts: Part A covers hospital stays, Part B covers doctor visits and outpatient care, Part D covers prescription drugs, and Part C (Medicare Advantage) is an alternative way to receive Parts A and B through a private insurer.
  • You must sign up for Part A and Part B during your initial enrollment period, which begins three months before the month you turn 65, and late enrollment can result in permanent premium penalties.
  • Part A is usually free if you or your spouse paid Medicare taxes while working, but Part B and Part D require monthly premiums that vary based on your income.
  • Original Medicare (Parts A and B) allows you to see any doctor or hospital that accepts Medicare, while Medicare Advantage plans restrict you to a network of providers.
  • You can change your Medicare coverage during the Annual Enrollment Period from October 15 to December 7 each year, or during other special enrollment periods if you experience certain life changes.

How Medicare Part A and Part B Work Together

Part A covers inpatient hospital care, skilled nursing facility care, hospice care, and some home health services. When you are admitted to a hospital, Part A pays the bulk of the cost after you meet your deductible. In 2024, the Part A deductible is $1,632 per benefit period, though this amount changes each year. Part A does not cover the full cost of a long hospital stay — after 60 days, you pay a daily copayment, and coverage ends after 150 days.

Part B covers doctor visits, outpatient surgery, diagnostic tests, physical therapy, and durable medical equipment like wheelchairs and oxygen. Part B requires a monthly premium (the standard amount in 2024 is $164.90, but it varies by income) and an annual deductible ($240 in 2024). After you meet the deductible, you typically pay 20 percent of the cost for most services, and the provider pays the rest.

Part A is usually free if you or your spouse paid Medicare taxes for at least 10 years while working. If you did not work long enough to may have access to for free Part A, you can still buy it, but the premium is higher. Most people are automatically enrolled in Part A when they turn 65, but you must actively sign up for Part B during your enrollment period or face a permanent penalty on your premium.

What Part D Prescription Drug Coverage Includes

Part D covers prescription medications through a private insurance plan that contracts with Medicare. You choose a Part D plan during your initial enrollment period or during the Annual Enrollment Period. Each plan has a different list of covered drugs (called a formulary), so the medications covered and the copayments you pay depend on which plan you select.

Part D has a coverage gap, sometimes called the "donut hole." In 2024, once you and your plan have spent $5,850 on covered drugs, you enter the gap and pay a higher percentage of the cost until your out-of-pocket spending reaches $7,050. After that, catastrophic coverage kicks in and you pay only a small copayment for the rest of the year. These dollar amounts change annually.

If you do not sign up for Part D when you first become may be able to access and you go without creditable drug coverage for more than 63 days, you will pay a permanent late enrollment penalty for as long as you have Medicare. The penalty is calculated based on how long you went without coverage.

Medicare Advantage as an Alternative to Original Medicare

Part C, also called Medicare Advantage, is an alternative way to receive your Part A and Part B benefits. Instead of using Original Medicare, you enroll in a private insurance plan — usually an HMO (Health Maintenance Organization) or PPO (Preferred Provider Organization) — that is approved by Medicare. The private plan receives a fixed payment from Medicare for your care and assumes the financial risk.

Medicare Advantage plans often include prescription drug coverage (Part D) built in, and many offer additional benefits that Original Medicare does not cover, such as dental, vision, hearing, or fitness programs. However, you must use doctors and hospitals in the plan's network, except in emergencies. If you see an out-of-network provider, you may pay more or the plan may not cover the visit at all.

Medicare Advantage plans have lower or zero premiums for Part B in many cases, but they typically have higher copayments and deductibles than Original Medicare. You can switch between Original Medicare and Medicare Advantage during the Annual Enrollment Period, but if you leave a Medicare Advantage plan and return to Original Medicare, you may not be able to buy a Medigap supplemental policy without undergoing medical underwriting.

Medigap Supplemental Insurance and What It Covers

Medigap (also called Supplement Insurance) is a private insurance policy that works alongside Original Medicare to cover costs that Medicare does not pay — such as copayments, coinsurance, and deductibles. Medigap is sold by private insurance companies, not by Medicare. There are ten standardized Medigap plans, labeled A through N, and each plan covers a different combination of out-of-pocket costs.

