What Is Medicare?

Medicare is a federal health insurance plan designed for people 65 and older. But some younger people with disabilities or end-stage renal disease also qualify for Medicare coverage.^[1]

Medicare coverage has several different parts, including Part A, Part B, Part C, and Part D. Understanding the different parts can help you determine what it takes to qualify for each, what coverage you need, and how the coverage can affect your healthcare costs.

Here’s what you need to know about Medicare.

How Medicare works

Medicare is a federal health insurance program primarily for people 65 and older. While some people get Medicare automatically, others have to sign up.

If you start receiving Social Security retirement benefits anytime between when you turn 62 and four months before turning 65, your enrollment in Medicare Part A and Part B will happen automatically when you turn 65.

If you apply for Social Security at least three months before turning 65, you can sign up for Medicare when you apply for Social Security. But your enrollment period will end three months after the month you turn 65. If you choose to take Social Security benefits later, you can apply for Medicare online or wait until after you retire.

If you don’t sign up within the appropriate window, you could pay a penalty for missing your initial enrollment period.^[2]

Who qualifies for Medicare?

Most people 65 and older are eligible for Medicare. But younger people can get it if they have a qualifying disability, end-stage renal disease, or ALS.^[4]

While some people qualify for premium-free Medicare Part A, others must pay a monthly premium. Most people pay a premium of some kind for Part B and Part D.

Different types of Medicare

Medicare includes multiple different types of coverage. Here’s a closer look at each part of Medicare.

Medicare Part A

Medicare Part A (hospital insurance) helps policyholders pay for inpatient care. Depending on your situation, Medicare Part A might cover inpatient care within hospitals, skilled nursing facilities, hospice care, and some home healthcare services.^[3]

Most people qualify for premium-free Part A, which means you won’t face a monthly premium. If you don’t qualify for premium-free Part A, you may have the option to purchase Part A coverage. The monthly premium in 2024 is either $278 or $505 each month. Your premium will depend on how long you — or your spouse — worked and paid Medicare taxes. In order to buy Part A, you’ll need to sign up for Part B.^[3]

Medicare Part B

Medicare Part B (medical insurance) covers medically necessary healthcare services. Additionally, it can cover preventative services, like screenings for certain health issues and wellness visits. Part B can also cover clinical research, ambulance services, and mental health services.^[5]

Unlike Medicare Part A, everyone pays a premium for Part B. The standard monthly premium amount in 2024 is $174.70. But if you earn above a certain threshold, you may pay more for coverage.^[1]

Medicare Part C

Medicare Part C, or Medicare Advantage, is a type of insurance plan available through private insurers approved by Medicare.

For people who join a Medicare Advantage plan, the plan will provide all your Part A and Part B coverage. Since Medicare pays a fixed amount to the company for your care each month, private companies must follow the rules Medicare determines.

Depending on your situation, you might choose to purchase extra coverage through Medicare Advantage plans, like vision, dental, and hearing insurance.^[6]

Medicare Part D

Medicare Part D offers prescription drug coverage. To get this coverage, you usually must join a Medicare-approved plan that provides drug coverage. You’ll pair this prescription drug coverage with other types of Medicare coverage.

While the cost of covered prescriptions may vary, Part D must provide a minimum level of coverage set by Medicare.^[1]

Original Medicare vs. Medicare Advantage

Original Medicare includes Part A and Part B insurance, but you’ll generally have to purchase a separate Medicare drug plan. With Original Medicare, you can use any doctor or hospital in the U.S. that accepts Medicare. When you use covered services, you’ll usually pay 20% of the Medicare-approved amount after you meet your deductible, and there’s no out-of-pocket maximum amount.^[7]

In contrast, Medicare Advantage involves using a specific network of doctors and healthcare providers. People have more choices across Medicare Advantage, which means the costs you’ll face will vary based on your unique situation. Most plans have a maximum annual out-of-pocket limit. Medicare Advantage plans generally include coverage for hospital stays, medical services, and prescription drugs.

Generally, you’ll choose between an Original Medicare and a Medicare Advantage plan.

Medicare vs. Medicaid

Medicaid is a joint federal and state program that covers the medical costs of people with limited income and resources. In contrast, Medicare is a federal healthcare plan primarily for people 65 and older.

The rules to qualify for Medicaid vary by state. But in general, you’ll need to have a limited income and few assets. If you qualify, Medicaid might help you pay for your Medicare Part B monthly premiums, your share of Medicare costs, and drugs that Medicare doesn’t cover.^[8]

What Medicare doesn’t cover

Medicare is a useful healthcare option, but it won’t cover everything. Below is a look at some of the things Medicare doesn’t cover:

• 

  Long-term care

  If you need long-term care for any reason, Medicare won’t cover it. But long-term care insurance is an option to consider.

• 

  Non-medically necessary services

  Medicare likely won’t cover non-medically required care, like cosmetic surgeries and massage therapy.

• 

  Vision

  Medicare doesn’t generally cover eye exams.

• 

  Dental

  Medicare doesn’t cover most dental care, including dentures.

• 

  Hearing

  If you need hearing aids, Medicare won’t cover the cost.

Medicare FAQs