Medicare is the federal health insurance program for people age 65 and older, as well as some younger people with certain disabilities or conditions such as end-stage renal disease. If you are approaching 65, the program can look complicated at first. This overview explains the main parts in plain language so you can ask better questions when it is time to decide.
The Four Parts of Medicare
Medicare is usually described in "parts." Each part covers a different type of care.
Part A: Hospital Insurance
Part A generally helps cover inpatient hospital stays, care in a skilled nursing facility after a qualifying hospital stay, hospice care and some home health care. Most people do not pay a monthly premium for Part A if they or a spouse paid Medicare taxes long enough while working. Deductibles and coinsurance still apply.
Part B: Medical Insurance
Part B helps cover doctor visits, outpatient care, preventive services, lab tests, durable medical equipment and many other services. Part B has a monthly premium that is set each year, and higher-income beneficiaries may pay more. After you meet the annual deductible, you typically pay a share of the cost for covered services.
Part C: Medicare Advantage
Medicare Advantage plans are offered by private insurance companies approved by Medicare. They bundle Part A and Part B coverage, and most also include Part D prescription drug coverage. Many plans offer extra benefits such as routine dental, vision or hearing coverage. These plans usually use provider networks and have their own rules for referrals and prior authorization.
Part D: Prescription Drug Coverage
Part D plans, also offered by private insurers, help cover the cost of prescription drugs. You can get Part D as a stand-alone plan alongside Original Medicare or as part of a Medicare Advantage plan that includes drug coverage.
Original Medicare vs. Medicare Advantage
When you first become eligible, one of the biggest choices is how you want to receive your benefits.
- Original Medicare (Parts A and B) is run by the federal government. You can generally see any doctor or hospital in the country that accepts Medicare. It does not have an annual out-of-pocket maximum, so many people add a Medicare Supplement (Medigap) policy and a Part D plan.
- Medicare Advantage (Part C) replaces how you receive Part A and B benefits. Plans have an annual out-of-pocket limit for covered services, but costs, networks and extra benefits vary widely from plan to plan.
Neither option is right for everyone. Your health needs, preferred doctors, travel habits and budget all play a role.
When Can You Enroll?
Most people first enroll during their Initial Enrollment Period, a seven-month window that includes the three months before the month you turn 65, your birthday month, and the three months after. Some people are enrolled in Parts A and B automatically, for example if they already receive Social Security benefits. Others need to sign up.
If you are still working and covered by an employer group health plan, you may be able to delay Part B without a penalty. The rules depend on the size of the employer and other details, so it is worth confirming before you decide.
Common Costs to Plan For
- Monthly premiums for Part B, and possibly for Part D, Medigap or a Medicare Advantage plan
- Deductibles for Part A, Part B and many drug plans
- Copayments and coinsurance when you receive care
- Possible late enrollment penalties if you delay Part B or Part D without other qualifying coverage
Getting Help
Medicare decisions can affect your costs and access to care for years. Before enrolling, review your current medications, the doctors you want to keep and how often you expect to use care. Official information is available at Medicare.gov, and your State Health Insurance Assistance Program (SHIP) offers free, unbiased counseling. A licensed agent can also help you compare plans available in your area.
This article is for general education only. Plan availability, benefits and costs vary by location and change from year to year.