For example, Medigap Plan G covers your Part B deductible, copayments for doctor visits and hospital stays, and some costs for skilled nursing facilities. Medigap Plan N covers similar benefits but requires you to pay a copayment for some doctor visits. The exact benefits of each plan are the same regardless of which insurance company sells it, but premiums vary by company and by your age and location.

You cannot use Medigap if you are enrolled in Medicare Advantage — Medigap only works with Original Medicare. If you enroll in a Medigap plan within six months of turning 65 and signing up for Part B, you have a may provide right to buy any plan at any price. If you wait longer, insurance companies can deny you coverage or charge you more based on your health history.

When and How to Sign Up for Medicare

Your Initial Enrollment Period begins 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. During this seven-month window, you can sign up for Part A, Part B, Part D, and Medigap without penalties.

If you do not sign up during 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 permanent 10 percent penalty on your Part B premium for each year you delayed enrollment, and the penalty lasts for the rest of your life. The same applies to Part D — a permanent late enrollment penalty of 1 percent per month of delay.

You can sign up for Medicare online at Medicare.gov, by phone at 1-800-MEDICARE, or in person at your local Social Security office. If you are still working at 65 and have health insurance through your employer, you may be able to delay Part B enrollment without penalty, but you must report your employment status to Medicare.

Changes You Can Make During Annual Enrollment and Special Periods

The Annual Enrollment Period runs from October 15 to December 7 each year. During this time, you can switch between Original Medicare and Medicare Advantage, change your Medicare Advantage plan, switch Part D plans, or enroll in a Medigap policy. Any changes you make take effect on January 1 of the following year.

Outside of the Annual Enrollment Period, you can make changes during a Special Enrollment Period if you experience certain life events. These include losing employer coverage, moving out of your plan's service area, getting married or divorced, or becoming may be able to access for Medicaid. You typically have 60 days from the event to make a change. If you miss the important date, you may have to wait until the next Annual Enrollment Period.

If you are in a Medicare Advantage plan and want to switch back to Original Medicare, you have until February 14 each year to make the change, even outside the Annual Enrollment Period. This is called the Medicare Advantage Open Enrollment Period. However, if you switch to Original Medicare after your Initial Enrollment Period, you may not be able to buy a Medigap policy without medical underwriting.

Frequently Asked Questions

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

If you are still working and have health insurance through your employer, you can delay Part B enrollment without penalty as long as your employer has 20 or more employees. You must sign up for Part A, but you can delay Part B until you retire or lose your employer coverage. You have eight months after your employment ends or your coverage stops to sign up for Part B without penalty.

What is the difference between Original Medicare and Medicare Advantage?

Original Medicare is run directly by the federal government and allows you to see any doctor or hospital that accepts Medicare. Medicare Advantage is run by private insurance companies and usually requires you to use doctors and hospitals in the plan's network. Medicare Advantage often has lower premiums but higher copayments and out-of-pocket limits.

Can I have both Medicare and Medicaid?

Yes. If your income and resources are low enough to may have access to for Medicaid, you can have both programs at the same time. This is called "dual may be able to access." Medicaid can help pay your Medicare premiums and cover services that Medicare does not, such as long-term care and dental care. Contact your state Medicaid office to learn about your state's rules.

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

If you go without creditable prescription drug coverage for more than 63 days, you will pay a permanent late enrollment penalty when you finally sign up. The penalty is 1 percent of the national average Part D premium for each month you were without coverage. This penalty is added to your premium for as long as you have Medicare.

Can I change my Medicare plan if I made a mistake during enrollment?

If you made a mistake or changed your mind shortly after enrolling, you may have a limited time to make a change. Contact Medicare at 1-800-MEDICARE to explain your situation. Outside of the Annual Enrollment Period and Special Enrollment Periods, changes are generally not allowed, but Medicare sometimes makes exceptions for errors or unusual circumstances.