Medicare is a federal health insurance program, not a private insurance plan

Medicare is government-run health insurance for people age 65 and older, some younger people with disabilities, and people with end-stage renal disease. It is not a private insurance company, and you do not buy it the way you buy car insurance or homeowners insurance. Instead, you become covered through Social Security once you reach 65 — or you enroll during a specific window if you may have access to earlier.

The program is funded through payroll taxes (Medicare tax) that you and your employer have paid during your working years. When you turn 65, those years of contributions make you may be able to access for coverage. Medicare then pays a portion of your medical bills — hospital stays, doctor visits, prescription drugs, and some preventive care — while you pay the rest through premiums, deductibles, and copayments.

Unlike private insurance, Medicare has the same rules and benefits nationwide. Your coverage does not depend on your job, your health history, or how much money you have. Once you are enrolled, you cannot be denied or dropped.

Key Takeaways

  • Medicare is federal health insurance run by the government, funded by payroll taxes, and available to most people at age 65 without a medical exam or process process.
  • Medicare has four parts — Part A (hospital), Part B (doctor visits), Part D (prescriptions), and Part C (an alternative that bundles coverage) — and you choose which parts you need.
  • You pay premiums for Parts B and D, and you share costs through deductibles and copayments when you use care.
  • Medicare does not cover everything — dental, vision, hearing aids, and long-term care are not included — so many people add supplemental or Medigap insurance to fill the gaps.
  • You enroll during your Initial Enrollment Period (usually the three months before and after your 65th birthday) to avoid paying higher premiums later.

The four parts of Medicare and what each one covers

Part A covers inpatient hospital care — hospital stays, skilled nursing facilities, hospice, and some home health care. Most people do not pay a monthly premium for Part A because they already paid for it through payroll taxes. You do pay a deductible when you are admitted to the hospital, and costs increase if you stay longer than 60 days.

Part B covers outpatient services: doctor visits, lab tests, X-rays, ambulance services, and some medical equipment. Part B has a monthly premium (the amount changes each year), an annual deductible, and a 20% copayment for most services after you meet the deductible. Part B is optional, but if you delay enrolling and do not have other coverage, you will pay a higher premium for life.

Part D covers prescription drugs through a private insurance plan you choose. You pay a monthly premium, and costs vary by plan and by drug. Part D is optional, but like Part B, delaying enrollment can mean higher premiums later. You must enroll during your Initial Enrollment Period or during the annual open enrollment period (October 15 to December 7 each year).

Part C, also called Medicare Advantage, is an alternative to Parts A, B, and D. Private insurance companies offer Part C plans that bundle hospital, doctor, and prescription coverage into one plan, often with lower out-of-pocket costs and added benefits like dental or vision. The trade-off is that you must use doctors and hospitals in the plan's network, and you may need referrals for specialists.

How much you pay: premiums, deductibles, and copayments

Medicare is not free. You pay three types of costs: premiums (monthly fees), deductibles (the amount you pay before Medicare starts paying), and copayments or coinsurance (your share of the cost when you use care).

Part A has no monthly premium for most people, but you pay a deductible of $1,632 per hospital stay in 2024 (this amount changes yearly). Part B premiums start at $174.70 per month in 2024 for people with standard income, with an annual deductible of $240. Part D premiums vary by plan, typically $7 to $100+ per month. Part C premiums vary widely — some plans have no premium, while others charge $50 to $200+ per month, but they usually have lower deductibles and copayments than Original Medicare (Parts A and B).

If your income is higher, you will pay more. Medicare charges an Income-Related Monthly Adjustment Amount (IRMAA) on top of your regular Part B and Part D premiums if your modified adjusted gross income exceeds certain thresholds. The thresholds and surcharges change yearly, so check with Social Security or Medicare.gov each year to see if you are affected.

What Medicare does not cover

Medicare has significant gaps. It does not cover dental care (cleanings, fillings, extractions), vision care (eye exams, glasses, contacts), or hearing aids. It does not cover long-term care in a nursing home or assisted living facility, routine foot care, or most cosmetic surgery. It also does not cover travel outside the United States (with rare exceptions).

Because of these gaps, many people buy Medigap insurance (also called supplemental insurance) to cover costs that Medicare does not. Medigap plans are sold by private insurance companies and are standardized — a Plan G from one company covers the same things as a Plan G from another company. Medigap premiums vary by company and by age, and you should enroll within six months of turning 65 to avoid paying higher premiums.

Alternatively, some people choose Part C (Medicare Advantage) plans that include dental, vision, or hearing benefits, though these are usually limited (for example, a dental benefit might cover one cleaning per year, not all dental work).

Original Medicare versus Medicare Advantage

You have two main paths: Original Medicare (Parts A and B, plus Part D if you want prescription coverage) or Medicare Advantage (Part C). The choice affects how much you pay, which doctors you can see, and what is covered.

With Original Medicare, you can see any doctor or hospital that accepts Medicare — which is most of them. You have more flexibility, but you pay more out of pocket: a deductible, copayments, and coinsurance add up. You also need to buy Part D separately for prescriptions and Medigap for gaps in coverage.

With Medicare Advantage, you choose a plan run by a private insurance company. The plan covers hospital, doctor, and prescription drugs in one package, often with lower monthly costs and lower deductibles. The catch is that you must use doctors and hospitals in the plan's network (except in emergencies), and you may need referrals to see specialists. If you travel or move, your plan may not work in your new location.

Neither choice is right for everyone. Original Medicare suits people who want freedom to choose doctors and who are willing to pay more out of pocket. Medicare Advantage suits people who want predictable costs and do not mind staying in-network.

When to enroll and what happens if you miss the important date

Your Initial Enrollment Period is the seven-month window that includes the three months before your 65th birthday, the month you turn 65, and the three months after. If you enroll during this window, your coverage starts on the first day of the month you turn 65 (or the first day of the following month if you enroll in the month you turn 65).

If you miss this window and do not have other may have access to coverage (such as employer insurance), you will pay a late enrollment penalty. For Part B, the penalty is 10% of the standard premium for each year you were may be able to access but did not enroll — and that penalty is permanent. For Part D, the penalty is 1% of the national average premium for each month you were may be able to access but did not enroll, also permanent. These penalties add up over time.

There are exceptions: if you are still working and covered by your employer's health plan, you can delay enrolling without penalty, as long as you enroll within eight months of leaving that job or losing the coverage. The same rule applies if you have coverage through a spouse's employer plan.

How to find out more about your options

Medicare.gov is the official source for information about all four parts, current premiums and deductibles, plan comparisons, and enrollment important date. You can use the Plan Finder tool on Medicare.gov to compare Original Medicare and Medicare Advantage plans in your area, see which doctors and hospitals are in-network, and check which drugs are covered.

Social Security handles enrollment for most people. You can enroll online at ssa.gov, by phone at 1-800-772-1213, or in person at your local Social Security office. If you are not yet receiving Social Security benefits, you will need to enroll in Medicare separately.

State Health Insurance information Programs (SHIPs) offer free counseling about Medicare options. You can find your state's SHIP by calling 1-877-839-2675 or visiting shiptalk.org. SHIP counselors can walk you through the parts, help you compare plans, and answer questions about enrollment.

Frequently Asked Questions

Do I have to enroll in Medicare at 65 if I am still working?

If you are still working and covered by your employer's health plan, you can delay enrolling in Part B without penalty. However, you should still enroll in Part A (hospital insurance) at 65, even if you do not use it yet, because Part A has no monthly premium and waiting can cost you later. When you leave your job or lose coverage, you have eight months to enroll in Part B without a late penalty.

Can I switch from Original Medicare to Medicare Advantage or vice versa?

Yes. The annual open enrollment period runs from October 15 to December 7 each year, and any changes you make take effect January 1. You can also switch during the Medicare Advantage Open Enrollment Period (January 1 to March 31) if you are already in a Medicare Advantage plan. Outside these windows, you can only switch if you have a may have access to life event, such as moving out of your plan's service area.

What if I cannot afford the premiums or out-of-pocket costs?

Medicare has programs to help. The Medicare Savings Programs pay some or all of your Part B premiums, deductibles, and copayments if your income is low enough. The Low-Income Subsidy program helps pay Part D premiums and copayments. You can find out whether you may be may be able to access by contacting your state Medicaid office or calling 1-800-Medicare.

Does Medicare cover preventive care?

Yes. Medicare Part B covers many preventive services with no copayment or deductible, including annual wellness visits, cancer screenings (mammograms, colonoscopies, Pap tests), cardiovascular screenings, diabetes screenings, and vaccinations. The exact services covered and how often depend on your age and health history.

What happens to my Medicare if I move to another state?

Original Medicare (Parts A and B) works the same in every state, so you can see any Medicare-accepting doctor or hospital anywhere. If you have a Medicare Advantage plan, check whether it covers your new state or whether you need to switch to a plan available in your new location. You can change plans without penalty if you move out of your current plan's service area.